The views stated here are those of the author and do not necessarily reflect those of the editors of this newspaper. We welcome supporting or opposing views on any published item. Received November 5, 2022.
On Wednesday November 2, 2022, town officials held a presentation about this issue. In it they addressed many of the concerns related to this sale. Of most interest to me was the financial impact to our taxes. As stated, the purchase price is 2.5 million dollars. To cover that cost, Haddam will have use of $330,000 of escrow from the purchase, a Brownfields Grant request of 1.5 million dollars, a budget surplus from the current budget of 1.1 million dollars, and funds available from a 2.4 million dollar ARPA (American Rescue Plan) grant. These sums of money interact to cover the purchase price and the remediation cost to make this viable for commercial use. Haddam already has the budget surplus and the ARPA money. We are waiting to hear about the Brownfields grant. The outcome of that grant will control how much of the escrow money we get to use.
There are different levels of remediation, and they have drastically different costs and required work. It isn’t likely that it would ever be viable (for a private developer or Haddam) to clean up the site to residential level. However, cleaning up to commercial level involves minimal excavation and mostly just paving to cover the area. Commercial level would allow light industrial and retail business on the property, a nice improvement over its current state. The current estimate for that use ranges from roughly $152,000 to $574,000. If none of the grant money comes in (unlikely), Rossi must use up to $330,000 of the sale proceeds (the escrow) to reimburse Haddam for the clean-up. That would very likely cover the entire expense. Worst case, if the clean-up comes in at the high end, we risk roughly $240,000 ($574,000 minus $330,000). If the entire grant comes in, even at the highest clean up estimate, Haddam would have roughly $900,000 to use to offset the purchase price (1.5 million grant minus $574,000 remediation). That surplus grant money, whatever amount it becomes, combined with Haddam’s $1.1 million budget surplus, backstopped by the $2.4 million in ARPA funds, means Haddam can cover the $2.5 million purchase price without raising taxes.
What about once we own it? The property is producing income. Right now, it generates $21,000 in tax revenue for the town, and $96,000 in rent for the Rossi’s. Of note, $36,000 of that rent comes from the Town of Haddam for Public Works, so the tax money we currently get doesn’t cover the rent we pay. Under town ownership, Haddam would stand to get $75,000 in rent to roll back into the property to control costs. If the front development goes through, that estimated tax revenue is $67,000, three times the current amount.
The most important reason to do this is control. Right now, there is a significant exception via grandfathering to the “Village District” P & Z requirements legally termed “legal non-conforming.” The right to those uses transfers intact to any new owner until surrendered. Under town ownership, Haddam can surrender any or all of these, thereby requiring any new development to comply with current zoning requirements. In addition, under town ownership, any development will go through an RFP process and be approved by town meeting. As I understood it, even if it meets P & Z requirements, it could be denied if it fails to pass the vote. Further, it helps ensure the success of other projects around the center already in progress. Final note here: development on the Rossi property will force the PW Garage to move, meeting the goal of the POCD. It will no longer fit on the site. Under Haddam’s control, that move can be methodically planned and budgeted for. If this property sells to a private entity, our PW lease can be terminated, forcing Haddam into a quick and costly relocation for a vital service.
In conclusion, I think this is a good thing for Haddam and not something to be afraid of. We aren’t so much buying property as investing in the direction of the future of Higganum Center. I fully admit there are risks that we cannot completely control. However, from everything I can see, we have the ability to take this risk with little if any tax consequence. In return, we get the ability to move this project from a stagnant eyesore to something we can all enjoy. Please join me in supporting this purchase.
Jeff Sturges, Haddam
