Debating The Veterinary Hospital Lease

By Kendra Bobowick

Tuesday’s public hearing regarding lease negotiations for a veterinary hospital drew a mixed crowd that filled the Senior Center, questioning the selectmen for more than an hour.

Speaking first, however, was lessee Glen Mountain Holding Co. LLC’s attorney Fran Pennarola who summarized: The tenant intends to renovate the site and create a first-class veterinary hospital offering specialized services not typically found in the vet practice. The building currently is not conducive for use and will require substantial expenditures beyond the lease agreement. He noted environmental concerns, which negotiations have taken into consideration. The lease is for $760,000 for 30 years. Renovation and remediation costs are much higher, however.

“My client is going to spend millions on the facility that we feel will be an asset to the community and will help local veterinary practices and animals in the western Connecticut region,” Mr Pennarola said. The lease outlines at least $3 million in anticipated expenses to bring the building up to satisfactory condition.

Town attorney Dave Grogins soon opened the hearing by spelling out the rules: “This is an opportunity for the public to comment on the lease proposal, this is not a [question and answer] period; it’s not a debate.”

What did people want to know?

Karen Banks was worried about the drop in price from a lease that had originally been set at more than $1 million. Now at $760,000, she said, “It’s too low. I really feel it’s not enough.” She was the first of several speakers to question the lease price.

Dr John Roumanis of Berkshire Veterinary Hospital in Newtown argued that the low rent and possible tax breaks are a great deal for the incoming tenant. He compared costs and square footage to similar locations calculating, “You’re giving it away … as a vet in town I object to you subsidizing a veterinary hospital.”

Resident Fred Baaf repeated the phrase, “Why is the town giving away the farm?” Why is the town not making money on this, he asked. He, too, argued against tax incentives. “Are they applying for them?” He offered his own figures, saying 30 years and $760,0000 works out to his estimate of 84 cents a square foot a year. Angered, he said, “Then you throw in parking, that’s a ‘tremendous lease.’”

Admitting that the lease was long and in some places confusing, he understands that the tenant will be seeking a mortgage and asked, “Can the holder of the mortgage foreclose and the town lose the building? How does the town get the property back?” Independent Party of Newtown (IPN) member Ruby Johnson also tapped into the argument. “Should the town spend $20-plus million on a property so businesses can move in? I do not think it is our role to buy a property and subsidize business.” Questioning the lease again she asked, “Who is making money? Not the taxpayers of Newtown.”

Po Murray, with the IPN and also a Legislative Council member, spoke as a resident Tuesday. “The money we receive will never be enough,” she said.

Resident and fellow IPN member Bruce Walczak’s comments also criticized the lease amount, asking, “Why did the Fairfield Hills Authority reduce it?” He also questioned the tenant’s ability to make payments. Offering his gut feeling, he said, “We’re getting the short end of it. Are we selling ourselves short?”

The lease and payments aside, residents had other questions.

Ms Banks asked about the utilities. Is the town providing the electric and gas? “If so, I object,” she said. She raised another point poised on many lips Tuesday. “I want clarification on the 125 parking spaces.” Was that the correct number? Who would pay and how much?”

Dr Roumanis opened, “I know this is not a question and answer, but I hope for answers at some point…” His concerns had to do, first, with how much Woodbury is worth. He also questioned the desired use as a veterinary facility. He also wondered if the town supported such a venture, and he asserted, “This [lease] has been developed clandestinely.”

Mr Baaf had a list of complaints, beginning with confusion over lease terms. “Is this a ground lease? Is Planning and Zoning allowing this?” Why was there a confidentiality agreement concealing the name of the individual behind the holding company, he wondered. “If this was a restaurant, wouldn’t you want to know if it was a McDonald’s, a Chucky Cheese, or a steak house? Who is Glen Holding Company?”

He questioned terms in the lease specifying the town’s responsibility for snow removal, etc, and the reasoning behind possible tax abatement. Common charges from the holding company to the town annually are also too low, he stressed. Like others, he questioned the zoning amendment and the proposed veterinary facility use.

Ms Murray followed up, “The master plan is predicated on the fact that economic development will fund Fairfield Hills, but looking at the lease I don’t think it would fund what we need it to.” She urged selectmen to approve a strategic planning community. “Reassess Fairfield Hills and address the needs of the future,” she said.

A Voice In Support

Only one resident had positive comments. Standing alone in her opinions earlier in the hearing was LeReine Frampton, also a public figure, registrar of voters, who spoke as a resident. “I have been listening to talk about the $760,000.” Rather than saying it was too low, she reminded, “What about [the tenant’s] costs to bring the building up to code? And, at the end of the lease we’ll have a building with heat, electricity, etc that we can lease at a market price.” The buildings on the former state hospital campus are in bad shape, she said. Closed up since the late 1990s, she said, ‘Things start to fall apart.”

She has a need for a veterinary hospital such as the proposed facility. “A year-and-a-half ago my dog broke its leg at 10:30 at night on a Saturday.” She wound up far from home at a facility where her pet remained for five days. “People in this town care about their animals; there is a need,” Ms. Frampton said.

Speaking economically, she asked, “If someone thinks they can make it here, why can’t we let them try? We need to develop the area, but people keep saying no. [Development] gets put off; we need to stop being negative.” Tossing a last shot, she stated, “Tax incentives were not made up for this, it’s nothing new.”

More Questions

Bruce Walczak spoke at length. “We have expectations that the selectmen will ask questions and would inform citizens and make an informed decision.” He questioned the authority’s right to negotiate leases in executive sessions. “Is that in violation of the Freedom Of Information Act?” he asked.

He is concerned with the process. “Are questions being asked [from the town to the prospective tenant]? Does the town provide information so we can understand this? We have a right to know Glen Mountain. Are they experienced at this?” Then asking, “Who is the landlord; who will renovate the interior; what about insurance; what if there is a problem?” The lease, with many of these explanations, is available at the Edmond Town Hall in the first selectman’s office.

Who is paying for the lights in the parking lot? Who will install them? Will Newtown bring utilities to the building? He continued: “The tenant pays common charges; who gets the money? Are town officials worried about the tenant’s ability to make its payments? How much tax will the building provide to the town? Did anyone recommend not using the sewers; are there any reports about the condition of the sewers?”

Mr Walczak made the hearing’s last comments. “I think the town deserves a thorough explanation of the lease and understand answers to the questions before the lease is approved.” Summarizing, he said, “So, there are a lot of questions. Will the Board of Selectmen answer? Is there time on the agenda?” Minutes later the selectmen, with the help of town attorney Grogins, authority Chairman Bob Geckle and Public Works Department head Fred Hurley did offer extensive answers and explanations.

A Time For Answers

In detail and piece by piece, the officials went through it. Mr Walczak had left the meeting, however, which Selectman Herb Rosenthal noted. “I don’t see [Mr Walczak] sticking around for the answers,” he quipped.

The selectman came prepared however, having received an e-mail that Mr Walczak had apparently sent urging others to attend the hearing, and listing questions. Regarding those questions, Mr Rosenthal said, “I am satisfied that I do have the answers.”

He began, “Is this a perfect deal?” he asked. To answer himself, he said, “I have respect for the town attorney and Mr Pennarola. I don’t believe anything is underhanded. I feel the authority acted in the town’s best interest.”

Before moving to other matters, First Selectman Borst made it clear that the public is welcome to pose additional questions to his office in writing.

The Lease: Attorney Grogins explained, “This is a ground lease. Except for the location, the building is worthless.” As for arguments that the town could lease the building for much more per square foot, Mr Grogins reminded, “This is not a new and complete building.”

 Utilities: The town is not upgrading the building’s interior electric gas, or other utilities, and the town is not paying for the tenant’s infrastructure. Mr Grogins and Mr Hurley explained that per the lease agreement, and as part of the town’s overall efforts to revamp the former state hospital, an underground utility loop with upgrades for phone gas and electric lines, for example, would run throughout the campus, accessible to tenants. Each tenant is responsible for tapping into that system.

Mr Hurley specified, “The work [at Fairfield Hills] is paid out of grant funds; no expenses are incurred by [The Public Works Department].” His crews are doing the infrastructure and parking work. Water and sewer lines are “OK,” but would he leave them alone for the next 30 years? “No,” he said. “You’ll want to make improvements.”

Zoning: Regarding zoning regulations, Mr Grogins agrees that the tenant must stay within zoning parameters. “There is no question that the tenant is required to comply.” There are no requirements for a site plan review; the hospital is a permitted use, he said.

Parking: “Parking is required under our zoning regulations,” Mr Grogins said. “We’ll provide what’s necessary under zoning.” Regulations aside, part of the plans for renovating the campus include shared parking in proximity of buildings. Right now, the prospective tenant and Mr Grogins have not ironed out the number of spaces. The general campus work, which includes parking, is funded through grants, as Director of Planning and Community Development Liz Stocker would later explain.

The town, per the lease agreement, also takes responsibility for snow plowing, for example, and maintenance of the common area.

Mr Hurley also added to the conversation. Planning and Zoning had specified a number of spaces, which had “nothing to do with the tenant.”

Woodbury’s worth: “What are our options? We could leave it as is and it’s subject to deterioration,” Mr Geckle explained. “Or, we could mothball and remediate — which is expensive. That’s also an option.” Demolition, for as much as $700,000, is also an option. After looking at the options, the authority had recommended to the selectmen that they lease the property.

Because of current water damage and the costs of remediation, or if the town must demolish the building or even mothball it, the building is an expense if it is not leased. “It has negative net worth to the town,” he said.

He also argues that the building should be brought back to life. “It makes sense to put the building back into productive use; the building goes on the tax rolls, creates employment, enhances chances of other developers coming in,” he said.

Lease amount: Mr Geckle has seen the holding company’s plans for renovations and sees the estimated $3-plus-million in costs the company will incur. The lease price had dropped for this and other reasons, including, “The inability to create interest in the building, the rapid deteriorations inside, and rising costs [to mothball and preserve the building].”

Why a veterinary hospital?: Regarding objections to the veterinary hospital, for one, Selectman Paul Mangiafico countered some of the public’s arguments from earlier that evening. “Does the Board of Selectmen have the right to decide on the competition in an area? I don’t think that’s a valid argument,” he said. “I believe in private enterprise. If there is no need for it, they’ll fail.”

Why doesn’t the town renovate the site?: Mr Mangiafico said, “Suppose we renovate it. Then we lay out the capital money,” he said. Possibly then, with a refinished building they could lease it for a much higher market price, but there is a catch. “Then we have to hope and pray someone will come in. A building is only worth what someone is willing to pay.” He asked, “What if we renovate and can’t lease it. Then what gave we got?”

A good deal?: Mr Mangiafico also argued against residents who complained that the lease is too low. “A really good deal is not necessarily bad,” he said. “If we don’t do this, where would we be? It’s a great bargain, but that’s not a reason to stop the project. In a desire to not let someone get a good deal, do we hurt ourselves?”

He said, “Glen Mountain gets a good deal, but it does something for us; it brings in a tenant and gets the project moving otherwise [Fairfield Hills] is pristine land that is just going to sit there.”

Tax abatement: So far the tenant has not applied for a tax abatement, but any tenant can apply for tax reductions, said Mr Grogins.

Tax revenue: Mr Geckle said that beyond the lease amount, the town could see common charges of more than $40,000 a year and taxes of between $40,000 and $60,000 annually.

Economic impact: Ms Stocker said that reuse on the campus is “responsible growth.” She named a number of state and federal grant applications awarded for work at Fairfield Hills. “This project is seen as an investment,” she said, also noting the jobs it will create. “I think the town is on the right track for redevelopment.”

One last question: “Are we satisfied with [the tenant’s] financial capabilities?” Mr Mangiafico asked.

“He has shared his business plan, and I feel it’s sound,” Mr Geckle said. The tenant is currently awaiting mortgage approval and is prepared to sign the lease.