A state-owned seaside hotel Connecticut cannot afford
On July 6 the Yankee Institute for Public Policy published an article about the former Seaside Regional Center hospital in Waterford, CT, which closed in 1996. The state legislature and then-Gov. Jodi Rell authorized the sale of the state property to raise money for the 2010 state budget. The property was to be sold to Allied Development Group for $8 million, and they would then turn the property into a seaside hotel and public park, employing about 300 people for construction and operation of the facility.
After Waterford denied Allied’s plans in 2014, Gov. Dannel Malloy stepped into the picture and cancelled the contract with Allied — before Allied could present an appeal in New London Superior Court. He has also directed DEEP to convert the former hospital into a hotel, spa and public park… at a cost of $21 million.
This is exactly what Allied had proposed to do with the property. It is also worth noting that DEEP’s own estimate of the cost to accomplish this work would be in the range of $45-60 million. Due to Gov. Malloy’s possible illegal actions, Allied has filed a $20 million lawsuit against the state for voiding the contract.
A review of the facts indicates the following:
- Allied Development Group had a valid contract with the State of CT to purchase and develop the former Seaside Regional Center hospital in Waterford. The purchase price was to be $8 million, paid to the state.
- Gov. Malloy unilaterally decided to cancel a valid state contract, possibly without the legal authority to do so.
- Gov. Malloy also directed DEEP to develop the same property into the same end use that Allied Development was trying to achieve, at a cost ranging from $21 – $60 million.
- Allowing the sale to Allied to be consummated, the state would have pocketed $8 million to help close the huge hole in the annual budget.
- Denying the sale and developing the property itself, the state stands to spend between $21 and $60 million – which it does not have on hand as excess funds.
- The net swing between state development vs. private development of the property amounts to between $29 and $68 million in extra costs to state taxpayers. And, if Allied wins their lawsuit, the state could be obligated to pay them up to $20 million for Gov. Malloy’s seemingly illegal actions.
- The final kick in the teeth would be the loss of $2-3 million in annual tax revenues to the town of Waterford if the state retains control of the property.
All of this is occurring in a fiscal climate where the state has already limited hours of use, reduced lifeguard coverage, and closed several state parks due to budget restrictions. And now Gov. Malloy wants to ADD a hotel/spa/public park at a multi-million dollar cost to the taxpayers when he cannot adequately fund the existing parks the state controls. Is he out of his mind?
Although I have seen no local TV or print media coverage of this issue, it appears to be a bad idea from the start for the state to take over this property. I strongly urge all voters to contact their state legislators and urge them to loudly reject this project and deny funding for it.
Although it may be something that would be “nice to have,” we cannot afford it as a state entity. We would be much better off letting the private sector develop this property.
Craig Hoffman is a retired industrial engineer and quality manager who lives in Cheshire.
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