The towns of Preston and Norwich are still seeking a developer for the 470-acre, 80-building Norwich Hospital, which has been closed since the mid-1990s. The state has offered to sell the property to the two communities for $1.

If the towns of Preston and Norwich can find someone to develop the 470-acre Norwich Hospital site that straddles their border, the small southeastern Connecticut communities could see more jobs and tourism. But if the two can’t bring in a developer and take up the state on its offer to sell the property to the towns for $1, they would see more of a bust than a boom.

The site – most of which is in Preston – was once a state mental health facility that employed 4,000 workers and served as many patients. The state-owned, 80-building facility began closing in the late 1980s and completely closed in the mid-1990s, according to Preston First Selectman Robert Congdon.

“Since then, the state has been looking for a developer,” he said.

But it hasn’t had much luck yet. The Office of Policy and Management, which manages the development of the land, has been trying to develop it for years. The office most recently put out a request for proposals in March of this year, hoping to attract a developer that would be right for the area. Some developers showed interest, but in the end none of the proposals were thorough enough and didn’t meet the requirements set forth in the request, said Mike Cicchetti, undersecretary at the Office of Policy and Management.

“None came close to supplying what we had asked for,” he noted.

The state extensively reviewed three submissions, each of which proposed wildly different uses.

Although the request for proposals asked for information regarding taxes, the history of the developer, site plans and numerous other documents, two of the three proposals were little more than several-page letters.

One was from Evan Blum of New York City. Blum, the owner of antique and salvage stores in New York, wrote a one-page letter offering a “good-faith deposit” of $1 million. He wanted to restore the original buildings “without changing the historical character” and use them for commercial and residential use. His letter also indicated he would develop a marina facility on the property.

Another letter from William Cutler of Mystic suggested some sort of educational institution, but did not specify what that would be.

The third proposal was from Utopia Studios, a company that would build a theme park and movie studio on the land. The park would be similar to Universal Studios, Congdon said. The company submitted an 800-page proposal on CD-ROM that was more complete than the others, but still lacked some required parts, according to documents from the Office of Policy and Management. The office’s staff also had problems finding files on the CD.

In the end, the state did not approve any of the projects. All three potential developers received the same letter from the Office of Policy and Management.

“After a through [sic] review by OPM staff, we have concluded that your submission did not meet the minimum submission requirements as set forth under the RFP document,” the July 30 letter reads. “Therefore, we have no option but to reject your proposal.”

‘A Huge Issue’

After rejecting the three proposals, the state decided to try to get rid of the property. On July 28, OPM Secretary Marc S. Ryan announced that the state would offer the property to the towns for $1.

“The towns would be better suited [to decide] the uses for the property,” Cicchetti said.

If the towns don’t find a developer for the site, however, they would be better off rejecting the state’s proposal.

“It’s costing [the state] a lot of money,” Congdon said.

The state, as the owner of the land, makes payments in lieu of taxes that once constituted a large portion of Preston’s town coffers, Congdon said. But since most of the buildings have fallen into disrepair, the state has reduced its payments by about three-fourths, Congdon said.

Even so, the $169,000 that the state now pays to Preston is helpful. And, because the town has state land in its borders, Preston receives a portion of slot money from Connecticut’s two casinos. The payment in lieu of taxes and the slot money come out to about $600,000 a year, Congdon said.

The cleanup of the property also would be a major expense. The estimated cost is $40 million, Congdon said. Just to keep the property the way it is costs money, as well, he said. Pipes all across the complex are leaking and, although the water is turned off, the leaks cost the state more than $250,000 in water bills every year. The state also employs 24-hour security to keep people out of the decrepit buildings and mows at least part of the lawn, Congdon said.

The towns, in short, can’t let go of that income and undertake the expense of cleanup and maintenance themselves.

“We have to replace the revenue we might lose,” Condgon said.

So the towns, which expect to get the letters offering the land from the state soon, are trying to market the land. They have sent letters to 19 developers who have expressed interest in the land. The towns will have 45 days from the date they receive the offer to make a decision.

“It’s a huge issue in our town,” Congdon said.

Congdon is familiar with the proposals the state received, but ideally would like to see something different there.

“Ideally, if you could do it, it would be nice to have four or five Fortune 500 companies develop something that would invite high-paying jobs,” he said. “Something that would help diversify our economy.”

But if that couldn’t happen, he would like to see something like Norwich’s industrial park, which offers mixed uses like hotels, biotechnology or high-tech companies, and retail.

Congdon also is interested in the Utopia Studios plan.

“I think the Utopia proposal has some merit,” he said.

Fred Allyn III, a partner at Norwich-based Allyn and Assoc. – a commercial and residential brokerage firm serving Connecticut and Rhode Island – agreed.

“The Utopia project proposal is very interesting,” he said.

A project like that would help to spur other commercial development in the area, he said, but he noted that he isn’t sure about the project’s viability. It likely has more merit than the other projects the state has sifted through, he said.

Something should happen soon, Allyn added.

“The site is outstanding,” he said. “It baffles me how the state would drag their feet for so long.”

Allyn said he hopes the towns will have a better chance of finding a developer if they accept the $1 deal.

“Again, it comes back to what’s viable,” he said.

The Utopia project would mean more visitors – Allyn estimated 25 million visitors a year – and employees, which would be a boon for the commercial real estate industry. The towns would need more restaurants, banks and shopping centers, he said.

If the towns receive the letter in early September, as Congdon estimated, they would have until mid-October to decide whether to buy the land.