Borough to Pursue Acquisition of General DataComm Property

Posted by Bob on October 22, 2012 under Daily Blogs | 3 Comments to Read

For the past several months, the Borough and the Naugatuck Economic Development Corporation (“NEDC”) have been entertaining discussions with the owners of General DataComm, Inc. (“GDC”), with regard to the purchase of 6 Rubber Avenue, Naugatuck, CT 06770, known in the community as Parcels A and B (hereinafter referred to collectively as the “GDC Property).  GDC has operated a communications technology business on that site since the departure of Uniroyal Rubber in the 1980’s.

In recent years, GDC has struggled to absorb the costs of the building located on the portion of the GDC Property referred to as Parcel A.  As staff has declined and product lines specialized, GDC has needed less space in the building which is in excess of four hundred thousand (400,000 ft 2) square feet.  As owners of the building and land, however, GDC still must pay for the costs associated with the remaining space which include but are not limited to; taxes, insurance, utilities and maintenance.

After the approval of the Renaissance Place Development Agreement (hereinafter “Development Agreement”), efforts were made by Conroy Development Company to purchase the GDC Property from GDC.  While various offers were made by and between the parties, a deal was never consummated to effectuate the transaction.  Last month, all parties to the Development Agreement agreed to release each other from their obligations as defined in the development agreement, effectively ending the relationship that was created for Renaissance Place.

During the Fall of 2011, the Borough was approached by principals of Atlas Partners, LLC, a third-party creditor of GDC.  Funding from Atlas Partners, LLC, was provided to GDC in exchange for a secured interest in the GDC Property.  While conversations initially focused upon the possibility of Conroy Development Corporation purchasing the GDC Property, they ultimately shifted to the Borough as a Buyer when a deal could not be reached.

The GDC Property comprises over ten (10) acres of the very heart and soul of Downtown Naugatuck.  While significant activity was proposed for the GDC Property as part of the Renaissance Place Project, no party to the Development Agreement ever exercised site control over the parcels.  Through the Renaissance Place process and true to this day, the only properties owned by the Borough in Downtown Naugatuck excluding the Town Hall are Parcel C, the Naugatuck Train Station (195 Water Street, Naugatuck, CT 06770) and the municipal parking lot between Church Street and Old Firehouse Road.  Together these parcels comprise approximately five (5) acres in total.  The combined total of the GDC Property exceeds ten (10) acres.  By purchasing the GDC property, the Borough drastically increases its control over our destiny in Downtown Naugatuck.

Now that the Development Agreement is no longer in effect, the Borough must seek additional development proposals for downtown redevelopment.  The possibilities for numerous and diverse proposals are dramatically increased if the Borough exercises control over fifteen-plus (15+) acres rather than five (5).  One alternative to the Borough purchasing the properties is to allow the market to determine how a private party would redevelop the property with little Borough control other than zoning regulations.  This scenario could yield negative consequences that would define Naugatuck for well into the future.  The more likely alternative, given the complexities associated with the property, is that it will remain in a vacant and under-utilized state for many years to come.

The GDC Property was the former site of Uniroyal Rubber Company.  While the “Rubber Shop” employed generations of Naugatuck residents including my grandparents, its departure left the effects of over a hundred years of industrial manufacturing on its former site.  While Parcel C was recently remediated, the GDC Property remains in the same environmental condition as when the factory buildings were demolished in the 1980’s.  Many of the foundations were simply buried underground, and encapsulated consistent with the practice of the time.  While there are few volatile substances on the site and none exposed to the public currently, the properties are littered with urban fill and other remnants of the past.  These contaminants would need to be addressed during any redevelopment of the parcels.  Through a federal Environmental Protection Agency (“EPA”) grant and corresponding permission from GDC, the Borough has very detailed, environmental data about the GDC Property.

It is unlikely the economics of redeveloping the site would work for any private developer, without financial assistance to remediate the property from the public sector.  In essence, the property will likely never redevelop to any productive use without the Borough’s involvement.

The Connecticut Transfer Act (hereinafter referred to as “Transfer Act”) requires a party (seller or buyer) to a transaction involving potentially contaminated land to assume responsibility for remediation and to investigate and remediate the property.  The Transfer Act provides an impediment to redevelopment of contaminated properties, commonly referred to as Brownfields.  There are, however, certain exemptions to the Transfer Act.  One such exemption allowed under current law is triggered when a municipality purchases a brownfield property pursuant to a resolution by the legislative body of a municipality authorizing the acquisition through eminent domain.

Eminent domain is a power granted to government which allows the taking of private land for public purposes.  The Board of Mayor and Burgesses (“BMB”) will be asked in the coming days to pass a resolution authorizing the taking of the GDC Property through eminent domain.  The NEDC voted unanimously to approve this concept at its meeting Monday (10/22/2012) night.  While the Borough has no intention of actually taking the property through the eminent domain process, the resolution approving the action will suffice to exempt the Borough from the Transfer Act if it is able to finalize an agreement with GDC for the purchase of the parcels.  GDC officials have been notified of the Borough’s intentions, and remain committed to the possibility of reaching an agreement for sale and remaining as a tenant in the building.

NEDC attorney Gary O’Connor has advised the NEDC and the BMB through this process in coordination with Borough Attorney Ned Fitzpatrick.  Members of the BMB have discussed this matter during the executive session portion of several meetings over the past year.  We commend each and every Burgess for respecting the confidentiality of this process.  Attorney O’Connor, who is one of the foremost experts in Connecticut brownfields law, has consulted with state officials regarding this process.  Discussions with representatives from the Valley Council of Government, which acts as the fiduciary for the regional brownfields program, have been ongoing regarding the potential for receiving financial assistance for future remediation.

In the coming weeks, the Borough and NEDC will attempt to finalize a sales agreement with GDC for the purchase of the GDC Property.  Throughout this process, there has been close coordination with Borough Comptroller Wayne McAllister regarding the steps necessary to obtain financing for the transaction.  The Joint Boards of Finance and Mayor and Burgesses (“Joint Boards”) were advised of this process during executive session months ago.  Once a purchase agreement has been reached with GDC, we will be able to share the details of the finance mechanism.

For the better part of a generation, the Borough has been pursuing a comprehensive redevelopment of Downtown Naugatuck.  The goal has been a vibrant, connected urban core based on smart growth, transit-oriented principles that take advantage of assets such as Route 8, the Metro-North rail line and the Naugatuck River.  While Renaissance Place offered such a vision, one of the major obstacles to its commencement was the lack of site control over downtown properties.  Attempting to plan redevelopment on lands that are not owned is extremely difficult and reduces interest from potential investors.

Acquisition of the GDC property will dramatically leverage the Borough’s ability to attract viable, private sector partners to meet our objectives.  The ultimate goal after acquiring the GDC Property would be to find a private sector partner, work with state and federal partners to remediate the parcels in accordance with a specific site plan, and sell all or portions of the property for redevelopment.  While there is disappointment that Renaissance Place did not come to fruition, the Borough’s acquisition of the GDC property is a game-changer for the future of Naugatuck’s urban core.

Further details of any proposed transaction will be made available to the public prior to any formal action, which would require authorization from the BMB.  A question and answer section addressing likely inquires which will be asked will follow in a separate post.  Please feel free to submit any questions in the comment section or by email ( bob@bobmezzo.com or bmezzo@naugatuck-ct.gov ).

  • Hunter said,

    How would this be different than the current status of Parcel C? If the town should take on Parcels A & B, would they remain a dormant site hoping for the right partner for years to come. Do we lose the tax base by taking on A/B from the GDC?

  • Bob said,

    Hi Hunter:

    Good questions. Parcel C has been remediated and is ready for development. Without the acquisition of the GDC Property, we would seek market interest for a stand-alone project for Parcel C and/or the Train Station property. The acquisition of the GDC Property would triple the size of the area under which the Borough would exercise site control. I can not emphasize enough the importance of site control when seeking responsible development.

    Clearly we would need to address remediation, but that needs to be done in conjunction with a site plan for reuse. That is one of the mistakes from which we have learned as a result of the Parcel C remediation. Because of changes in brownfield redevelopment law and procedure, cleaning based on a specific reuse is advised. It allows more flexibility with regard to encapsulating soils rather than the more costly process of removing and re-filling.

    You are correct that we will need to find private sector partners. Because of the previous obligations of the development agreement, we were only able to work with the preferred developer. Now that a release has been executed, we will renew the process and are not able to seek interest from other parties.

    The likely reality is that without the Borough taking the lead on this, the site would remain dormant for many years. Any perspective purchaser of the GDC Property would need assistance from the Borough to redevelop. If we are able to acquire the property, it is more attractive to a developer to propose a reuse in partnership with the Borough and the Naugatuck Economic Development Corporation.

    Yes, we would lose the real estate taxes paid by GDC, but the pending implementation of revaluation would reduce this amount anyway. If we are successful in retaining GDC as a tenant in the short-term, the company will still have to pay personal property taxes on machinery and equipment.

  • Borough eyes General DataComm property | Citizen's News said,

    [...] “The GDC property comprises over 10 acres of the very heart and soul of downtown Naugatuck,” Naugatuck Mayor Robert Mezzo wrote in blog post detailing the plan. [...]

Add A Comment

Switch to our mobile site