Norwich City Council approves tax abatement for $26 million Hale Mill renovation

Claire Bessette 

Norwich — A $26 million project to convert the historic former Hale Mill into a hotel received a boost from the city Monday night, with unanimous support from the City Council for a 15-year phase-in of property taxes.

Following a public hearing at the start of Monday's meeting, the council approved an ordinance to provide a 15-year phase-in for property taxes on the planned improvements to be done on the granite mill in the heart of the Yantic former mill village.

The proposal calls for the owner, Mill Development LLC, to pay full taxes on the property at 140 Yantic Road, currently assessed at $452,200, each year throughout the 15-year period.

The abatement would apply to the value of improvements on the property, with the owner paying 25% of the assessed value of the improvements for the first five years; 50% of the value for the second five years, and 75% during the final five years of the abatement period.

Later in the meeting, the council was scheduled to review a proposed second-year spending plan for the city’s American Rescue Plan funding, which included a proposed $400,000 grant for the hotel project “that will support the re-emerging tourism, travel and hospitality industry.” The council had not voted on the spending plan by The Day’s print deadline.

The project also plans to apply for federal historic rehabilitation tax credits, which would require the mill to remain income-producing for a minimum of five years, according to the tax abatement ordinance.

Gabi Benhamo, owner and developer for Mill Development LLC of Woodside, N.Y., who did not attend Monday's meeting, said in April the plan calls for an estimated $26 million renovation of the vacant mill into a 164-room boutique hotel with a restaurant, indoor pool, salon and 500-seat banquet hall. He said construction is ready to start as soon as the council approves the funding.

The only speaker at the hearing was Norwich businessman Robert Bell, also a state legislative candidate. Bell said the abatement helps a developer who already is investing “millions of dollars” in the city.

The Commission on the City Plan also favored the project, saying it met the city Plan of Conservation and Development to “capitalize on historic assets.”

“A mill that languished for decades is now being brought to life,” Council President Pro Tempore Joseph DeLucia said.

Mayor Peter Nystrom called it “really, really great news” that another of the city’s long-vacant mills will be revitalized, comparing it to the ongoing renovation of the giant Ponemah Mill complex in Taftvlle.

Earlier, Nystrom said that unlike some property tax abatement plans, which begin with completion of construction, the Hale Mill plan would start with the “issuance of the first building permit for new construction.” That would give the developer incentive to finish the project quicker to receive the higher value tax breaks, Nystrom said.

The tax abatement ordinance also has a mandated start date of Dec. 31 and a completion deadline of Dec. 31, 2025. Benhamo said construction is expected to take 18 months to two years.

Mill Development LLC purchased the property in June 2018 for $826,000, after a previous hotel conversion project fell into financial trouble after several years of fits and starts, leading to foreclosure. The new owner received approval from the Commission on the City Plan for the new project in December 2018.

The ordinance calls the Hale Mill “a focal structure of the Village of Yantic,” starting as the Williams Flannel Mills, and designated as a historic mill in the city’s 1992 study of historic mills.

“The Council of the City of Norwich seeks to encourage stability of the city, encourage tourism, and improve the quality of life for the residents of Norwich through the adaptive reuse, rehabilitation, and preservation of the historic and architecturally important resources that reflect Norwich’s rich history,” the proposed ordinance states.

Amazon’s distribution center expansion pullback inspires apprehension in towns eager for growth

Michael Puffer

Amazon’s plan to curb its aggressive logistics network expansion following a $3.8 billion first-quarter net loss has sent tremors of unease through some Connecticut communities where the e-commerce giant was eyeing new distribution facilities — a potential source of significant new jobs and tax revenues.

In Plainfield, Town Planner Mary Ann Chinatti read with apprehension news spilling out of Amazon’s April 28 earnings report. A roughly 200,000-square-foot “last-mile” fulfillment center under construction in her town just off Interstate 395 is expected to bring 400 to 600 jobs.

That center was originally planned for a May opening, but supply chain difficulties have held up progress.

However, Chinatti said her concerns were soothed in an early May meeting with Amazon representatives who assured the project is moving forward, with completion now anticipated in December. They asked for the town’s help setting up a job fair, she said.

“I have been reading they were overambitious, but that’s not the case here, which is good,” Chinatti said. “It’s going to be a wonderful addition to the town and area. It’s going to bring a lot of jobs. It’s going to put a lot of people to work, and that’s the goal.”

The Plainfield project is being led by Exeter Property Group, a Pennsylvania-based real estate investment and development firm.

Amazon and Exeter did not respond to requests for comment.

In Waterbury, officials said they have received assurances from a development group proposing a massive Amazon regional distribution center in the city, but that a smaller last-mile fulfillment center is “on hold.”

“From our perspective, the Waterbury-Naugatuck Industrial Park project is full steam ahead,” Thomas Hyde, CEO of the Naugatuck Valley Regional Development Corp., said of the larger of the two projects, planned for a roughly 157-acre property with portions in Waterbury and Naugatuck.

Bluewater Property Group — another Pennsylvania developer — signed a $2.5 million purchase-and-sale agreement for the land in mid-May, Hyde said. The company has put down a $100,000 deposit and is moving forward with expensive site plan studies ahead of design, Hyde said.

Bluewater did not respond to a request for comment.

However, developers have “hit the pause button” on a planned $25 million East Main Street last-mile Amazon facility in Waterbury that had won land-use approvals, Mayor Neil O’Leary said. The proposal could still move forward, O’Leary said, but he was not able to disclose further details.

Phil DiGennaro, the Trumbull-based developer behind that last-mile proposal, did not respond to a message seeking comment.

Rough quarter

In an April 28 earnings call with investors, Amazon Chief Financial Officer Brian Olsavsky blamed several factors for the company’s multibillion-dollar loss. Higher gas prices and the war in Ukraine were factors outside the company’s control, but he also blamed overdevelopment of labor and facilities.

The omicron variant in late 2021 substantially increased worker absences, Olsavky said, prompting new hires to cover that lost productivity.

“As the variant subsided in the second half of the quarter and employees returned from leave, we quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity,” Olsavsky said during the earnings call. That alone translated to about $2 billion in losses, compared to the prior year, he said.

Olsavsky predicts labor will stabilize, as will the ability to build new distribution capacity. He predicted it will take several quarters for Amazon to grow into its excess capacity.

“So, we’ve brought down our build expectations,” Olsavsky said. “Note again that many of the build decisions were made 18 to 24 months ago, so there are limitations on what we can adjust midyear. That said, we expect fulfillment dollars spent on capital projects to be lower in 2022 versus the prior year. We also expect transportation dollars spent on capital projects to be flat to slightly down.”

In South Windsor, a sleek driveway marker bearing Amazon’s name at a new warehouse built by Scannell Properties was recently covered up with a plain canvas banner bearing the words “COMING SOON.” Giant letters spelling out “amazon” and the company’s blue arrow logo have been removed from the top of the building. That set a lot of tongues wagging in the development community and beyond.

South Windsor Town Manager Michael Maniscalco said he heard rumors and reached out to Scannell, who reassured him that Amazon is still “lined up to move there.” Maniscalco said the sign was erected prematurely and that Scannell is putting the finishing touches on the interior of the planned last-mile facility.

Asked for an update on the deal, a Scannell spokesperson said the developer is not authorized to comment for Amazon.

Mark J. Duclos, president of Hartford-based Sentry Commercial, retains a bit of skepticism about the likelihood of Amazon ultimately inhabiting the South Windsor building, especially given recent news reports the company is considering shedding some of its commitments.

Bloomberg, citing unnamed sources, has reported Amazon is seeking to sublet at least 10 million square feet of warehouse space.

“There was an Amazon sign on that building,” Duclos said of the Scannell property at 240 Ellington Road in South WIndsor. “I can tell you that sign is no longer on that building. It’s all rumor but I cannot imagine that is not one of those facilities they are going to be looking at.”

Duclos said the logistics market remains strong overall, at least for the moment. There is a sense that changes might be afoot, with Amazon announcing plans to slow its growth and online pet products retailer Chewy recently pulling out of plans to inhabit a 750,000-square-foot logistics center in Windsor.

On the other hand, Missouri-based NorthPoint Development is still moving forward with construction of the planned Windsor building, purely on speculation, Duclos noted. NorthPoint is a very sophisticated company demonstrating a lot of confidence in the market, Duclos said.

“Substantially, if you talk to developers out there and people building big boxes, they are not seeing a slowdown,” Duclos said.

Adam Winstanley — principal of Winstanley Enterprises, a major builder of distribution centers in Connecticut — doesn’t expect Amazon to withdraw from any of the projects it has announced in the state. The online retailer is simply likely to reduce the pace of its future expansion, he said.

“They are not as active as they were, but they are still the largest leaser of industrial space in the U.S.,” Winstanley said. “I don’t think that’s going to change anytime soon. I just don’t think they will be growing at the same clip.”

Winstanley said he has three leases with Amazon in Connecticut, one more in Albany, New York, and is working to close a fifth outside of Connecticut.

“I still see them making targeted investments in areas that are important to them,” Winstanley said.

WILL WEISSERT

WASHINGTON (AP) — President Joe Biden ordered emergency measures Monday to boost crucial supplies to U.S. solar manufacturers and declared a two-year tariff exemption on solar panels from Southeast Asia as he attempted to jumpstart progress toward his climate change-fighting goals.

His invoking of the Defense Production Act and his other executive actions come amid complaints by industry groups that the solar sector is being slowed by supply chain problems due to a Commerce Department inquiry into possible trade violations involving Chinese products. Word of the White House's actions caused solar energy companies to gain ground on Wall Street.

The Commerce Department announced in March that it was scrutinizing imports of solar panels from Thailand, Vietnam, Malaysia and Cambodia, concerned that products from those countries are skirting U.S. anti-dumping rules that limit imports from China.

Asked at the White House if Biden's pause in tariffs was not a gift to China, press secretary Karine Jean-Pierre said he was invoking the Defense Production Act, “to make sure that he’s delivering for the American people.”

“He is putting the full force of the federal government behind supporting American clean energy producers,” Jean-Pierre said.

White House officials said Biden's actions aim to increase domestic production of solar panel parts, building installation materials, high-efficiency heat pumps and other components including cells used for clean-energy generated fuels. They called the tariff suspension affecting imports from Thailand, Vietnam, Malaysia and Cambodia a bridge measure while other efforts increase domestic solar power production — even as the administration remains supportive of U.S. trade laws and the Commerce Department investigation.

Commerce Department Secretary Gina Raimondo told a Senate panel in May that the solar inquiry is following a process set by law that doesn’t allow consideration of climate change, supply chains or other factors. She said Monday that she remains “committed to upholding our trade laws and ensuring American workers have a chance to compete on a level playing field.”

“The president’s emergency declaration ensures America’s families have access to reliable and clean electricity while also ensuring we have the ability to hold our trading partners accountable to their commitments,” Raimondo said in a statement.

Clean energy leaders have long warned that the investigation — which could result in retroactive tariffs of up to 240% — would severely hinder the U.S. solar industry, leading to thousands of layoffs and imperiling up to 80% of planned solar projects around the country.

The department counters that rates exceeding 200% for solar products would not apply to the vast majority of imports. They instead typically apply to uncooperative companies that cannot differentiate themselves from China's government or Communist Party. 

Still, any possible punishment might have jeopardized one of Biden’s top clean energy goals and run counter to his administration’s push for renewable energy such as wind and solar power, advocates argue.

“The president’s announcement will rejuvenate the construction and domestic manufacturing of solar power by restoring predictability and business certainty that the Department of Commerce’s flawed inquiry has disrupted,” Heather Zichal, CEO of the American Clean Power Association and a former Obama administration official, said in a statement Monday.

Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, cheered Biden’s “thoughtful approach to addressing the current crisis of the paralyzed solar supply chain.”

“Today’s actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home,” Ross Hopper said in a statement.

But not everyone in the industry was supportive.

First Solar Inc., a major solar panel manufacturer, said that freezing tariffs would grant “unfettered access to China’s state-subsidized solar companies for the next two years” and that using the Defense Production Act is “an ineffective use of taxpayer dollars and falls well short of a durable solar industrial policy.”

“The administration cannot stick a Band-Aid on the issue and hope that it goes away,” Samantha Sloan, the company’s vice president of policy, said in a statement.

The use of executive action comes as the Biden administration's clean energy tax cuts, and other major proposals meant to encourage domestic green energy production, have stalled in Congress.

The Defense Production Act lets the federal government direct manufacturing production for national defense and has become a tool used more commonly by presidents in recent years. The Trump administration used it to produce medical equipment and supplies during the early stages of the coronavirus pandemic.

Biden invoked its authority in April to boost production of lithium and other minerals used to power electric vehicles. Last month, he used it again to prioritize boosting the nation's supplies of baby formula amid a domestic shortage caused by the safety-related closure of the country’s largest formula factory.

Jean Su, director of the Center for Biological Diversity’s energy justice program, said in a statement that Biden's announcement can “give critical momentum to the needed transition to solar energy.”

“We hope this use of the Defense Production Act is a turning point for the president, who must use all his executive powers to confront the climate emergency head on," Su said.