Borough settles on GDC purchase plan

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The General DataComm building in downtown Naugatuck. The borough is buying the roughly 11-acre property for $2 million and has settled on a lease-purchase agreement to finance the deal. –RA ARCHIVE
The General DataComm building in downtown Naugatuck. The borough is buying the roughly 11-acre property for $2 million and has settled on a lease-purchase agreement to finance the deal. –RA ARCHIVE

NAUGATUCK — The borough has finalized the way it will be paying for the General DataComm property.

The borough has decided to fund the purchase of the property, which has a $2 million purchase price, with a lease-purchase agreement.

Comptroller Wayne McAllister negotiated two different deals for the borough, one as a bond and one as a lease.

The terms of the bond are 10 years with a fluctuating interest that rises from 2 percent to 3.25 percent, and comes to a total of $2,299,153. The terms of the lease are 10 years with 3.25 percent fixed interest, which comes to a total of $2,311,367.

Mayor Robert Mezzo explained that if both the loans were taken to full maturity, the lease would cost the town approximately $12,000 more when compared to the bond. However, Mezzo said, the bond does not allow for early payment, which means the town would have to pay the full amount.

By going with the lease, the borough would be able to sell off parts of the downtown property as it finds developers and repay the loan early.

Since the borough does not plan to hold on to the property for 10 years, McAllister recommended the option of the loan, Mezzo explained.

Mezzo explained the borough has been working with the Chicago-based financial services firm William Blair & Co. on the deal’s finances and the loan is coming from Naugatuck Savings Bank.

“It’s good for community to have a local bank involved that affects the future of downtown Naugatuck,” Mezzo said.

The Board of Mayor and Burgesses approved buying the property during a special meeting in December. Burgess Mike Ciacciarella offered the only dissenting vote.

The property, located at 6 Rubber Ave., is two parcels that combined are approximately 11 acres in downtown Naugatuck. The property is believed by officials to be the key to Naugatuck’s downtown revival and buying the land has the support on the Naugatuck Economic Development Corporation.

The land was the cornerstone of the Renassiance Place project, but developer Alexius Conory could never get it off the ground.

According to the agreement, the company will remain in the four-story building at 6 Rubber Ave. as a tenant on the first floor and part of the second floor. The borough plans to seek more tenants for the building and to send out requests for proposals to develop the newly acquired land and the train station on Water Street, Mezzo said.

If General DataComm and the borough do not manage to draw up a lease agreement by the closing date, the company will pay an occupancy charge of about $31,000 over the following two months. General DataComm will also pay more than $2,500 a month in lieu of property taxes.

The company owes about $113,000 in taxes on machinery and other items in the building, which it is paying on a monthly plan, said Tax Collector James Goggin. General DataComm also owes about $111,000, including interest, in real estate taxes from the bill due Jan. 1, which Goggin said he expects will be paid at closing.

If a lease agreement is not reached two months after closing, General DataComm has three months to vacate the building and must pay nearly $16,000 per month during that time, according to the sales agreement.

Mezzo said representatives from General DataComm and the borough will work on a lease agreement once the sale is closed.

The original closing date had been set for last Friday but was rescheduled for Tuesday. The closing will have to wait a little longer.

Due to an outstanding issue with one of its creditors, officials with General DataComm were unable to meet Tuesday’s date, Mezzo said. Mezzo said he was giving them a little more time to get the situation straightened out before the contract is signed.

The Republican American contributed to this article.