South Windsor Mayor Asks Attorney About Legalities of Rink/Recreation Proposal

The proposed $10.5 million recreation/ice rinks project to be located at The Promenade Shops at Evergreen Walk certainly has its share of proponents, not least of which are the members of the South Windsor youth hockey and swimming communities.

The two groups packed the Town Council meeting chambers Oct. 15 in vocal support of the project, which has an aggressive construction schedule that would make the indoor ice rink available in time for the start of the youth hockey’s season in September 2013.

But while terms such as “no-brainer” and “win-win” have been attached to the project by supporters, there has been some concern raised by elected officials over whether the project is even permissible under the town charter.

Mayor Tom Delnicki, looking to clear up the issue, sent four questions to Town Attorney Dwight Johnson regarding how the project would be financed.

Normally, a project of that size would be put to voters via a referendum, like the $12 million package of questions coming up at the November election.

The rinks/recreation center would be financed through the creation of a 63-20 corporation, a not-for-profit entity that is used as a vehicle to finance the construction of public buildings, including hospitals, courthouses and schools. Such entities are traditionally used to avoid statutory debt limitations and other restrictions, as well as take advantage of private-public partnerships.

The 63-20 corporation is able to take out tax exempt bonds to fund the project, while leasing the complex to the town annually at a set rate that is below the threshold needed to go out to a referendum. The lease would appear as a line item - estimated to be about $600,000 in this case - on the town’s budget for up to 30 years.

Without weighing in on the merits of the project, Delnicki wrote in an email to Johnson that he is concerned about the use of the 63-20 proposal. His questions are the following:

• Does the Town Charter authorize the formation of 63-20 Corporations and the Long term commitment by lease of millions of taxpayer dollars over decades for a project of this magnitude without a referendum?
• If the answer of question # 1 is yes ... can any five town council members place a resolution on the agenda to form a 63-20 Corporation, partner with a group and commit the Town to the expenditure of millions of dollars over decades by a simple majority vote, without a referendum? If the answer is no … Can any six town council members pass an ordinance to form a 63-20 Corporation, partner with a group and commit the town to the expenditure of millions of dollars over decades without a referendum?
• If the answer to question # 1 is yes, can any five town council members by resolution or six town council members by ordinance approve a partnership with and give favor / economic benefit to an individual or corporation in a 63-20 “partnership” without competitive bidding?
• If the answer of question # 1 is yes, what would it cost the town/taxpayers to defend a legal challenge to the formation of a 63-20 and consummation of a project of this type?

Delnicki stressed that he was not weighing in on the merits of the project itself, but was instead interested in protecting the town to ensure the process was even within the law.

“I wouldn’t be asking these questions if it weren’t for the fact that there’s an extremely aggressive timeline this group wants on this project,” Delnicki said in a telephone interview. “I’ve heard that they want the council to act on this in a matter of weeks. We need to find out these answers first…"

“There are people who are up in arms over if we pass this, it might be done without a referendum.”

Not Everyone in Favor

Several residents have expressed their opposition to the rink, not least of which is Richard Grigorian, the owner of the South Windsor Arena.

“I would hate to be in competition with the town of South Windsor,” Grigorian said at the Town Council's meeting Oct. 15.

Other residents who are not in the hockey business agreed.

"This is another case of a private organization trying to get the town to pay for their sports facilities," Jack Phillips wrote to the Town Council in a letter obtained by Patch. "The town cannot afford this. If it is as great a proposal as they present it, why do they need the town, through the proposed public-private organization, to issue the bonds and pay for it? Thirty years of $600,000 "rent" for the new community center is really a backhanded method to assure that the town pays off the bonds. If the rink fails to make its projected income, the town will still have the long term commitment for the use of the community center and will end up paying off the bonds. The $600,000 does not include the cost of running the new facility."