Is the state's deal to sell Seaside as big a house of cards as the Malloy budget?
To the neighbors of the historic Seaside Regional Center in Waterford who worry about the developer proposing to buy and build condominiums on the landmark waterfront property, I'd say: relax.
The developer, Mark Steiner, is allegedly behind on payments on the mortgage on his palatial 8,000-square-foot home in Avon and is currently fighting a foreclosure on that property in which the bank is seeking to collect more than $600,000 in principal and interest it says it is owed on a mortgage loan and equity line of credit.
There is also an article in the May issue of the Connecticut Law Reporter describing a years-long court fight in which creditors tried to recover some $50,000 that Steiner originally borrowed in 1982 from the now defunct Connecticut Bank & Trust Co.
In addition, there was a 2010 lawsuit between the Connecticut commissioner of revenue and Steiner, apparently related to taxes. The details are a bit murky, because state officials won't talk about tax matters because of privacy rules, but court records indicate it's been resolved.
The piece in the Law Reporter also describes in passing that Steiner owed some banks "$12 to $15 million on a failed business venture" in 1992.
Just what appears on the public record would suggest Steiner might have a challenge ahead putting together the financing for a development the size of the Seaside project.
After all, one bank is trying at this moment to foreclose on his house.
Steiner, when I reached him this week to talk about his financial wherewithal to buy Seaside, admitted he has only lined up about $1 million in lending for the Seaside project.
That means he doesn't have the $8 million he has agreed to pay the state for the property at closing or any promises from banks to lend it to him. He added he's not worried about it.
He will also need to raise as much as $1 million for an environmental cleanup as well as the many millions needed to actually design and build the condominiums.
As for Steiner's pending request to have the town zoning changed to eliminate age restrictions on the new condos and to make it easier to alter or demolish the existing historic buildings, apparently the changes are intended to make the property more valuable.
Steiner says he doesn't believe he will be able to obtain financing to buy the property unless he successfully completes contingencies of the contract, like changing the zoning.
Another worrisome element of the pending deal is that Steiner has not yet paid the $250,000 deposit that, according to the purchase and sale agreement, was due five days from the time the attorney general approved the deal, which was in May.
Steiner told me he has not paid the deposit because the state has requested changes in the escrow agreement for the deposit money. State officials confirmed this is true.
OK, so to recap, the developer admits he doesn't have the money to buy the property or agreements to finance the purchase. Also, there's no deposit money on the table or at risk if the deal falls through.
At the same time, the town is being asked to rezone property, even though the changes do not appeal to many of the neighbors, so that it might become more valuable.
Honestly, if I were trying to sell my house and a Realtor brought a deal like this to me, I would fire that broker.
When I called the state Department of Public Works, which agreed to sell the property to Steiner, to ask about these issues I was told to submit the questions in writing, that no one would talk about it.
Jeffrey R. Beckham, director of legislation and communications for the department, finally got back to me, in writing, on Thursday, almost a week after I first called to ask about the Seaside deal.
He said, in effect, not to worry.
If Steiner doesn't come up with the $8 million at closing (which, by the way, was originally scheduled in the agreement to happen before June 30) the state won't sell it to him.
"Failure to close on the purchase due to lack of funds would constitute a default of the buyer's obligations under the agreement and the state would be entitled to retain the deposit," Beckham wrote. Of course, he neglected to add there is no deposit.
"The state," he went on to write, "would then offer the property to another buyer."
For the record, Steiner wouldn't say much about the pending foreclosure of his home but indicated he expects the matter will be resolved soon.
He said he didn't know anything about a lawsuit regarding state taxes and was not represented by a lawyer in such a matter. However, when I mentioned the name of the attorney listed as representing him in the 2010 lawsuit against the revenue commissioner, he did say that lawyer has worked for him.
He said he doesn't recall any dispute, but said he did file an amended tax return one year and that his wife handled the matter.
"We never had a dispute with the state over taxes," he said. "We paid what was owed."
The closed lawsuit lists no details of the case, but a clerk in Hartford Superior Court said the litigation was triggered when the Steiners filed paperwork seeking an exemption to a collection maneuver by the state.
I started out here by saying the neighbors shouldn't worry too much about the prospects of this project going forward.
And yet they are wise not to let down their guard.
Maybe they ought to aim some of their ire, too, at the state, which seems to have let the situation drift into a mess.
This is the opinion of David Collins.
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