A critical decision approaches on Seaside

Waterford - The zoning approval process that is scheduled to begin with Planning and Zoning Commission public hearing Wednesday plays a significant role in the state contract that grants Farmington-based developer Mark Steiner the right to purchase the property of the former Seaside Regional Center for the developmentally disabled.

While the 2010 contract between the state and Steiner does not have a "drop dead" date, as Pawcatcuk attorney Ted Ladwig puts it, the zoning change process can provide fodder for alterations to the agreement or create conditions under which it can be terminated. Ladwig, who has practiced real estate law since 1971, is not involved in the Seaside proposal.

Steiner has proposed changing the zoning regulations of the Seaside Preservation Zoning District off Shore Road to allow for construction of an inn with a maximum of 40 lodging rooms and privatizing the roads inside the prospective condominium and resort development.

Nonetheless, Steiner could hypothetically walk away from the contract based on not receiving a town approval that the developer deems necessary.

"In the event Purchaser is not able to obtain any one of the necessary approvals or permits, Purchaser shall have the right to terminate with no penalty this Agreement by written notice to Seller within five (5) days of the Purchaser receiving notice of a denial of any necessary approval or permit," the contract states.

Ladwig aid the section that defines the town approvals Steiner has the option to seek before purchasing the property is "very broad." He said he could not tell from reading the section whether the purchaser - Steiner - would be able to pursue the approvals process multiple times.

Steiner has been through the zoning approvals process before. The commission in 2011 granted Steiner several zoning changes. The contract states that closing should occur 60 days after Steiner receives the necessary approvals. The state and town apparently disagree on which level of government might play a role in determining whether Steiner has sufficient approvals.

Steward said Wednesday it is up to the state or Steiner to determine what approvals are needed. Steiner could not be reached for comment last week.

Department of Administrative Services Staff Counsel Jeffrey Beckham wrote in an e-mail last week, "I do not have the detail on what local filings and approvals are required for him to be able to proceed. That is a question for him and the town. Our staff are in touch with him and when those approvals are achieved, we will move to close on the sale."

DAS is administering the sale of Seaside to Steiner on behalf of the state. The contract allows the state to argue that Steiner is in default and send him a notice to that effect, which can lead to terminating the contract. Ladwig said that state could theoretically argue at a given point that Steiner has enough approvals to act on his plans for the property.

While Steiner has a right to seek town approvals as a contingency to buying the $8 million property, the state must meet certain requirements to transfer the property, according to the contract. These contingencies include "approvals, rulings, waivers or releases from the Office of Policy and Management, State Properties Review Board, the Legislative Committees of Cognizance and the Office of the Attorney General," according to the contract.

Beckham wrote in an e-mail Wednesday, "The Seller's (state's) contingencies have already been met; it is the Purchaser's (Steiner's) approvals that we are waiting for."

Theoretically, if the state tried to walk away from the agreement, Steiner could sue to enforce the agreement and sell him the property, as is typical in a real estate contract, according to Ladwig.

Ladwig said that a key safety net for the state, at least financially, lies in a provision that would allow the state to increase the cost of the property to stay in line with the Consumer Price Index should an appeal to the issuance of any permits or approvals delay sale.

"That provision was added to give the state an option should circumstances warrant. However, this is a surplus state property whose sale is subject to a multitude of state and local approvals. As a practical matter, any change in price might require new appraisals, contract amendments and additional approvals, resulting in further delays. The price was arrived at after two independent appraisals and was approved by all of the relevant state entities. While it is an option, we would need a compelling justification to warrant such a step," Beckham wrote in an e-mail Friday.

Appeals are one area where neighbors of Seaside can exercise influence on the timeline of the contract and whether it ever reaches the sale stage. Another way is bringing experts to the hearings to dispute the developer's experts. Woodsea Place resident Debby Green, who has submitted an alternative development proposal, said Thursday that she was not aware of neighbors planning to bring competing experts to the hearing.

The contract ultimately lacks language that would build in a firm time frame, according to Ladwig. The contract suggests June 30, 2011 as an end date and outlines the amount of time supposedly permitted between milestones, but Ladwig said that these sections aren't phrased with any sense of urgency.

"Under Connecticut law, if there's a date specified but it is not modified by 'time is of the essence' or other language that says, 'We really mean this,' a quote, reasonable time, unquote, will be implied," he said, explaining that "reasonable time" is up to the parties involved.

State Sen. Andrea Stillman, D-20th District, and State Rep. Betsy Ritter, D-Waterford, tried earlier this year to impose a hard deadline on the contract by passing an amendment on three different bills. DAS at that time informed the politicians that the amendment would not be legal.

For information, visit: http://www.ct.gov/deep/cwp/view.

t.townsend@theday.com

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