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Seaside could be focus of legal fight

Hartford - The state's planned sale of the former Seaside Regional Center in Waterford could soon wind up in court as the developer previously selected to buy the former hospital fights an effort to put it back on the market.

Mark S. Steiner argues that his contract to purchase Seaside for $7.1 million and redevelop its historic buildings into condominiums is still valid, despite a 2007 vote by a legislative committee to reject the sale - and a brief period during which Gov. M. Jodi Rell insisted the state should hold on to the abandoned hospital property for reuse by the state.

While the Government Administration & Elections Committee voted down the sale in 2007, Steiner's contract with the state requires Connecticut officials to make their "best reasonable efforts" to secure a sale of the site to Steiner, including to overcome procedural denials like the committee vote.

Despite those clauses, Steiner and his attorney said, state officials never resubmitted the sale proposal to the legislative committee or attempted to clarify what they say were the committee's misunderstandings about the environmental approvals for the project.

Shortly afterward, an investigation by The Day found Rell's top aide, chief of staff M. Lisa Moody, recommended the state cancel more than 10 years of effort to sell off the property and instead preserve it as open space - a project Moody said would be a "legacy item" for Rell.

Now that the state and Rell have once again embraced the sale of the property, Steiner said, the purchasing agreement remains valid and the administration must offer it to him before letting others bid.

"We feel it's really clear that our contract requires that they resubmit to the GAE," Steiner said in an interview on Wednesday. "We don't think there's any ambiguity about that at all."

But state officials, who have refused Steiner's requests to meet about the dispute, reject that argument, though they refused to detail their objections to The Day this week.

In an e-mail in early November, Steiner wrote to Public Works Commissioner Raeanne Curtis about news reports that Rell was considering selling Seaside, asserting that he and his company "currently have a valid contract for the purchase of Seaside."

Steiner also said he would be "willing to consider adjusting our purchase price offer" based on new appraisals the state has commissioned for the property. Those appraisals are due to the agency sometime this month.

"As you know, I've been very patient, spending more than 10 years and substantial sums of money as the state started, and then suspended, the Seaside sale process," Steiner wrote.

After Curtis responded with a brief note saying the state intended to put the sale of Seaside out to bid in accordance with state statutes, Steiner's attorney wrote to the state in early December, warning that any attempt to sell to a developer other than Steiner could trigger a lawsuit for breach of contract.

"I don't want to commit him to litigation," Joseph A. Vitale said in an interview on Wednesday, "but he certainly has to consider it, and is considering it."

Such litigation would almost certainly mean that proceeds from the sale of the property will not help the state close its deficit in the current budget year, which ends June 30, or craft a budget for fiscal year 2011. The state budget requires Rell to raise $15 million from the sale of state assets before June 30 and another $45 million over the next year.

Rell administration officials and the governor herself referred detailed questions about the Seaside sale to the Department of Public Works, which handles land transfers.

But while Patrick Nolan, the department's chief spokesman, said he would seek answers about the department's positions from its legal department on Tuesday, he failed to provide a statement or to respond to e-mail and voice-mail messages on Wednesday afternoon.

Meanwhile, Rell herself said Wednesday that the administration planned to move forward with new appraisals on the property and to seek new bids, according to the guidance of the state's attorneys.

"Our lawyers have all said that we have to go through the process again, that we have to have an appraisal, that it has to go out to bid," Rell said as she walked to her car outside the Capitol Tuesday afternoon. State officials would follow "the letter of the law" in pursuing new prospective buyers, she said.

Asked if pushing forward with such a sale would trigger legal action and ultimately undermine the effort to sell the property quickly in order to balance the budget, the governor widened her eyes in exasperation, and said, sighing, "I hope not."

In her own e-mailed response to Steiner in November, Curtis was blunt, saying the "earlier contemplated transaction" between the state and Steiner's firm, Seaside in Waterford LLC, was "terminated" after the vote of opposition from the legislature's Government Administration and Elections Committee.

Steiner's proposed development, endorsed by local legislators and town officials over opposition from a small group of neighborhood residents, would have preserved the main buildings of the Seaside campus, which was designed primarily by the legendary architect Cass Gilbert, and converted them to residential buildings.

The plan would have preserved public access to the waterfront and adjoining grassland of the 36-acre property, which overlooks Long Island Sound, providing visitor parking for about 40 cars. And it would have added "well over $1 million" to the town's tax rolls, Steiner said in an interview.

The plan retains substantial support among local officials, including Waterford First Selectman Daniel Steward, who remains supportive of Steiner's project and eager for the state to make a decision.

"It would would be a good use of the property, and the buildings would be taken care of and restored to their original beauty," Steward said, adding that a lengthy court fight could lead to another interval of decay.

"The buildings would get much more damage over the interim," he said, "to the point where the buildings would not even be repairable. And that's not what we want to see."

t.mann@theday.com

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