The last project by Smiler's Wharf developer ended in foreclosure
The last project in Stonington by John Holsten, a principal in the enormous Smiler's Wharf project being proposed for downtown Mystic, ended in foreclosure, with lenders taking ownership of the site, the former Mystic Color Lab property off Masons Island Road, which remains undeveloped today.
When I went to learn more about the failed $30 million development, Mystic Harbor, at the clerk's office in Superior Court, my request for the lawsuit file produced an enormous cardboard box, too big for the clerk to maneuver across the counter — a long paper record of three years of litigation in which creditors tried to claw back some of the money they lost.
According to the plaintiffs, investors who bought the initial loan for $2.9 million from People's Bank, both the principal and $80,714 in interest were due and not paid by the developers, who ignored demands for payment.
The lawsuit originally was filed in September 2006, before the start of the Great Recession. A final foreclosure settlement was reached at the end of 2009. Among the creditors included in the suit was the acclaimed international architectural firm Beyer Blinder Belle Architects and Planners, which had a lien on the property for $398,213 in what it said were unpaid fees.
Another large creditor was Fuss & O'Neill Design Build Services, which had an attachment of $525,000 on the property.
Mystic Harbor was supposed to be 55 condominiums, some priced in the millions of dollars, on the 5-acre site next to what is the Mystic YMCA today.
The plaintiffs, Edgewood MAC LLC, said in the lawsuit that the developers, after completing environmental remediation and demolition of the old brick mill building, ran out of money from the original loan. A bridge loan offered by People's, to get the project to a new principal loan of $28 million, was never completed because Holstein refused to personally guarantee the full amount, according to the lawsuit.
That lack of continuing funding brought the project to a halt, the plaintiffs say in the lawsuit.
Now, he’s asking for state help for his latest project in a $10 million bond. The first phase the developers propose would include the site work funded by the state and then construction of a new restaurant twice the size of the existing 100-seat Red 36 on the property.
Without the change of zoning being sought, that new restaurant would not be allowed.
Will one of Stonington's only large remaining shipyards be lost to a project that is never finished?
Do residents really want to change the zoning to discontinue a marine use that has existed there for 150 years, starting with the building of seafaring sailing ships, for a project aimed at selling pork sliders and liquor to tourists?
Are there engineering studies to support the claim that a new bulkhead, part of site work for the hotel, restaurant and seven-story apartment tower, would help and not harm the nearby neighborhood with flood resilience?
Is there evidence the new hardening of the riverfront wouldn't push rising floodwater away from the absorbent wetlands at the rim of the Seaport Marine property and drive it instead farther downtown?
These are questions residents should demand answers to Tuesday, at the public hearing on this landmark zone change request, scheduled for 7 p.m. at Mystic Middle School.
This is the opinion of David Collins.
Stories that may interest you
Graduation ceremonies for Brown University went virtual on Sunday, but some graduates and their families turned up anyway for a social distancing version of a live ceremony.
Temporary allowance for online gaming could end the standoff on whether the casinos should reopen.