NLDC Redux: Another lawsuit consumes Fort Trumbull prospects
Certainly the single lawsuit that put New London most prominently on the national map, Kelo v. New London, ground to a halt prospects for new development on New London's Fort Trumbull peninsula.
The city won in court, but the fight by neighborhood residents to save their homes from the bulldozers of eminent domain created a stigma that lingers to this day.
But a 2016 lawsuit, River Bank Construction v. New London and Renaissance City Development Association, is one that has thrown a significant red flag on development prospects for a big part of Fort Trumbull, possibly for years to come.
River Bank is the father and son developing duo, Irwin and Robert Stillman, that was left standing at the altar in 2014, claiming the city and redevelopment agency failed to live up to their development agreement and turn over the 6.5-acre peninsula parcel for which a rental apartment complex was planned.
River Bank, which says it spent more than $2 million trying to develop the property, is seeking damages and title to the land.
The agency, because the lawsuit encumbers title to the property, cannot sell it to anyone else until the case is resolved. A trial is scheduled for September 2019 and there is no promise it will happen by then.
The aborted Stillman development also has tied up the allotment for new housing units created by Fort Trumbull development legislation, and therefore no other developers can be given permission to build housing on the peninsula until the suit is resolved.
The developers' lawsuit, which is scathing in its description of the way they were treated by the city development agency, is also a warning to any other developers thinking of working with the RCDA. The lawsuit might as well use the term "thug" to describe its dealings with RCDA. It does refer to "strong-arming" and "threatening."
"At the time the defendant RCDA refused to convey the project area to River Bank .... Its president Michael Joplin stated, in substance, 'You (the developer) are in a box. You can move a little to the left or a little to the right, but you are in a box. I don't care what the contract says, you have to do things our way or this deal will fall apart.'"
OK, I know that is the snarl of a litigating developer. Take it in context. But the litigants in Kelo v. New London were much more harsh in their description of the way they were treated by the development agency that threw them out of their homes. I have heard worse name-calling than "thugs" from some of them.
Curiously, the name of the agency was changed, from the New London Development Corporation to Renaissance City Development Association, by then-Mayor Daryl Finizio, who also demanded the resignation of leaders, hoping for a new beginning to wash away some of the toxicity.
Alas, Finizio failed.
NLDC President Joplin and Vice President Karl-Erik Sternlof did indeed resign from the board of the renamed agency.
Attorney Linda Mariani was installed as president.
But Sternlof stayed in the game, taking a job within several months with the law firm Waller Smith & Palmer — the same firm, working for the redevelopment agency, that helped the city defend and ultimately win Kelo v. New London.
Waller Smith has remained the RCDA law firm, and Sternlof regularly now attends board meetings and helps steer policy as counsel for the agency. Given his history with the agency and the inexperience of the rest of the board, he is almost certainly the most influential voice in the room.
He played a prominent role in hiring the current executive director, Peter Davis, the development agency's only full-time employee.
His firm, where he is a partner, is expensively defending a lawsuit that grew out of RCDA decision-making in which he played a prominent role. He whisked through a revolving door and ended up profiting from the public agency he previously helped lead.
Sternlof told me this week that neither he, nor his law firm nor the RCDA board, believes there is a conflict. I disagree. I think it is, at best, unseemly.
Sternlof wouldn't tell me how much Waller Smith has been paid to defend the lawsuit over the decision he and other RCDA board members made to sever ties with River Bank.
Davis told me he doesn't know how much has been spent in total on the lawsuit, but he said he has approved invoices for about $11,000 since he started in the spring of 2016.
He told me Wednesday he would find out the total paid to the law firm since the lawsuit began, but I never heard back, and he didn't return a message Thursday.
From the looks of the many filings and motions in the suit and the fact that it has been moved to Hartford, as complicated legislation, I would guess the legal bill is going to be quite significant.
Meanwhile, the agency, which got a one-time $100,000 payment from the city at the time Davis was hired, money that is already gone, is headed for a financial cliff.
The agency has $151,000 on deposit at Dime Bank, money left over from the years the agency's work was directly funded by the state, a fund which has been gradually depleted, to pay for operations. There is also $198,000 left on a grant of $684,000 made by the state Department of Economic Development in 2006.
The last disbursement from that grant was made in early 2017, for $55,000, including $11,000 for legal fees, according to a DECD spokesperson. Further funds from the grant must be specifically applied for, the spokesman said.
Davis says the agency spends about $15,000 a month on expenses, including payroll, and might be able to survive on its remaining money for up to 16 more months.
That doesn't account for legal bills for the ongoing lawsuit, which Davis said he was unable to even broadly estimate.
Unlike Mayor Finizio, who promised and tried to kill off the old NLDC, Mayor Passero doubled down and came up with the $100,000 payment. He pushed to have the agency named a development partner for other city property, thinking, I suppose, that its track record might finally turn from failure to success after all these years.
It now looks like the agency, bound by the Stillmans' lawsuit, won't be able to do much development on the sadly vacant remains of the old fort neighborhood, at least not before the mayor's term is up.
This is the opinion of David Collins.
Editor's Note: This version corrects the spelling of Karl-Erik Sternlof's name.
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