City poised to settle lawsuit blocking Fort Trumbull development

New London — The city and its development arm, the Renaissance City Development Association, are poised to settle two pending lawsuits that have stymied development efforts on a swath of land at the Fort Trumbull peninsula.

Riverbank Construction, a company run by the father-and-son team of Irwin and Robert Stillman, filed lawsuits against the city and RCDA in 2014 and 2016 to recoup what it claims was $2 million spent in the permitting and development of plans for a $24 million, 104-unit housing project called Village on Thames.

RCDA Executive Director Peter Davis said developers have come and gone in the years the suits have been pending.

“We’ve had a number of developers approach us,” Davis said. “It made absolutely no sense to have any serious discussions with the pending litigation. I think this is an opportunity for both sides to move on."

The RCDA voted unanimously last week to approve details of a settlement that Davis said will not be made public until both sides have signed off on it and it is presented to a judge.

"We'll actually be able to negotiate a development agreement without the lawsuit hanging over our heads," Davis said.

The City Council on Monday authorized the mayor to use $200,000 from an economic development fund toward the settlement.

Council President Don Venditto acknowledged the roadblock the lawsuit posed to future development.

Councilor Martin Olsen voted for the measure but said it left “an exceptionally bad taste in my mouth.”

“It galls me we have to go through these gyrations to move forward,” he said, while acknowledging that the alternative was “counterproductive.”

Passero said it was a “milestone moment if it happens.” The parcels in question are the most readily developable and therefore desirable to developers, he said. He said the lion’s share of the $200,000 is "essentially giving (Riverbank) back money they had paid us."

An important part of the settlement is release of a Lis Pendens, or pending litigation, attached to the property that scared interested parties away, Passero said.

The suit encompassed four Fort Trumbull parcels designated as 2A, 2B, 3C and 3B — about 6.5 acres associated with the former Naval Undersea Warfare Center. The Stillmans' involvement in the area dates back to 2009 when they signed a development agreement with the New London Development Corp., the predecessor of the RCDA.

The RCDA found Riverbank in default of a development agreement in 2013, on the eve of the start of construction, taking issue with the way Riverbank changed the way the project was being funded at the last minute.

The Stillmans claimed they were prepared to self-finance the project but the RCDA had demanded “cash performance bonds, letters of credit or some forms of personal guaranty.”

A trial in one of the cases was scheduled to start in September. Terms of the settlement agreement were worked out by City Attorney Jeffrey Londregan and RCDA Attorney Mark Zamarka.

Davis said his expectation is that based on the interest from developers, the land is most suitable for a residential development.

Fort Trumbull, the subject of a U.S. Supreme Court case over the city’s use of eminent domain, was once home to 84 residences. The state, which has chipped in approximately $80 million to aid in the cleanup and infrastructure work of the area for economic development purposes, had initially capped the number of residential units at 84, Davis said.

The primary reason for the cap is that the area is in a flood plain and state environmental officials did not want to increase risks for residents.

The Stillmans, as part of their development plan, managed to secure state approval for 104 units, which is where the cap now stands.

Davis said subsequent attempts to increase that cap have failed, in part because of the lack of ways to get off the peninsula in the event of an emergency. The lawsuit effectively barred residential development on the peninsula.

Robert and Irwin Stillman could not be reached to comment.

g.smith@theday.com

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