Old Lyme — A local businessman is pursuing another option now that sewers don't seem like a possibility for his affordable housing development.

Mark Diebolt, owner of the locally based Diebolt and Company hose manufacturer, is testing the feasibility of a septic system to serve the 220- to 240-unit complex he hopes to build near the East Lyme border.

He said the concept for the 20.6-acre site includes easy access to Interstate 95, a mix of one- and two-bedroom apartments, amenities like a pool and a financial component to make some of the units obtainable across a wider income bracket — but only if he can figure out what to do with the sewage it would produce.

Up to 72 units would be rented at rates considered "affordable" by state and federal standards. In Old Lyme, that means families making from $55,080 to $73,440 per year could live there without spending more than 30% of their income on rent.

If Diebolt can solve the sewage dilemma, he said construction will begin no earlier than 2023. He is looking at options for installing a septic system after officials denied his requests to tie in to a planned sewer system in Old Lyme.

Diebolt said he has no partners on the project at this time.

He likened his vision for the complex to Saybrook Station in downtown Old Saybrook, which is touted as a luxury development on 12 acres with 186 units and amenities including a pool, fitness center and game room. Thirty-eight of those units are considered affordable.

"I know 220 or 240 units sound like a lot," he said. "What does that look like? Go to Old Saybrook and take a look at that."

He estimated about one-third to one-half of the Hatchett Hill project would consist of two-bedroom units.

Diebolt, who described himself as a businessman and not a professional developer, emphasized his buildings will be spread out over a wider swath than the Old Saybrook project. His current 20.6 acres were part of a larger property that held his company's headquarters until he sold it and subdivided the land in 2008, he said.

Now, he plans to buy an adjacent 16.3-acre parcel so he can install a septic system on it. He told The Day he is under contract to buy it for an undisclosed sum.

"Basically, without septic, the project's dead," he said, before amending his statement to say that it might just have to sit there for a long time until sewers become an option.

Tests to determine the suitability of the adjacent site for a septic system started this summer and will continue through February, according to the developer. He described going with a septic system as a last resort because he can't get access to sewers for the estimated 50,000 gallons per day the development would produce.

The Old Lyme Water Pollution Control Authority a year ago formally rejected his request to tie in to a proposed sewer system that will connect four of Old Lyme's beach communities to a treatment plant in New London, according to meeting minutes.

Chairman Rich Prendergast this week said the town would have lost about $2 million in federal Clean Water Act funds for the sewer project if officials used them to subsidize economic development. The fund is dedicated to improving water quality and protecting public health.

The town's portion of the sewer project has been estimated at roughly $9.4 million, which is what was approved at a referendum in 2019. Officials said Sound View ratepayers are on the hook for the amount not covered by Clean Water Act grants.

The sewer project has been years in the making since the beach communities — including three private associations and the Sound View neighborhood under the town's jurisdiction — were ordered by the state to resolve groundwater pollution issues.

Affordable housing

Diebolt said 30% of the units would be rented at rates considered affordable by state standards, with half reserved for families who make less than 60% of the median annual income and half for those who make less than 80%.

The median income in Old Lyme is $91,800, according to the U.S. Department of Housing and Urban Development.

The affordable housing process outlined in state statute makes it easier for developers to build a high number of apartments for which they might otherwise not get approval.

Commonly known as "8-30g," the affordable housing statute is an incentive to promote fair and diverse housing options in municipalities where less than 10% of the housing stock is considered affordable. As described by the nonprofit Partnership for Strong Communities, it means towns that haven't reached that threshold must allow affordable or mixed-income housing proposals to be constructed unless they can prove to the Superior Court that the rejection is necessary to protect public health and safety.

Once a community hits the 10% affordable housing threshold, it is no longer subject to the 8-30g statute. Then the onus returns to a developer to convince the town the project should be built, as opposed to requiring a zoning commission to convince a judge why it should not.

According to the Old Lyme Affordable Housing Commission, 85 units in town currently qualify as affordable — less than 2% of the town's housing stock.

First Selectman Tim Griswold at this week's Board of Selectmen meeting updated newly elected Selectmen Martha Shoemaker and Matt Ward on the project. He said a project of that scope would "certainly move the needle" toward the 10% affordable housing threshold.

Griswold said being able to accommodate a septic system on the adjacent parcel would put Diebolt's project "in great shape."

Diebolt, a resident since 1987, emphasized his connection to the community as a resident and business owner. He said he sees the project as a way to provide housing options in town for more people — including those who are just starting out or older people who are downsizing.

"Let's get it done and do it the right way — the way we want it," he said, "instead of something that's from an outside party that's kind of shoving it down your throat."

e.regan@theday.com