Groton — Developer Jeffrey Respler is asking for assurance that the state will continue to sell the Mystic Oral School property to Respler Homes, but the state has raised concerns that a planned change in the company and new proposal for senior housing represent a "significant departure" from Respler's original plan for a mixed-use development.

The state and Respler Homes recently exchanged letters about the path forward, following Respler’s announcement several months ago that he plans to sell his membership interest in Respler Homes LLC to a limited liability company called Blue Lotus Group, which would develop senior housing on the vacant, state-owned property that also is called the Mystic Education Center, at 240 Oral School Road in Old Mystic.

Respler Homes, which is in ongoing mediation with the town over a development agreement it signed in 2020 that outlined a proposed redevelopment framework, has an agreement with the state to purchase the property.

After receiving a letter with the state Department of Economic and Community Development's concerns, Jeffrey Respler asked the agency for a meeting so he could explain the new proposal. DECD Spokesman Jim Watson said Wednesday that DECD has agreed to meet with Respler but the date has not been set.

DECD Commissioner David Lehman wrote in the April 22 letter to Respler that the department understands that Respler is exploring shifting control of Respler Homes to Blue Lotus Group, which has a website for plans to develop "wellness-focused living for the 55+ community" at the Mystic Oral School site. The website lists Hemal (Hem) Rathod and Aditya (Adi) Jha as the principals of Blue Lotus Group.

Lehman said the department has few details, but understands that "the new proposal is a significant departure" from the initial one. He said the department is reviewing and gathering more information about the updated plans, as the diversion from the original request for proposals, or RFP, response "is concerning."

Lehman said the initial proposal, which called for apartments, a commercial hub in the main Oral School building, and the restoration of the Pratt Building as a recreation center, was chosen as part of an RFP selection process promoted by the town and the state and done in accordance with a state law, Public Act 15-193, that "seeks to return dormant state-owned or formerly state-owned brownfield properties to economically productive use."

Lehman said the agreement between Respler and the state required the state to obtain approvals for the sale of the property, including from the State Properties Review Board, the Office of Policy and Management, and the Department of Administrative Services. The DECD is "concerned those entities may not accept a new set of principals and a project" that hasn't been vetted through the RFP process.

"The interests and obligations of the State in this matter center on economic development and the return of otherwise derelict properties to productive use," Lehman wrote. "We hope to see the Mystic Oral School property redeveloped in a way that benefits the residents of the Town of Groton and the region."

In a May 19 letter, Respler requested a meeting with Lehman to outline the new proposal. Respler said that to move forward with the proposal, he needs assurance “that the State will continue to honor the Contract and sell the Property to Respler Homes, regardless of the change in the underlying membership interests in Respler Homes.”

“If I am unable to quickly reach an accord with the State, the transaction with (Blue Lotus Group) will fall through, the Project will undoubtedly fail, the Property will continue to pose an environmental and safety risk to its neighbors, and Respler Homes and the Town may end up in litigation,” Respler wrote.

He said he hopes to convince the state that the new proposal for an “assisted living facility, which will include residences, medical offices, a store, and a dining facility which will serve residents and their guests,” “is consistent with the original RFP and is in the best interest” of the state and town.

Respler wrote that the town was responsible under the development agreement for applying for zoning text changes, but the Planning and Zoning Commission "publicly indicated that it would not approve any text amendments, which would permit a development on the scale of the Project” he had proposed.

He said he received the message from the town that “Respler Homes needed to modify the scale and character of the development proposal in order to be successful in the zoning text amendment process.” He said the need to revise the proposal “was a direct result of the State and Town creating an RFP which anticipated selecting a developer and a project consistent with their preferred uses, prior to addressing the significant zoning issues, which needed to be resolved in order for the selected developer to develop one of the preferred uses.”

Respler could not immediately be reached to comment. Blue Lotus Group also was not immediately available to comment.

In response to the letters, Town Manager John Burt said the state hasn’t officially weighed in on whether the membership interest is transferrable for the purchase agreement, and the town isn’t part of the decision on the transfer.

Burt said the directive from the Town Council remains to extricate the town from the development agreement with Respler Homes. He said he is barred from discussing the mediation per the development agreement.

The town and the developer are in disagreement over each other's responsibilities under the agreement. The town said the developer has not provided detailed information on aspects of the proposal and is in default of the agreement, while the developer disagreed and said he cannot submit such information until he knows what zoning will allow.

Edward E. Moukawsher, an attorney representing residents from Mystic Oral School Advocates, a group formed in opposition to Respler's proposed project, sent a letter to the Town Council last month that raised concerns about the participation of Blue Lotus Group in mediation between the town and Respler and referenced Lehman's letter.

At Tuesday evening's Committee of the Whole meeting, the Town Council discussed in executive session the next steps with mediation and the participation of Blue Lotus Group, after limited discussion in open session and a disagreement over whether or not and when to enter into the executive session. Councilors discussed how to best share with the public the information they are able to disclose.

Town Attorney Eric Callahan told the council in open session that the development agreement outlines the dispute resolution process. He said an initial premediation process between Respler Homes and the town was "unproductive" and the town then initiated formal mediation through the American Arbitration Association. He said there are confidentiality requirements outlined in the development agreement.

He explained that there also are exemptions from the Freedom of Information Act that allow an executive session to discuss strategy and negotiations about how the town wants to proceed and potential outcomes, which would be inadvisable to discuss in open session.

After the executive session, Burt announced in open session that the council came to the unanimous consensus to continue mediation with Respler Homes but discontinue participation of Blue Lotus Group. The next mediation session is scheduled for Friday.

k.drelich@theday.com