Waterford - The state Department of Administrative Services intends to keep the $250,000 deposit made by developer Mark Steiner on his previously planned purchase of the Shore Road property known as Seaside, according to correspondence from the department.

The state notified Steiner in a Sept. 30 email that his firm, Seaside in Waterford LLC, was in default on its contract with the state to purchase the land for "failing to receive and/or diligently pursue necessary Land Use Approvals."

Gov. Dannel P. Malloy said on that date that the state intended to make a state park of the property, which once housed a hospital for the developmentally disabled and earlier served as a tuberculosis hospital.

Steiner had been contracted on and off as the state's preferred developer on the property for roughly 15 years, with his latest contract initiated in 2010.

The Oct. 17 letter says the state will go ahead with terminating the sale agreement "due to Seaside's failure to cure the default or make reasonable provisions to cure the default" and will keep the deposit.

Steiner's attorney, Lewis Wise, said in September that he and Steiner planned to ask the state to reconsider its decision to make the property a state park. Steiner would sue the state for damages if the state moved forward with termination of Steiner's contract, Wise said at the time.

Wise and Steiner declined to say last week whether they still intended to sue the state.

As of Friday, no new filings had appeared in the state judicial website under "Seaside in Waterford, LLC" or "Mark Steiner."

"I don't mean to be evasive, but one of the things, when situations get into this state - my attorneys advise me not to say anything," Steiner said in a phone interview Thursday.

"Stay tuned," he added.

Steiner on Sept. 26 appealed the Waterford Planning and Zoning Commission's rejection of zoning amendments he had proposed for the Seaside property. The amendments would have allowed for construction of an inn and other commercial development on the property, which is zoned for residential use.

Town Attorney Robert Avena wrote in an email last week that he anticipates Steiner's and the town's lawyers will appear in court in early December to report on the status of the appeal.

"No substantive activity will occur on the appeal until that time," Avena wrote.

t.townsend@theday.com

Twitter: @ConnecticuTess