East Lyme — In what was hailed as a "historic occasion," First Selectman Mark Nickerson and developer Glenn Russo finalized an agreement Tuesday that signaled efforts to find another property in exchange for Russo's land in the Oswegatchie Hills.

The town and Russo's Middletown-based company, Landmark Development, have been engaged for years in litigation and land use procedures over Landmark's intention to build housing in the hills.

Under a memorandum of understanding, they would try to find land of the same value to swap for the development rights of the acreage in the hills. The arrangement says the land can be in any state and doesn't declare the land's value. It also allows for an arrangement that would enable Landmark to take a charitable deduction on income tax. No deadline is specified.

Sitting side by side at a table at Town Hall, with state Sen. Paul Formica, R-East Lyme, looking on, Nickerson and Russo officially signed the Memorandum of Understanding.

The MOU states that they would voluntarily work together to find another property that could be traded to preserve 236 acres in the hills. The land could be obtained through acquisition or donation and it could be federal- or state-owned property, or property owned by a public agency or private party. The memorandum is intended to be an alternative to litigation.

"This is an exciting moment in the history of the hills thus far," Nickerson said at a news conference before the signing on Tuesday afternoon.

Over the last 15 years, Landmark has submitted several applications, including affordable housing proposals, to develop the Oswegatchie Hills. A petition to rezone acreage in the hills as an affordable housing district will go to public hearing next week, as part of an ongoing appeals case.

The Oswegatchie Hills overlook the tidal Niantic River bordering Waterford. Conservationists say the undeveloped rocky hills along a mile of shoreline should be preserved. 

Nickerson said legislators have expressed interest in preserving the hills over the years.

"We're calling on those same leaders to help assist East Lyme to see this proposal to its final successful conclusion," he said.

The MOU stemmed from conversations that began several years ago between Russo and Formica, the former first selectman of East Lyme.

Formica called the signing a "historic occasion" and said he has been searching for a "win-win" solution between the town and Russo. He said he and Russo sought to understand each other's positions in depth over coffee and conversations.

Formica said he has been looking for potential properties that could be swapped for Landmark's, with the state Department of Energy and Environmental Protection. He also contacted U.S. Sens. Richard Blumenthal and Chris Murphy, and Rep. Joe Courtney, D-2nd District.

While Formica said "we still have some work to do," he expressed confidence that people are working hard on the proposal.

Russo said Formica "can be very persistent and persuasive."

"We started out with a simple cup of coffee, I think at O'Rourke's Diner, some time ago, which has now led to this agreement where we're going to try to substitute a different property to give our company an opportunity to develop and also give the city the opportunity to preserve this property," said Russo.

The audience at Tuesday's conference included members of the Friends of the Oswegatchie Hills Nature Preserve, Save the River-Save the Hills, town employees and officials, as well as representatives from the Connecticut Fund for the Environment and Blumenthal's office.

Praising the creativity of Formica and Russo, Mike Dunn, director of land acquisition and legal defense for the Friends group, said he was "cautiously optimistic that something good will happen."

Next Thursday, the Zoning Commission will hold a hearing on Landmark's petition to rezone 123 acres in the hills as an affordable housing district. Landmark's preliminary site plan calls for building 840 residential units on 36 acres and designating 87 acres as open space.

The petition follows a 2011 remand order from a state Superior Court judge in an ongoing appeals case over the Zoning Commission's 2005 decision on Landmark's application.

The Friends group and Save the River-Save the Hills, intervenors in the litigation with Landmark, sent an engineering report to the Zoning Commission and Inland Wetlands Agency. The report, completed by Trinkaus Engineering at the request of the two groups, asserts "the design proposed by the applicant will cause adverse physical and chemical impacts to the down gradient wetlands and watercourses on this site." 

"We can't let our guard down," said Kris Lambert, president of the Friends group, after the press conference. "We will fight this to the end."

The Connecticut Fund for the Environment and its program Save the Sound also sent a letter to the Zoning Commission and the Inland Wetlands Agency calling for the denial of Landmark's application. The organization says the application's site plan was not submitted to the Inland Wetlands Agency and also claims the application's wastewater treatment plans are inadequate.

Matthew S. LeBeau, an aide for Blumenthal who attended Tuesday's press conference, said the U.S. senator has been involved with the hills since he was attorney general and would like to see the property preserved.

k.drelich@theday.com

Twitter: @KimberlyDrelich