Some Hope For Opportunity To Purchase Shoreline Open Space

Jan 05, 2009 (The Hartford Courant - McClatchy-Tribune Information Services via COMTEX) -- LEHMQ | Quote | Chart | News | PowerRating -- For some shoreline residents, last fall's news that Lehman Brothers was declaring bankruptcy seemed to have a local silver lining: Among the company's assets was The Preserve, the 934-acre forest property at the center of a long-standing land dispute.

River Sound Development, the Lehman Brothers Holdings subsidiary that owns the land, has been trying to build 220 luxury homes and an 18-hole golf course on The Preserve, which includes sections in Old Saybrook, Essex and Westbrook. Local and state officials, who hope to keep the land undeveloped, considered buying The Preserve, but could not agree with River Sound on a price.

To some, including Old Saybrook First Selectman Michael Pace and Attorney General Richard Blumenthal, Lehman Brothers' bankruptcy seemed to offer an opening, a chance to acquire The Preserve, possibly at a lower price than River Sound had previously sought.

But Sam Stern, the owner's representative and asset manager for River Sound, disputed what he called misperceptions that the company would be quick to "give it away" at a lower price.

"I don't see that as a likely event," he said.

While Lehman Brothers is bankrupt, River Sound isn't, Stern said, and chances are the trustee running the Lehman estate will be looking to maximize the value of the company's assets, not sell them for less.

Still, Blumenthal said he is hopeful that the state will have a chance to ensure the land remains open space since the bankruptcy requires that all of Lehman's assets be sold or transferred.

Blumenthal said his office has been "very actively" working with representatives for Lehman Brothers' real estate holdings. Among the immediate tasks, he said, is a review of the property's value in light of Lehman's situation and changes in the real estate market.

"My own feeling is that we will have a profoundly significant and even historic opportunity, a unique window of opportunity at some point in the near future," he said. "My hope is that we will be in a position to take advantage of it."

That, of course, means coming up with the money to purchase The Preserve at a time when the state is facing a projected $6 billion budget gap over the next two years. Blumenthal noted that the conservation effort received bipartisan support in the past -- state legislators at one point approved $8 million to purchase The Preserve -- and said there may be private funding sources available too.

Previous efforts to purchase the land included talks with the Nature Conservancy, which had considered putting up the money along with the state and Old Saybrook.

Past attempts to settle the dispute over The Preserve have included permit denials, litigation and disagreements over the value of the land.

In 2006, the Old Saybrook Inland Wetlands and Watercourses Commission denied River Sound a permit, citing concerns that the golf course would harm nearby vernal pools. River Sound appealed the decision.

In February 2008, Superior Court Judge Julia Aurigemma upheld the commission's denial of the wetlands permit. But Aurigemma wrote that River Sound could respond to the commission's concerns by eliminating or shortening the golf course.

River Sound appealed Aurigemma's decision to uphold the 2006 permit denial.

Blumenthal appealed another portion of the ruling on behalf of the Department of Environmental Protection, arguing that further review of the golf course proposal would be needed.

In April 2006, after the wetlands commission denied the permit, the state Department of Environmental Protection offered to purchase the land for $7.5 million, the state-appraised value.

River Sound had maintained that the land was worth at least $23 million. Last month, Stern put the value closer to $30 million. He said Connecticut and other nearby states have paid comparable per-acre costs for other land meant for open space and said River Sound would accept nothing less.

In the meantime, River Sound has not pursued any new proposals for the site. "Right now, we've taken a breather because the market has dictated that," Stern said.

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