Sold: East Lyme expands its open space holdings after years of negotiations

Feb. 21—EAST LYME — Three years of negotiations culminated Wednesday afternoon when deeds were filed in the town clerk's office, transferring ownership of hundreds of acres of open space from the struggling East Lyme Land Trust to the town.

The move came after First Selectman Dan Cunningham said Paul Geraghty, the attorney representing the land trust, received the town's bank check for $2.25 million.

That's how much 260 acres of undeveloped land is worth to a community focused on keeping it that way forever.

"It's a done deal. We have the title, they have the proceeds," Geraghty said.

The nonprofit conservation group in 2022 purchased land near Pattagansett Lake for $2.3 million after the town rejected overtures by the previous owner to buy it for $1.65 million.

Cunningham said all of the land will soon be protected by permanent conservation easements, which was not the case when the land trust owned it.

"We're very happy to have this chapter behind us, ensuring these properties will be available to the public in perpetuity," he said.

Voters authorized the purchase at an October referendum, but progress was slow as officials finalized details including title searches and the transfer of a $400,000 grant previously assigned by the state Department of Energy and Environmental Protection to the land trust.

Four months later, the land trust was facing foreclosure by a private lender if the sale didn't go through.

Foreclosure would have put in jeopardy the 115 pristine acres known as the Hathaway property, which has long been identified as the town's number one preservation priority. But it also would have threatened existing hiking trails totaling 145 acres in the Oswegatchie Hills and the Giants Neck beach area that were put up as collateral in the mortgage. Together the three parcels comprise the 260 acres purchased by the town.

Cunningham said the DEEP earlier this week assured him in writing that the grant award would convey to the town.

Tax Collector Christine Dixon on Wednesday said there are outstanding taxes on the Hathaway property amounting to $21,203, which was on the books by the time the non-taxable land trust acquired the land.

The payment of the back taxes was required as a condition of the sale and was placed in escrow because the amount is still in dispute, according to Cunningham.

He said Town Attorney Mark Block controls the escrow.

Arthur Carlson in a Wednesday phone call identified himself as president of the land trust following the death of Ronald Luich last fall. He said the town is getting the land for about $6,700 an acre, compared to an average cost for open space statewide of about $20,000 an acre.

Carlson for years has been a public face in efforts to convince the town to buy the land. He acknowledged most of it was not protected under the land trust's ownership.

"That's pretty dangerous to leave in the hands of a trust," he said.

The land trust was the subject of an inquiry by the state Office of the Attorney General after complaints that the cash-strapped nonprofit was using property meant to be preserved as open space as collateral for the mortgage. That investigation concluded with no official report or guidance issued.

Asked why he took the risk of putting the properties up as collateral, Carlson said it was "because it's so important to have these properties protected by the town permanently."

Foreclosure was a real threat, according to Carlson. "But I felt we could solve the problem, and we did," he said.

Hathaway Farm LLC, the Delaware-based entity that sold the Hathaway property to the land trust and held the mortgage, is represented by former land trust member Steve Harney. The North Carolina transplant described himself as experienced in the "niche market" of open space real estate.

Harney has described a business model where investors sell off large chunks of land to environmental groups for the tax benefits, while "carving out" parcels to be developed for financial gain.

Hathaway Farm LLC initially picked up the Hathaway land for $1.05 million in 2021.

"I'm happy they finally closed," Harney said Wednesday. "I think it's in the best interest of the residents and taxpayers of East Lyme. I've always thought that. I think it could've been handled much quicker and more efficiently if it was in the spirit of cooperation and not adversarial."

Harney counted about 800 acres he's helped preserve in town through various open space deals.

"We're out on the edge doing something that's creative," he said. "It's still driven by money, driven by tax deductions, driven by creation of value. Because that's what you do with land, you just don't watch birds land on it."

He described it as "development as a catalyst for conservation."

Kris Lambert, president of the Friends of Oswegatchie Hills Nature Preserve, on Wednesday welcomed the news that the endangered trails are now safe.

"All I can say is 'hooray,'" she said. " I know it was a very long process to get to this point. I think some people are tired. This is only the best news for the town, for open space and for the environment."

e.regan@theday.com