The Connecticut Supreme Court last week shut out a developer from claiming payment and damages for a 77-acre parcel of land that the town of Branford, Conn., had seized from its two owners by eminent domain six years ago to prevent the construction of a multifamily community there.

Ironically, the same court ruled that the town had acted improperly and upheld the award of $4.7 million to the former landowners.

However, the Supreme Court stated that the developer, New England Estates, did not establish any ownership of the property, and therefore was not entitled to remuneration or legal fees.

The attorney representing New England Estates, Timothy Hollister of the Hartford, Conn., firm Shipman & Goodwin, told BUILDER on Wednesday that he intended to petition the Supreme Court to reconsider its verdict against his client.

The Nutmeg State has been ground zero for eminent domain disputes since the infamous Kelo v. City of New London ruling in 2005.  The circumstances of the case involving the town of Branford date back to 1988, when the 76.91 acres in question, located in the south-central part of town, were zoned industrial. That year, the town had approved a site plan application for construction on this property of 298 condominiums, a community center and a nine-hole golf course.

In the early 1990s, Thomas Santa Barbara and Frank Perrotti, Jr., paid $2.11 million to purchase the land in a foreclosure auction, and then entered into an option agreement with New England Estates for the purchase price of $4.75 million. The developer would pay $10,000 per month for the option purchase, plus development expenses.

This parcel presented several development challenges: It had previously been mined for sand and gravel, a portion fell within a flood plain, and wetlands comprised about 7.4 acres.

Nevertheless, New England Estates submitted a plan to build 268 units with a golf course. Even though the town’s wetlands commission and the U.S. Army Corps of Engineers had granted permits, the town’s zoning commission denied that application. So in May 2003, the developer submitted a new plan, this time under an affordable housing statute, which called for 354 units, 30% of which would be set aside for low- and moderate-income buyers.

That July, the town’s Board of Selectmen voted to “take” the property by eminent domain. “The town was against the residential development because it was concerned about contamination issues,” recalls William Clendenen, Branford’s attorney.

On Dec. 18, 2003, the town filed a notice of condemnation and stated the owners were entitled to $1,167,800 in compensation. It acquired the site on Jan. 5, 2004, and denied New England Estates’ revised application.

The owners and developer sued the city, which led to a five-year-long legal battle. Two courts rejected the town’s argument that, because the land was still zoned industrial when it was seized, the developer would not have secured approval for its plans without a zoning change. The Supreme Court also found “ample evidence” to support the lower court’s determination that the “highest and best use of the property was residential,” based on prior approvals by the town’s wetlands and zoning commissions for a similar plan in 1988.

Clendenen said that the trial court had hamstrung the town by precluding expert testimony to support Branford’s resistance to developing this land for residential use. (Branford is now suing the lawyer that handled this case for malpractice.)

The trial court also didn’t accept the $770,000 value that the town’s appraiser had placed on this land. Appraisers representing the owners valued the land—which is located near Long Island Sound and has access to utilities—at between $6.1 million and $6.5 million, depending on whether it was developed with affordable or market-price housing.

The town has already paid the former landowners $1.1 million and could be on the hook for as much as $6 million when attorneys’ fees are added.

However, the Connecticut Supreme Court also reversed a 2007 Superior Court ruling that the town owed New England Estates more than $12 million, based on projected sales through the proposed buildout of this property. With interest and legal fees, those costs might have risen to $20 million over time, estimates one of the town’s selectmen.

Clendenen explains that in Connecticut “an option does not provide you with property rights.” Consequently, the Supreme Court ruled that New England Estates “had no cause for [legal] action.”

Calls to Branford’s planning department requesting comment about what the town intends to do with this property were not returned. But Clendenen says that a portion of this land has been earmarked for a new Public Works facility and garage. (That department is now sharing space with the town’s fire department.)

John Caulfield is senior editor for BUILDER magazine.

Learn more about markets featured in this article: Norwich, CT, Hartford, CT.