By Jane Smith
04/24/07
April 23, 2007 11:44 pm
—
Unless somebody comes forward with a gift of approximately $300,000, Conneaut Lake Park will not open this year.
On Monday, Crawford County Court of Common Pleas Judge Anthony Vardaro rejected the sale of 3.3 acres of land to Gregory Sutterlin. Park officials followed the ruling by laying off all but two employees and announcing the park will not open.
Earlier this year, Sutterlin had made a bid of $1.7 million to purchase the former Flynn House property to build approximately 30 condominium units he planned to sell as lakefront residential housing. Park officials wanted to use part of the money from that sale to pay off some debt, and also use some of it as start-up money for 2007, the park’s 115th season. Traditio-nally, the park opens on Memo-rial Day Weekend each year.
That all changed Monday.
“We are not opening,” said general manager George Deshner, noting there is no money to open the financially troubled amusement park.
In May of last year, Erie businessman Joe Prishak came forward with a loan, allowing the park to open, but court-appointed overseer LeRoy Stearns won’t seek a loan this year, and Vardaro’s ruling agreed, saying the court “was not interested” in obtaining another start-up loan.
Because the park was determined to be a charitable trust two years ago, court approval is needed for all loans, sales or leases for the park.
Four employees who were recently called back to work were laid off Monday. Only Deshner and Bob Morrow, operator of the water system, are still working.
Stearns said he made it clear for months that without the sale, there would be no money to open.
Reasons for rejection
In the ruling handed down Monday morning, Vardaro said the agreement to sell the land to Sutterlin wasn’t acceptable because:
n No requirements are listed regarding the type of condominiums to ensure they are of a quality nature;
n No time frame is listed regarding when Sutterlin must do something with the property; and
n It was indicated a “bridge loan” would be used to open the park until the sale funds are received. Vardaro said he isn’t interested in approving such a loan when so many contingencies of the sale aren’t certain.
He also wouldn’t accept Sutterlin’s proposed ban on future development of lakefront/lakeview property in the park for five years. Vardaro said that would potentially tie up other properties. He said it may well be that future Trustees of Conneaut Lake Park will choose not to allow further residential development within that time frame, but he didn’t want to put future trustees in a position where they could have no choice.
Vardaro also said he agreed with Eugene Herne, Pennsylvania’s deputy attorney general, who argued that “the restrictive covenant has substantially changed the sale of the property from what was advertised.” The land wa initially offered to any buyer but without the five-year development ban Sutterlin negotiated, no buyers came forward. Herne argued this made the land more valuable and may have attracted buyers had it been offered to the public with the restriction.
In addition, Vardaro said Stearns hadn’t specifically set forth how proceeds of the sale would be allocated. He said he wanted to see as specifically as possible what portion of the debt would be reduced by the sale.
Furthermore, he said in April 2006, the Economic Progress Alliance of Crawford County received funds to create a development plan for the trustees. At that time, Vardaro ruled the property could be sold, but he would have to be convinced the sale price was adequate and there would be appropriate restrictions on the development of the parcel by any new owner consistent with development plans perceived by Stearns and the EPA “for the good of the public.”
Citing the April 2006 order, Vardaro said before he would approve a sale, he wanted to know that it is logically consistent with some reasonable development plan for the property of the Trustees of Conneaut Lake Park. The judge noted in his ruling that EPA Director Mark Turner wasn’t in court recently to answer some of those questions.
Transition to trustees
Vardaro’s ruling notes that he had attempted to keep the park’s court-ordered overseer in place to allow a transition to a new board of trustees with little or no debt and with the park’s assets preserved as well as they could be. However, he now sees the possibility of a new board of trustees taking over the operation before that point.
He noted that Conneaut Lake Park’s master plan proposed by the EPA, “while not particularly specific, appears to have indications that a plan could be developed to take care of the current debt and, further, there appears to be a desire (by EPA) that there be no increasing debt.”
He said maybe a new group of trustees, possibly in conjunction with the EPA, could develop not only plans for the development of the asset, but also a reasonable plan to take care of the debt that is burdening the business.
In addition to rejecting the sale, Vardaro said it may be appropriate for Stearns to consider turning the matter over to a new group of Trustees of Conneaut Lake Park.
He said that is no reflection on Stearns’ or Deshner’s work, but cited the legal constraints the overseer faces regarding future development of the park as the reason for that recommendation.
Stearns said Monday he has turned the ruling over to the park’s attorney to learn whether the same restrictions apply to a board of directors that apply to him. Vardaro said a board, rather than a non-liquidating custodian, can consider proposals such as Sutterlin’s that may result in the sale of parts of the property to private developers.
In the meantime, Stearns said he will not file petitions for easement purchases for Jeff Davenport, developer of the Snow Waters housing project; and for Carl Burkett, who wanted an easement for access to his property. Both were seeking help to develop properties they own near the park, but do not have easy access because of the location of park properties.
Honoring reservations
In a meeting today, Conneaut Lake Park officials will address the issue of what to do about honoring reservations made for pre-planned 2007 events at the park.
LeRoy Stearns, court-appointed overseer, and George Deshner, general manager, said they were reviewing possibilities Monday and would have a meeting today to discuss options for honoring those reservations — for things such as wedding receptions at Hotel Conneaut.
The park has liability insurance through May 15, but needs $30,000 to pay the insurance premium — money it doesn’t have.
Without liability insurance coverage in place, officials can’t allow others to use the facilities after that date.
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