Buyout hinges on worth of property

SALISBURY — More details are emerging over why Salisbury wants the state to use state eminent domain powers to take a beachfront property critical to the redevelopment of Salisbury Beach Center.

The issue comes down to money — the developers are offering $2 million less than the seller wants, and Salisbury's town manager thinks the only way to break the deadlock is for the state to get involved.

Town Manager Neil Harrington announced that he asked the town's two state legislators to ask the state to take the property at 25 Ocean Front South — the former Sidewalk Cafe — by eminent domain, which Sen. Steven Baddour said he and state Rep. Michael Costello will move on immediately.

Harrington's reason for the extraordinary measure was his frustration that three years into the Salisbury Beach redevelopment project, an agreement still had not been reached between Cambridge-based Thompson Design Group, which wants to revitalize the Beach Center, and Robb Osinski and Jay Gallagher, who have a purchase and sale agreement with the property's owner, Mark Finneral.

About 70 other property owners with land surrounding Broadway have signed development options with the Thompson Group, but the Finneral property is in a key position. It's a 1-acre strip of land right on the beach that the Thompson Group would use to widen the beach for public enjoyment.

In an interview with The Daily News yesterday, Osinski said neither he nor Gallagher ever wanted to hold up the project for Salisbury, but they have differences of opinion with Thompson over the property's potential monetary value. Osinski did not sound upset about going through the eminent domain process, which ultimately could result in the court's determining fair market value for the property and how much money the state pays to whoever owns it.

"The court may be a better venue for us to establish the true value of this property," Osinski said.

For some time, the numbers concerning how much money Osinski and Gallagher want and what Cambridge developer the Thompson Design Group is willing to pay have been circulated in the community, discussed by those aware of the stalemate between the two parties. Although the Thompson Group and Osinski are unwilling to discuss dollar amounts for the record, according to those familiar with this standoff, the difference amounts to about $2 million.

The property was assessed for tax purposes by the town at about $2 million in 2009, but the purchase and sale agreement allows Osinski and Gallagher to buy it for $750,000 from Finneral's Merit Property Limited of Tewksbury.

The purchase and sale document expires today and may or may not be extended. Yesterday, Osinski insisted he's moving forward and fully expects to buy the property, but he would not say when.

Thompson Group members made their offer based on what they expect Osinski would be allowed to build on the footprint of the existing building. The Thompson Group offered from $1.8 to $2.4 million, based on the possibility of building 18 to 21 premium-priced oceanfront units.

Given that most of the rest of the 1-acre lot is sandy beach and owned by the state Department of Conservation and Recreation, officials believe environmental restriction and the Wetlands Act prohibit building outside the current building's footprint.

Osinski disagrees adamantly with that evaluation, adding he believes there are no restrictions limiting him from building on the entire lot. He estimates as many as 55 units could be built there, although he would not maximize buildout, settling instead for 37 units. Osinski has for years discussed creating a mixed-use beach club/condo complex.

Local authorities don't think that's possible.

"Common knowledge of Salisbury Beach development would indicate that it is very unlikely that they'd be allowed to develop more than the footprint of the building as it is today," Harrington said, a comment confirmed by Baddour, who has been working to bring Osinski and the Thompson Group together.

"In addition, the Thompson Group doesn't want to buy that property to build condos on it to make money," Harrington said. "Their intention is to tear the building down and not build anything. They want to open up and widen and enhance the beach as a public amenity and to prevent the flooding that happens in the Beach Center every year."

Harrington said the Supreme Court decision that allows eminent domain takings for the purpose of assisting development isn't behind his request that DCR use its eminent domain authority to take the property.

"That isn't what this is about," Harrington said. "What's even more important is that the state owns the beach at the Beach Center for the public good."

Baddour said the state owning all the beach area at the center for public use was a state plan years ago that very nearly happened. The Legislature at the time actually appropriated money in a bond bill for that purpose, with all Salisbury Beach Center's oceanfront named. The bill was sponsored by former Sen. James Jajuga and former state Rep. Frank Cousins.

The state bought the Frolics and Blinkey's Fried Doug properties with that money and was negotiating with the owners of the other properties when the process was brought to a halt by the Romney administration, Baddour said.

"But the state has the money to take the Finneral property now by eminent domain if it decides to go forward; the name of that property is in that bond bill," Baddour said. "I've kept the Patrick administration updated on the progress of the Salisbury Beach redevelopment process, and the property at 25 Ocean Front South keeps coming up as an issue.

"I wanted to help everyone get together on this before this happened," Baddour continued. "I told (Osinski and Gallagher) that this property has been on the state's eminent domain list for more than 10 years. This didn't come out of the blue. An eminent domain taking of this property by the state was something all parties knew was a possibility."

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