Investor seeks to revive water bottling effort at USA Springs site

$1.2 million offered for property and expired withdrawal permit

In the midst of an extreme drought, a Massachusetts real estate investor has agreed to purchase the former USA Springs property in Nottingham for $1.2 million to extract its groundwater, threatening to revive the battle between a business and nearby residents opposed to the idea.

Kevin B. Delaney, manager of Nottingham Springs LLC, deposited $50,000 to buy the 189-acre parcel and an expired permit to withdraw more than 300,000 gallons of water a day at the site, according to records filed Sept. 29 in bankruptcy court, which has to approve the sale. A hearing on the matter is scheduled for Nov. 15.

According to the town’s website, Delaney’s attorney contacted the town of Nottingham in June to inform it that it was planning to extract an unspecified amount of groundwater. Delaney had expressed interest in reviving the dormant water bottling project in the past.

Several opponents have written Delaney warning him that he would face insurmountable regulatory obstacles and fierce community opposition if he were to pursue the project.

“I’m rather taken aback that this is starting up again,” said Gail Mills, a founder of Nottingham Water Alliance. “It is sad that we have to go through this another time.”

But Mills said that opponents were prepared and have a national environmental group waiting in the wings to help in their battle.

Calls to Delaney and his attorney, Andrew Sullivan, were not returned.

Flurry of interest  

USA Springs, which had planned to sell bottled water overseas, spent more than three years and millions of dollars to overcome opposition and receive a 10-year groundwater permit in July 2004. But it declared bankruptcy in 2008, leaving a partially finished bottling plant as it futilely tried to obtain financing. Instead, the company – and the bankruptcy court – got hoodwinked by Malom Group AG, which ran a Ponzi scheme out of Switzerland. (Three Malom officials in the United States were sentenced earlier this year to federal prison after a trial in Nevada).

In 2013, the bankruptcy trustee tried to sell off the land and its permit. But despite earlier claims that it was worth $125 million, the property languished at an asking price of nearly $2 million that was then slashed to $1 million.

There was a flurry of interest before the permit expired, including from Delaney, who tried to buy the property under the name Tanglewood Springs International LLC, posting a plea for $55 million in funding on an angel investing site.

Delaney also formed Nottingham Springs LLC in August of 2012, but the corporation was administratively dissolved in in August 2015, according to records at the New Hampshire Secretary of State’s office. In April, Delaney filed paperwork to revive that entity.

The bankruptcy trustee recommends the court approve the sale, which is $200,000 above the asking price, though the bankruptcy sale process allows for a higher bidder, starting at $1.3 million. The proceeds of the sale would mostly go toward paying some of the $11 million mortgage held by Roswell Commercial Mortgage LLC, and possibly to help pay off some construction liens and more than $830,000 in property tax liens, both of which are expected to be contested.

Permit uncertainty

But the big question is the permit. The large groundwater withdrawal permit expired in July 2014. Bankruptcy court can sometimes extend the life of such permits by tolling, legally stopping the clock, said Nottingham Realtor Romeo Danais, who once tried to buy the property himself with a conservationist to protect the wetlands and build some commercial buildings along the highway. He speculated that this tolling was what Delaney was counting on to revive the bottling plant.

“Otherwise, you can’t make that property work at $1.2 million,” he said.

But tolling extensions can’t be more than 60 days, said Dan Sklar, a bankruptcy attorney who was not involved in the USA Springs case. Besides, he said, it would likely be contested both in bankruptcy court and in other venues.

And if Delaney had to start from scratch, he would be facing tougher regulations, which were passed partly in reaction to the USA Springs proposal.

Earlier tests of the bedrock aquifer showed that larger water withdrawals might bring to the surface certain contamination.

In addition, the ongoing drought, which is considered extreme in the Nottingham area, could further complicate the process of obtaining a new permit.

It also appears likely that the new owners would have to apply for a town special exception use permit because water extraction is no longer permitted under the town zoning ordinance.

If the new owner moved ahead, “the appeal process available to us and others could take at least several years before you would be allowed to begin activities at the site.” Hadley warned.

But legal questions aside, there is also a moral dimension involved, said Denise Hart, a founder of Save Our Groundwater.

“This is a historic drought. We have strict water conservation restrictions. Farmers are having enough trouble getting enough water to keep their crops alive. It’s unconscionable to think that in a community so dependent on well water, that one company should have the right to stick their straw in the ground and suck out what’s left,” she said.

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