Opinion ID: 204058
Heading Depth: 2
Heading Rank: 3

Heading: The Transaction Sours

Text: About a month later, by March 19, 2003, McDonnell was singing a different tune. On that date, McDonnell wrote in confidence to members of FORA, I recently have spent some time thinking through this project in detail . . . and have a realized that a number of key assumptions about structure and timing are unworkable. In an attached confidential memorandum, McDonnell explained that the TPL would require $1.154 million at closing and proposed relying on Eye of the Storm, a fledgling non-profit with little infrastructure, to raise $400,000 either through fundraising or a loan secured by its interest in 144 Red Acre Road before closing. In addition, McDonnell contemplated raising $450,000 through private philanthropy prior to closing. FORA agreed with these observations but concluded that McDonnell's proposed fund raising timetable was overly optimistic and urged the Trust to close with borrowed funds. To that end, FORA arranged for a line of credit for the Trust. McDonnell replied with another confidential memorandum dated March 27, after the assignment but before the Town provided any funds. In this memorandum, for the first time, McDonnell disclosed to FORA that TPL's national board has given only a tentative approval to this excellent adventure we are undertaking together. . . . We have not received the go-ahead to actually purchase the property. Our board is awaiting progress on both the political and fundraising fronts. Unless we secure approval at the May town meeting and make substantial progress on the remaining finances, I do not believe we will get national approval for this project. [3] Although McDonnell did not foreclose the possibility of TPL's obtaining conservation financing, he made clear that it would have to be limited to $600,000, the combined value of the main house and the horse farm/caretaker's house. [4] Despite these doubts with respect to the financing of the project, the Trust, FORA, and the Town pressed onward. The Trust and the Town applied for state aid to rehabilitate the two homes on the Kunelius property, and prepared for the Town meeting, which was to confirm the Town's contribution of Community Preservation Act funds. At the meeting, the funds were approved, but this approval marked the high-water mark of the potential transaction. Soon thereafter, in mid-June 2003, although contrary indications were evident even before the Trust accepted the ROFR, it became clearer that the Trust's plan of dividing the parcel in order to sell the two homes on the Kunelius property was unlikely to fare well in the zoning process. In another blow to the project, in early July 2003, the State Department of Housing and Community Development denied the grant application to renovate the two houses on the property. The combination of these body blows forced the Trust to ramp up planning for abandoning the transaction, and to that end, McDonnell wrote to TPL colleagues I think the most important thing about the `exit strategy' is not to be seen as TPL pulling the plug, but for a consensus to emerge from all that the project has now got some fatal flaws . . . . The prediction of fatal flaws proved prescient, though some of them were of TPL's own making. Peter Christiansen, a leader of FORA, wrote that McDonnell's conduct led him to feel raped, and that McDonnell had told him that TPL would neither engage in any fundraising nor supply any fundraising prospects. Christiansen further claimed that the Trust solicited leads that FORA members had identified for funding of other projects. This alleged poaching, combined with TPL's threats to pull out of the purchase altogether, made it difficult for FORA members to harness their relationships with potential donors. Once it appeared likely that TPL would withdraw from the transaction, that appearance would bode ill for FORA-members' relationships with repeat players in the conservation world. By July 31, 2003, the Trust informed FORA that it was not particularly sanguine that the transaction could close. Indeed, TPL unequivocally stated that only price concessions from Kunelius, who was forced to deal with TPL by virtue of the ROFR, could save the transaction. [5] TPL then requested $350,000 in price concessions from Kunelius, which she refused. Although TPL and FORA continued to trade arguments about the feasibility of financing, the project was effectively dead. TPL unilaterally withdrew its application for a zoning variance on September 25, 2003, and did not close on September 26, 2003.