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[whitespace] Mid-peninsula deal with Novitiate owner may be on verge of collapse

Los Gatos--After the Mid-Peninsula Open Space District signed a letter of intent on a compromise that would include both open space and some development on the former Alma College Novitiate late last September, it looked as if both sides had what they wanted.

The property owner, Oregon-based Arlie Land and Cattle Company, which paid $17 million for the 1,130-acre property in December 1997, would get the chance to put as many as 55 homes on the land. And they would get the environmentalists off their back.

Mid-Peninisula, in turn, would get almost 90 percent of the property on the cheap, and turn it into open space--but only if Arlie got approval from the county to redraw the property lines on the huge parcel to cluster the home sites along Bear Creek Road.

What about Pete Denevi's golf course?

Under the deal, which now seems to have unraveled, the 210 acres Denevi wanted would be sold to Mid-Peninsula for $5 million, while the other 800 acres would follow once the approvals came from the county.

Denevi's claim to the property was turned down by a Superior Court Judge Jan. 21, which means that Arlie's hands are no longer tied if it wants to sell.

Now, the fate of the land is still up in the air.

And Denevi still has a lawsuit pending against Arlie, as does Denevi's new partner, Barry Swenson, who teamed up with him last summer.

Swenson sued Arlie for breaking the contract that Arlie claims expired Sept. 30, when Denevi failed to deposit $400,000 into escrow.

Along with Denevi and Swenson, the partnership that wants to build the Los Gatos Country Club just above Lexington Reservoir also includes three other investors.

Both Denevi and Swenson insist that Arlie's land acquisition manager, John Musumeci, who has become the central character in the continuing controversy over the land, didn't live up to his end of the bargain.

In his lawsuit, Denevi claims Musumeci never deposited the claim for the land with the title company. But Musumeci claims that Denevi didn't deposit the amount specified by the contract. The agreement set the price of the 210 acres for the golf course at $8 million.

Barry Swenson's land acquisition director, Jeff Lauritzen, also maintains that Musumeci tried to change the terms of the deal at the eleventh hour, when he faxed a letter asking Lauritzen to give Arlie a 30-percent stake in the country club, and pay a $320,000 broker's fee.

But with all the legal maneuvering and big sums going back and forth, Mid-Peninsula may find itself left out of a deal.

The district's board had scheduled a special meeting Jan. 26 to discuss the complicated contract with Arlie, but the inch-thick document didn't show up from Arlie's attorneys.

"We never got an agreement signed," Mid-Peninsula general manager Craig Britton said. As of press time, no meeting to discuss the Arlie contract had been rescheduled. "We have all these issues on the table, but unless we resolve them, there's just so much we can do."

Mid-Peninsula, which had hired additional attorneys to help its own legal counsel draw up the complex document, doesn't have the money it needs to make the purchase, Britton says, and because of the time and effort it has already invested in the project, the district may not be able to pursue the deal much further.
Jeff Kearns

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Web extra to the February 4-10, 1999 issue of Metro.

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