The Clary Lake Dam in December 2015. Due to a foreclosure, an auction has been scheduled for the Clary Lake Dam on Jan. 29. (Photo courtesy Clary Lake Association)
The Clary Lake Dam, a center of controversy in Jefferson and Whitefield, is up for auction, according to a notice of public sale filed with the Lincoln County Registry of Deeds on Jan. 5. The auction, the result of a foreclosure on the mortgage on the dam, is scheduled for Friday, Jan. 29 at 11 a.m. on the steps of the Lincoln County Courthouse.
The auction adds another layer of complexity to an already complicated situation, said Paul Kelley, manager of Pleasant Pond Mill LLC, which is the deeded owner of the Clary Lake Dam.
Since 2014, Pleasant Pond Mill LLC has been the subject of a Department of Environmental Protection water level order, which Kelley and downstream property owner Aquafortis Associates LLC, managed by Richard Smith, are appealing in Lincoln County Superior Court.
In July 2015, Arthur W. Enos, owner of the mortgage on Clary Lake Dam, assigned the mortgage to Medius L3C, a recently incorporated low-profit limited-liability corporation. Medius L3C was formed on March 18, 2015.
According to Kelley, Medius L3C made a demand for payment on the mortgage, which Pleasant Pond Mill LLC was unable to make. “PPM is unable to satisfy the mortgage,” Kelley said. “There are no assets in the company other than a breached dam.”
Due to the inability of Pleasant Pond Mill LLC to make payments on the mortgage, the property is being seized and placed up for auction. The property “is being sold on an ‘as is’ ‘where is’ basis, without any warranty whatsoever as to the condition, fitness … or the state of title to the property,” according to the notice of public sale.
Medius L3C, which must send a representative to the auction for any sale to be considered valid, also reserves the right to purchase the property, modify the terms of the sale, and add additional terms to the sale, according to the notice. Efforts to contact Medius L3C by press time were unsuccessful.
The foreclosure calls into question a number of contracts and pending litigation related to the Clary Lake Dam, which was damaged during Hurricane Irene in 2011 and can no longer impound water safely, Kelley said.
The DEP issued a notice of violation of the water level order to Pleasant Pond Mill and Aquafortis Associates in September 2015, which carries a monetary penalty for each day of noncompliance with the order. The order requires the dam to be repaired and a water level management plan to be created.
Preti Flaherty attorney Timothy Connolly is one of the litigators representing Kelley and Smith in the appeal to the water level order. While the appeal is still pending, the future of the water level order in the event of a transfer of ownership of the dam is uncertain, Connolly said.
According to the water level order, the DEP has the right to review and approve the sale of the Clary Lake Dam if the purpose or consequence of the sale transfers the obligation of the owner to comply with the water level order.
The DEP was notified Monday, Jan. 11 that there was a notice of public sale for the Clary Lake Dam in a local newspaper, DEP Communications Director David Madore said, but has received little additional information. According to Maine law, the water level order will transfer to the new owner if the dam changes hands, Madore said.
The status of the notice of violation will be another conversation the DEP will need to have, Madore said.
The mortgage foreclosure is the second foreclosure the Clary Lake Dam has faced. Whitefield currently has a lien on the dam for $190.77 in outstanding property taxes from 2013. In March 2015, the Whitefield Board of Selectmen voted to waive the town’s right to foreclose on the property.
Kelley has also made several efforts to transfer ownership of the Clary Lake Dam. He previously filed a DEP petition for release from dam ownership or water level maintenance, which the DEP denied.
He also approached the towns of Whitefield and Jefferson on separate occasions asking the towns to assume ownership of the Clary Lake Dam, which voters in both municipalities rejected. Kelley is attempting to dissolve Pleasant Pond Mill LLC.
As part of the process, Kelley said he offered the DEP the company’s property, or the Clary Lake Dam, which the DEP refused to accept. The legal dissolution of Pleasant Pond Mill LLC is also currently pending in superior court, Kelley said.
The Clary Lake Association, an association of Clary Lake waterfront owners, petitioned the DEP to establish and to enforce the water level order. George Fergusson, spokesman for the association, declined to comment on whether the association intends to bid on the dam during the auction.
The auction is scheduled for Friday, Jan. 29 at 11 a.m. on the steps of the Lincoln County Courthouse.
