A Wealthy Connecticut Town Sells Bonds For The Purchase Of An Island Worth $85 Million

Next week, Darien, a town on the Connecticut coast, one of the wealthiest towns in the country, will sell over $115 million of debt, with the majority of that money going toward financing the purchase of a private island off its shoreline that will be used for the deployment of public services.

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In order to make sure that the open space is protected, municipalities sell bonds and notes all the time, but there's one particular site - called Great Island - that is really spectacular, just like a scene from "The Great Gatsby." 

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In addition to the 60 acres of Long Island Sound, the property includes a 13,000-square-foot mansion with ten bedrooms and eight bathrooms that was built for the baking powder magnate William Ziegler in 1905. For almost 100 years, the island has remained in the family, and it was first listed for $175 million in 2016. It has been on the market ever since. 

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Also featured on the site are the house of the guest house, the caretaker’s cottage, the farmhouse, the seaside cottage, and the equestrian facility, which is a large equestrian facility that has tiled ceilings that were designed by the same architect who was also involved with Grand Central Terminal’s vaulted tile arch system, according to the magazine. This island is connected by a causeway to the mainland and has a pool, two beaches, a couple of nice terraces and a dock that can accommodate a yacht up to 100 feet.

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"We are pleased to announce that the recent purchase of this captivating property has prioritized its conservation, preventing intensive development and preserving it forever for future generations," First Selectman Monica McNally said in last month's press release.

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It has been proposed that part of the island be used for community activities such as equestrian uses, a seasonal marketplace, croquet courts, and the inevitable pickleball facility, as part of a “Visioning Plan,” a document that was adopted by Darien officials. There is a possibility that one area could serve as a museum, a community center and a farmers market, while another could serve as a conservation area. Recreation could also take place on the existing beaches and shoreline. 

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There are about 40 miles (64 kilometers) of coast between Darien and Manhattan, and it is situated in a affluent area where hedge funds and other financial institutions have established a presence. According to Trade Algo, it is ranked as the 10th wealthiest city in the nation with a household income of $352,839. 

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It was originally going to cost $103 million to buy the island in 2022, but after due diligence and negotiations the town settled on an offer of $85 million.

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According to James Palen, chairman of the town's board of finance, Darien renegotiated the price after the Federal Reserve raised interest rates starting last year and this led to a softening of the real estate market.

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There will be an auction on April 6 that will sell approximately $72 million worth of general-obligation bond anticipation notes at the municipality, which will coincide with a bond offering of approximately $43 million. As the notes mature in April 2024, the town will be able to plan how the island will be used, which will determine how much is taxable and how much is exempt from taxes. This will give them a year to plan how the island will be utilized. 

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In addition to the island acquisition, Palen said the remaining $30 million will go toward the renovation of an elementary school as well as other community projects in the town. The town is using almost 34% of next week's proceeds for the island acquisition. 

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It is fiscally 'solid'

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Moody’s Investor Service ranked the town with a rating of Aaa in 2022 and cited the fact that the tax base is large and the resident wealth is exceptionally strong. There was a total value per capita of $572,946 in 2021 based on the value of all the taxable real property in that municipality divided by its population. In the United States, the median salary is $96,667. 

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This town of 21,500 people is said to be in a “solid fiscal position,” according to Moody's, which provides a rating from A- to B.

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Palen said he believed the acquisition would offset the impact of the taxation on the island by bringing on three mixed-use developments that will come on line in 2023 to offset the impact of the acquisition on Darien's debt and property tax rolls. 

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According to Palen, Moody's has refused to comment on whether the acquisition will have any effect on its credit rating. Moody's has not raised any red flags regarding the acquisition in recent and last year's discussions. As far as he is concerned, it is unlikely that the ratings will be affected by this.   

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"The Douglas Elliman listing on the Douglas Elliman website emphasises that this is one of the largest private islands in the world and represents a one in a lifetime opportunity," states the listing on the Douglas Elliman website.

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A place like this is the kind of place that my mother used to remind me of, "See this? If you work really, really hard, I'm sure you might be able to live here one day.".