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pursuant to the Clean Water Act, Pub. L. 95-217, sec. 404, 91
Stat. 1600 (see 33 U.S.C. sec. 1344 (1988)) prior to developing
the property.
When asked to opine as to the likelihood that COE would
grant Lakewood's application for a permit to develop the
property, the consultants generally agreed that Lakewood would
not be permitted to develop the land, and, in fact, COE probably
would never formally act on Lakewood's application. The
consultants' view in this regard is reflected in the following
statement:
Based on my review of the documentation, all the
signals from [COE] indicate that the permit would not
be issued, and it was not probable that Lakewood would
get a permit. The more probable result would be that
[COE] would require Lakewood to provide more and more
studies of alternative sites, endangered species
reconnaissance, and archeological surveys, until
Lakewood finally gave up, due to the rising costs. It
is my experience that this is the pattern in other
cases in which a residential developer applies to [COE]
for a permit to develop a large wetland area.
Based on this advice, Lakewood decided that it would not be
economically feasible to attempt to develop the property.
Lakewood reported a loss of $9,849,682 in respect of the
property on its 1989 partnership return. Respondent subsequently
examined Lakewood's 1989 return and disallowed the loss in its
entirety. Although an appraiser engaged by respondent to review
the matter found it unlikely that the property could be developed
in an economically feasible manner, respondent issued a notice of
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Last modified: May 25, 2011