Burlington city councilors gave Mayor Miro Weinberger their blessing early Tuesday to sue CityPlace developers Don Sinex and Brookfield Asset Management if negotiations over the long-stalled project sputter out.
The council voted 10-1 to “pursue all legal remedies” should talks with Sinex and Brookfield fail. The vote, taken just after midnight Tuesday, authorized the city to make all "necessary budget allocations to accomplish these ends." Councilor Ali Dieng (I-Ward 7) cast the lone no vote; Councilor Franklin Paulino (D-North District) was absent.
"The city is really wanting to take strong action against Sinex to make him live up to his promises," Council President Max Tracy (P-Ward 2) told Seven Days later Tuesday morning. "It's looking increasingly likely that we will pursue legal action," he added.
On Tuesday afternoon, Weinberger made clear in a statement that the city’s priority is to reconnect streets that were divided when the old mall went up in the 1970s. In pitching the CityPlace project to residents in 2016, Weinberger highlighted the fact that the city could use tax-increment financing dollars to reopen Pine and St. Paul streets, plus build sidewalks, street lighting and other improvements on parts of Cherry and Bank streets that abut the project.
Voters in 2016 approved using $21.8 million in TIF funds for the road improvements. A development agreement between the city and Sinex’s team, signed in October 2017, spelled out the details.
But attorneys for the city now contend that Sinex and Brookfield failed to keep up their end of the bargain and must now foot the cost of the improvements themselves.
“It has been nearly three years since the City entered into the Agreement and nearly four years since the voters [approved the TIF bond],” attorney Marc Heath wrote on the city’s behalf. The city “simply cannot wait any longer” for the developers to act, Heath wrote. “Please be advised that this letter represents the City’s final demand.”
The “final demand” comes just over a month after Weinberger announced he was prepared to sue CityPlace majority owner Brookfield for seeking to abandon the project. The city issued a letter of default notifying Brookfield that it had violated the project’s development agreement, including a clause that promised construction would continue "without interruption" after the former mall was demolished in 2017.
Little activity has taken place on the site since, but as recently as January, Brookfield had pledged to start construction this summer and complete the project by 2023. Brookfield then notified the city in mid-July that it would hand the reins to Sinex.
Brookfield attorney James Aronoff responded on August 18 to Weinberger’s default letter, writing that the city’s “claims of unfairness and deception … ring hollow.” Brookfield has invested $70 million to bring CityPlace to fruition, Aronoff wrote, adding that litigation would stall the project’s development “for the foreseeable future.”
“Ultimately the litigation will fail, and the City will not only be left paying its lawyer’s fees, but also the significant fees incurred by Brookfield,” he wrote. “Any such claims brought directly against Brookfield under the Development Agreement lack merit or any substantial basis.”
The city has since asked Brookfield for proof of its $70 million investment “given the extremely limited work toward construction of the Project conducted to date.”
If Sinex has his way, Brookfield will no longer be part of the picture. The developer says he’s signed a “binding agreement” to buy out the international company’s CityPlace share and has formed a new partnership with three local businessmen: Scott Ireland of SD Ireland, Dave Farrington of Farrington Construction and Al Senecal of Omega Electric Construction.
"The new partnership understands that getting this project back on track will not be an easy task given that the project's delay has created a feeling of mistrust and skepticism in Burlington," they wrote in a statement, adding that the council and mayor's unwillingness to collaborate "is a direct dereliction of their duties as elected officials."
Weinberger issued a statement earlier this month saying that the partners have not provided the city with basic financial information despite repeated requests. The mayor has said he doesn't trust Sinex to follow through — a sentiment shared by Tracy.
"Faith in and desire to work with Sinex has significantly eroded," Tracy said. "In that sense, there's not a desire to continue to work with Sinex on this project."
It's unclear how long Weinberger will engage in talks before pursuing litigation.
“The City remains willing to work with a well-capitalized, experienced property developer to get the outcomes the people of Burlington are due,” the mayor said in a statement Tuesday. “However, until presented with a viable opportunity for such progress, the City will pursue the outcome that it can legally compel: the construction of eight blocks of public improvements through the enforcement [of] the City’s rights under the Development Agreement.”
During the council meeting, Dieng said the city should try to "continue to try to compromise" with Sinex before going to court. Councilor Jack Hanson (P-East District), however, said he has long supported taking a harder line with CityPlace developers.
Tracy agreed, saying the city has given Sinex too many chances. "I've been calling for legal action for a long time," he said. "We should have gone down this route a long time ago, but I'm glad that we're here now."