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UPDATE: Lawsuit Settlement Gives Land and $610,000 to Developer

The city would essentially hand developer Samuelson & Fetter land for free and pay the developer a total of $610,000 under the terms of a settlement agreement that the City Council will review in a special meeting next week.

The City Council will decide Monday whether to enter into a settlement agreement that would compel the city to pay Samuelson & Fetter $610,000 and and essentially give the developer land for free.

The council will consider the terms in a special meeting after they were agreed to by attorneys for both parties. The council must still vote to approve the agreement, which must then be approved by a judge.

The agreement calls on the city to pay Samuelson & Fetter $2.78 million and then sell a lot of land east of Magnolia Avenue and south of Pomona Avenue to the developer for the exact same amount--$2.78 million, according to Councilman Tom Adams.

"The city ... is paying Samuelson & Fetter $2.78 million to terminate the lawsuit," Adams explained. "And then we sell the land to Samuelson & Fetter for $2.78 million. Basically we're giving them the land for free."

Additionally, the city must pay $510,000 to the developer and up to $100,000 for environmental insurance premiums on the land, according to the settlement agreement.

The payments were agreed upon in the city's original development agreement with Samuelson & Fetter, according to City Manager Laurie Lile.

"The development agreement had some provisions for reimbursement ... for some of their costs for development of the Station Square Design Plans," Lile said. "There is no reason not to do the reimbursement."

The money comes from the budget of the successor agency to the city's redevelopment agency, which was eliminated by the state last year. If the council approves the settlement, it must then be approved on Wednesday by an oversight committee set up to handle the agency's finances. The state Department of Finance must also sign off on the agreement.

Lile said the city decided to settle because it did not want to continue to spend money fighting the lawsuit.

"I think, from our perspective, challenging the lawsuit in court and litigation--it is not very productive," she said. "It is very expensive and time consuming."

The settlement agreement stems from a $106 million lawsuit filed by the developer against the city in August alleging the city breached a development contract. The land specified in the agreement will be developed as part of the Station Square Transit Village project and will house a Gold Line parking facility.

Blaine Fetter, a principal at Samuelson & Fetter, could not be reached for comment on this story.

Clarification: A previous version of this story stated that Samuelson & Fetter would pay $2.78 million for the land but did not mention that the city would give the developer the same amount of money. We regret the misunderstanding.

R. Ray Morford February 08, 2013 at 07:55 AM
Where does the money come from with such a tight budget? From the sale of the plot of land? If there is any left over, pave Norumbega .
Dan Crandell February 08, 2013 at 02:30 PM
The settlement is an ouch but the land has got to be valued several times more than $2..78 million. Why does our City always seem so willing to accept the dirty end of the stick?? Monday night we will be paying attention to what the council decides. Have mercy.
Gayle M. Montgomery February 08, 2013 at 07:24 PM
Many think in terms of absolutes as in we're absolutely right and they're absolutely wrong so that we must absolutely not pay. The truth of the matter is that anyone who has spent time in the legal process understands that the system is a hot mess. It takes a prolonged amount of time for civil trials to come to court (generally about 4 years), and it takes buckets and buckets of money because each party sends discovery (a bunch of questions and/or a demand to produce all manner of documents) that gets generated using billable hours. Those billable hours are definitely not cheap, and attorneys have gotten quite savvy. You're not just paying the attorney's time, you pay for all staff, and specific charges for most documents. The costs continue to climb. If you lose, you can be compelled to pay the other guy's costs en toto. This type of litigation is not the type a city attorney is generally prepared to handle which means you ratchet up the costs as you go with one or more specialists. I don't think any of us wanted to be in this situation, and I clearly would not want us to see do any additional business with this developer who should be ashamed of itself for even wanting to continue to stay in our town (bite the hand that feeds us, you damn well better pay every bit of taxes and fees you owe), but the only cost-effective thing for us to do at this point is to cut our losses and settle. I just hope this is the best possible stinky settlement option.
Gordon Bachlund February 08, 2013 at 07:40 PM
A "settlemen" may be the best course of action as Gayle suggests, but we also need to identify those responsible for this debacle and deal with them as appropriate.
NWT February 10, 2013 at 08:11 PM
Are we talking only about the lot bounded by Pomona to the north, Metro right of way to the south, Magnolia to the west and South Primrose to the east (which in itself is a huge piece of property), or are we talking about the entire area slated for development extending all the way over to Myrtle Avenue and including the ownership of the historic depot? What exactly are the specifics here?

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