Paid in full? : Final penalty payment to city due soon for Renaissance developers
Posted on Tuesday, July 22, 2008
It's up to the Fayetteville City Council to decide what happens next at the corner of College Avenue and Mountain Street where the Renaissance Hotel is supposed to be built, according to City Attorney Kit Williams.
"The city could say, ' We don't want to demand so much money that it could ruin the project. It is more important to the city that a significant project be built here than to continue to try and collect damages, '"Williams said. "It's a policy decision of the City Council."
But owners and developers John Nock and Richard Alexander maintain that when they have paid the last of the liquidated damages to the city, their obligation to the city is over.
"In my opinion, we've complied with the contract, done everything we said we'd do, and we still intend to build the hotel," Alexander said.
Nock and Alexander, partners in East Square Development LLC, have paid about $ 250, 000 to the city's general fund - about $ 25, 000 per month for 10 months - for liquidated damages because the Renaissance Hotel did not open as expected in September 2007.
There are two payments remaining.
The last payment is due in September, said Paul Becker, finance and internal services director.
"At the end of this yearlong payment of liquidated damages, there are no more liquidated damages to be paid or collected, but that does not necessarily mean the city has no further damages," Williams said.
Alexander disagrees.
"In my opinion, at that point our obligations to the city are over. We own that land fee simple absolute. The city has been paid the full benefit of its bargain," he said.
Williams said fur ther damages, if there are any, would require the city to go to court to prove it had suffered reasonable damages by breach of contract without having the building open. He said he still supports the project and that filing a lawsuit would make it less likely that it would be built.
Williams said the city has other options, such as negotiation.
One such possibility would be to allow more time for construction of the 18-story mixed-use hotel, convention center and condominium project.
Williams noted that the City Council already allowed more time for construction when it gave developers until 2010 to obtain all the necessary building permits.
"Overall, I think we still want to see it completed," Williams said.
Alexander said the contract between the developers and the city had three relevant clauses with respect to the city.
They had to enter into contracts with an architect and an engineering firm by a certain date and enter into a construction contract by a certain date.
"We did," Alexander said.
The other clause was for liquidated damages, which were capped in the contract at about $ 300, 504.
"We will have paid those in full when we make our 12 th and final payment," Alexander said.
"How it goes, who knows ? "said Ward 2 Alderman Kyle Cook. "I just want them to build it."
Cook said he expects a council discussion with developers about the project after the final damages payment is made.
If the council wants to give the developers more time and not demand further damages, Williams would recommend that the council demand site rehabilitation, such as screening.
"It has become an eyesore and a joke," he said.
Williams said when it becomes a true construction site, the city can expect holes in the ground, metal going up, and equipment.
"It's going to look like a construction site. Now it looks like an abandoned construction site. I don't think that's what the City Council ever assumed would happen," Williams said.
Ward 4 Alderman Lioneld Jordan said he wants to hear what the developers have to say, but he'd like to look at the possibility of fencing and removing barricades so residents can use the streets again.
Ward 3 Alderman Bobby Ferrell is looking to the city administration to tell the council what to expect and to offer recommendations.
"I'm hopeful that our administration, which are the ones that kind of led us into this project, will be advising us," he said. "They need to come to us before (the last payment ) and give us the ups and downs of the situation. We don't need any surprises."
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