[B]URLINGTON — The developer behind a planned $225 million mixed-use downtown redevelopment is asking a judge to dismiss a legal challenge brought by project opponents.
He’s also asking Judge Thomas Walsh to reject opponents request for a stay that would block construction.
If those requests are denied, Don Sinex, owner of the Burlington Town Center Mall, is asking the court to require the group of residents challenging the project to post a bond — $25 million — to compensate him for losses if the project is “improperly stayed pending appeal,” according to a spokeswoman and the legal filings.
A group of 57 residents brought an appeal in the environmental division of Chittenden Superior Court on April 14, arguing that Burlington’s Development Review Board erred in its decision to greenlight the project. Their attorney, John Franco, later filed a motion seeking a stay of construction activities pending the outcome of their appeal.
In motions filed this week, Sinex further requests an expedited hearing in the matter, arguing that project opponents appeal is “legally meritless,” and Sinex will suffer “substantial irreparable damage” if construction is delayed.
Among the issues the group raises in their appeal is whether it was acceptable for Devonwood Investors LLC to be listed as the applicant before the Development Review Board, when the owner of the property is BTC Mall Associates LLC, which is also the entity that signed a predevelopment agreement with the city.
Sinex, in an interview Tuesday, said the discrepancy was an “administrative oversight” by his architect who filed the permit application with the Development Review Board. He said he’s taken steps to make clear to the city what the ownership structure is for the mall property.
An attorney representing Sinex before the review board said that Devonwood Investors LLC is the “upstream owner” of BTC Mall Associates LLC, the company the owns and operates the Burlington Town Center Mall. But Franco, in his motion, equates that to the relationship between a stockholder and a corporation.
“The actions of an individual member of an LLC or by an LLC, which is the ‘upstream owner’ of another LLC, no more binds the LLC than would the actions of a stockholder bind a corporation,” Franco writes.
Alongside motions filed this week, Sinex provided a sworn affidavit stating that he is the “managing member” of Devonwood Investors LLC and Devonwood II Investors LLC, which together wholly own BTC Mall Associates LLC.
“I am ultimately responsible for all decisions related to the ownership and operation of the Mall,” Sinex writes in the affidavit.
According to an organizational chart provided to city officials and reporters, Sinex owns 81.75 percent of Devonwood II Investors LLC and a Steven Posner owns the remaining 18.25 percent. Sinex owns 50 percent of Devonwood Investors LLC, and Mark Quigley owns the other 50 percent.
Those two entities together own BDM Associates LLC, which in turn owns BTC Mall Associates LLC.
Sinex described Quigley as a “personal friend” and “passive investor” who owns a 25 percent stake in the redevelopment.
“He knows me, he trusts me, and he relegates all decision making to me,” Sinex said, “The governance documents, the operating agreement for the limited liability company, vests all decision making in me.”
The legal challenge also suggests that the Development Review Board was wrong to approve the project because it doesn’t include enough parking.
Meanwhile, Sinex, in his affidavit, states that construction was slated to begin on July 5, but the city’s Department of Public Works won’t issue building permits until the court has denied the motion to stay.
Until construction begins, Sinex said the Burlington Town Center Mall will continue to lose $270,000 per month in lost rental and maintenance payments from tenants who have cleared out of the mall in anticipation of the redevelopment. Further, Sinex writes that, while construction is delayed, he will incur another $240,000 per month in other expenses to keep the mall operating.
“While these costs are caused by the need to make way for the Project, delay will mean that we incur these costs for more months than necessary,” Sinex writes.
In addition, construction costs increase overtime as the cost of building materials and labor rise with inflation, leading Sinex to estimate that a one year delay in construction would increase the project’s cost by $5.6 million. Other soft costs, such as professional fees and retaining investors would increase by $2 million if the project were delayed for one year.
Finally, a substantial delay threatens to scuttle a commitment from the University of Vermont Medical Center, which is expected to lease offices for 350 to 400 of its employees in the redeveloped property. That’s because the medical center’s current leases for offices expire in January, 2019.
If certain project milestones aren’t met, such as obtaining permits, UVM Medical Center can terminate its lease agreement.
“At worst, the loss of UVMMC as a tenant could result in a complete loss of financing, which would jeopardize the entire Project,” Sinex writes. That in turn would harm the city and its residents through the loss of jobs, economic activity and property tax expected from the project, according to Sinex.
Franco and the project’s opponents have several days to file response briefs to Sinex’s motions. Then, Judge Walsh may either rule based on those filings, or schedule a hearing in the case.
