BURLINGTON — Burlington officials are stepping up pressure on Brookfield Asset Management, the developer of the stalled downtown $220 million CityPlace Burlington.
The mayor’s office has issued a demand letter; a group of city councilors is pushing for more immediate legal action.
Mayor Miro Weinberger sent a letter to Brookfield Sept. 27 accusing the company of violating the development agreement with the city. The letter lists a set of demands the company must meet in October.
The site of the $220 million mixed-use downtown development has sat vacant for over a year as financing and feasibility issues have stalled the project. Brookfield is revising plans for the site and has not made public information about how the massive 14-story structure will be redesigned.
In his letter to Brookfield, Weinberger wrote that the company needed to take “immediate action” in timeframes laid out by the city in order to preserve the agreement and restore confidence in the project.
“The lack of progress over the past year is deeply frustrating, and your lack of clear progress on a revised project since July is threatening the viability of our long-planned collaboration,” Weinberger wrote.
City officials discussed the matter behind closed doors in executive session before the council’s Sept. 23 meeting. Weinberger and councilors who believe continuing to work with Brookfield will get construction started faster have found themselves at odds with councilors who believe a lawsuit seeking financial damages for the delays is the best path forward.
Councilor Max Tracy, P-Ward 2, argued that Brookfield violated two basic terms laid out in the development agreement: that it would continue construction until completion and would communicate with the city in a timely fashion.
VTDigger is underwritten by:
“I think the city should pursue legal action against Brookfield, they have clearly not lived up to their end of the deal,” Tracy said. “The city needs to continue to ramp up the pressure on Brookfield because this sort of wait-and-see approach has not been successful.”
Other councilors say while they are open to litigation as a last resort they believe legal action now would be premature and would inevitably lead to further delays.
“That would not move us one inch further toward the goal,” Council President Kurt Wright, R-Ward 4, said. “If you go to court with the developer you’re supposed to be partnering with, I think that’s got to be a last step, a last resort.”
Chelsea Ziegelbaum, project manager from Brookfield, did not respond to a request for comment. Brookfield is committed to meeting the city’s demands, according to a memo provided by the mayor’s office.
The development agreement, which was finalized in 2017, includes details about the project schedule, the sustainability of the project, housing, parking, public improvements, communication and other factors.
In the letter issued this week, Weinberger wrote that Brookfield and minority partner Don Sinex were not in compliance with “numerous” obligations under the agreement.
“Most significantly, BTC failed to continue construction of the Project following demolition of the mall and parking garage in contravention of the requirements in the Development Agreement that BTC diligently prosecute construction to completion,” Weinberger wrote.
Rouse Properties LLC, which previously had an interest in the project, also asserted that the construction would be diligently worked on to completion after the demolition in October 2017, Weinberger wrote.
The delays are jeopardizing the city’s ability to complete the public improvements tied to the project under the tax increment financing deadlines for reimbursement. The city is set to spend $22 million in tax increment financing for public improvements around the site, most prominently reconnecting Pine and St. Paul streets.
The developer is also in violation of its agreement with the city for encumbrances on Bank Street and Cherry Street, according to the mayor’s office. Weinberger’s letter demands Brookfield remove itself from the city’s right of way.
“The City demands immediate removal of the concrete barriers and other encumbrances now on public property, and the restoration of the streets, sidewalks and other public property to their prior safe and sound condition,” the letter states.
Weinberger demands that by Oct. 7, Brookfield pay the city the $50,000 it had agreed to pay for the city’s administrative costs associated with the delays from May to September, and pay $30,000 it had agreed to pay the Burlington Electric Department.
The city is also demanding Brookfield pay $122,000 for a second year of the holiday parking promotion it funded last year, implement a parking plan and confirm a plan to reopen the restrooms in the mall by Nov. 25.
Weinberger insists that Brookfield report to the city on the status of the project on Oct. 28 and to present an updated development plan and other information about the project.
Brookfield needs to take action by the deadlines in order to “salvage all of the hard work that has gone into this project,” Weinberger wrote.
Council mulls legal options
While Weinberger’s letter doesn’t explicitly threaten a lawsuit, the option is clearly on the table if Brookfield does not meet the city’s deadlines. The city reviewed its legal options in June, as an attorney working for the city prepared a “default analysis” of the development agreement with Brookfield and “noncompliance list.”
Councilors across the political aisle see legal action as a viable option, but most see a lawsuit as a last resort that would further delay construction as the city and Brookfield duel in court.
Some councilors say they believe that the pressure of a lawsuit demanding financial damages for violation of the agreement would motivate Brookfield to get moving faster.
“We’ve seen a continual effort on the part of a lot of councilors who say we need to play nice with Brookfield and that will lead to better outcome,” Tracy said. “Well that hasn’t led to a better outcome, so we need to take a different tack.”
Councilor Jack Hanson, P-East District, said he was glad the city sent the letter but would have preferred if it explicitly expressed a willingness to take legal action.
“I think it’s pretty clear that the strategy of just asking politely, or even asking with a serious tone, it doesn’t really matter, the words alone have done nothing,” Hanson said.
Even councilors more closely aligned with Weinberger are saying they are not taking legal action off the table.
“Depending on what we hear at our next update will determine whether or not I am willing to pursue legal action, but it is very much on the table,” Councilor Joan Shannon, D-South District, said via email.
Wright said the city’s patience is wearing thin and Brookfield had to show forward progress very soon, or the city would be forced to move in a different direction.
“They have to understand that patience isn’t limitless here,” Wright said.
Wright said the city would have “a pretty good case” to make if it did go to court, but damages would not be likely not be an “enormous” amount of money. At this point, Wright said he believed filing suit was not prudent and would bring the city further away from its goal of ensuring Brookfield restart construction.
Hanson said Brookfield had clearly not been responding to the city’s requests and would be more responsive if they had even more of a financial interest at stake.
“They care about money, and whether the money is coming in or going out,” Hanson said. “That’s what they respond to, and that’s what makes it real for them.”
Councilor Adam Roof, I-Ward 8, said he thought it was premature to call for a lawsuit.
“This isn’t a daytime TV courthouse drama that we’re looking at here,” he said. “This is serious business … We’re talking about whether or not this property is going to sit vacant for a long time or whether or not we’re going to do everything that we can to get this thing going.”
A lawsuit should be a last resort, Roof said, and the council needs to weigh the costs associated with additional delays caused by the lawsuit with whatever the city could recoup in damages.
“This whole thing is oversimplified, and I fear that politics are our leading decisions as opposed to real thoughtful, deliberate decision-making,” Roof said.
Councilors Sharon Bushor, I-Ward 1, and Franklin Paulino, D-North District, both said that they believed a lawsuit should be a last resort, but that the option was still on the table if Brookfield didn’t get its act together soon.
At the moment, Paulino said he thought a lawsuit would just lead to further delays.
“Let’s say everyone walked away from the table and everyone got lawyers, is that really going to get us moving forward?” he said. “I want action and I think the public wants action.”
Want to stay on top of the latest business news? Sign up here to get a weekly email on all of VTDigger's reporting on local companies and economic trends. And check out our new Business section here.