Brookfield, the developer of the long-stalled CityPlace project, has alerted the city that it is taking steps to sell its interest in the project and return management authority back to Don Sinex, the project’s former manager.
Mayor Miro Weinberger said that the city had sent Brookfield a default letter Saturday alleging “bad faith and fraud” and alleging that the company breached its development agreement with the city.
Weinberger said the city was prepared to file suit against the company seeking damages and ownership of the portion of the land the city had planned to use to connect St. Paul and Pine streets through the site.
Weinberger said the city would give the developers “a short period of time” to present an acceptable path forward before pursuing legal action.
The site has sat idle since August 2018, as the project has struggled to receive financing and construction restart dates have come and gone without action. Brookfield publicly emerged as the managing partner of the project in January 2019, taking over control of the day-to-day operations of the project.
Sinex had been the public face of the stalled project for years. Brookfield is the majority partner in the project, with 51% control, while Sinex’s Devonwood Investors have a 49% stake.
The city had prepared a default analysis last June as delays persisted, as VTDigger reported. But the city ultimately reaffirmed its commitment to the project following additional reassurances from Brookfield.
Weinberger said that Sinex’s return to leading the project would be “unacceptable” to the city.
“It would constitute a breach of faith and a betrayal of trust,” he said. “Brookfield should keep its commitment to the people of Burlington and see the project through to completion as it has repeatedly promised.”
Brookfield announced a scaled-down, $120 million, 10-story project late last year. The company said construction would start in 2020 and be complete in 2023 under its timeline.
In May, the company said through a spokesman that it still was aiming to start construction this year despite the pandemic.
Weinberger said that the city was concerned about Sinex taking control of the project following his previous failures to start construction.
“That history came as a result of attempting to make this work with Don, so we do have concerns about trying that again, for sure,” he said. “There’s a real chance this will become a matter of active litigation.”
Sinex said via email Wednesday that he would be releasing a statement at some point in the future.
“Until then … I am not able to comment further on the matter,” Sinex said.
Ken Liatsos, a spokesman for Brookfield on the project, also declined to comment.
The city’s July 18 letter to Aanen Olsen, Brookfield’s senior vice president, stated that Brookfield told the city the company was leaving the partnership to settle “its ongoing partnership dispute with Devonwood Investors LLC.”
“This is in direct contravention of its earlier reassurances to the City,” Jeremy Farkas, a lawyer working for the city on the project, wrote. “It appears to the City that Brookfield has been contemplating this action for some time, and that its earlier assurances and reassurances were knowingly false when made and designed to induce the City’s continued support of the Project.”
Brookfield “fraudulently induced” the city to release permits authorizing the demolition of the mall and the parking garage and “fraudulently induced” the city to petition the Vermont Economic Progress Council for a change request for the city’s TIF district, Farkas wrote.
Additionally, Brookfield claimed that it was fully committed to the project while secretly designing alternative project designs and claimed that it needed modifications to the development agreement to pour the foundation before not following through, Farkas wrote.
Brookfield also claimed that it was “committed to the Project and that it would not divest its ownership interest in BTC until after construction was compete, and then secretly negotiating to exit the partnership that controls the Project prior to commencing construction,” Farkas wrote.
“The City intends to pursue all available legal and equitable remedies arising from or in connection with Brookfield’s and BTC’s breach, fraud, misrepresentation, and bad faith, including claims for monetary damages, lost property tax revenue, and specific performance,” Farkas wrote.
City Council President Max Tracy, P-Ward 2, said he supported the city pursuing legal action against Brookfield.
But he said he was frustrated it had taken the city so long to take a harder line with Brookfield as it had been clear that the company was not acting in good faith.
“I appreciate we are taking a harder line against Brookfield, and we need to follow through and hold them accountable,” he said.
Tracy said he had “no faith” in the project.
“I have seen nothing from either Brookfield or Sinex to give me any indication that they are going to be able to follow through on any of the commitments they’ve made,” he said. “In addition to that, they’ve made false or misleading statements on so many occasions, that at this point, it’s impossible to trust them.”
Councilor Brian Pine, P-Ward 3, said that the past six months had been concerning for the project as Brookfield had not provided full transparency about the project or been willing or capable of engaging with the community about the project.
“I support the action he’s taking, and the tone and direction he has laid out for us,” Pine said. “Perhaps, it’s even overdue.”
Pine said that neither he nor the Burlington public had confidence in Sinex.
“I think the fundamentals of the project as designed and envisioned by Mr. Sinex were deeply flawed,” he said.
Read the city’s default letter to Brookfield:
This story was updated at 6:20 pm Wednesday with additional comments from city officials.
