The future of a $70-million hotel complex and parking ramp in downtown Sioux Falls is in doubt after the project developers requested changes to what is the largest private-public development in city history.

City officials are now trying to assess whether the changes requested by Village River Group will be a hit to taxpayers, who have already dedicated $20.6 million for the project. The developers include Legacy Developments and Aberdeen-based Lamont Cos.

"We are reviewing proposed changes in the project scope that were brought to the city by the developer to determine the financial impact to the city," Erica Beck, Mayor Paul TenHaken's chief of staff, said in a statement to the Argus Leader. "Our top priorities are complying with the existing agreement and avoiding financial burdens to the taxpayers as a results of any proposed changes.”

Work on the hotel portion of the 15-story multi-use complex called Village on the River in the heart of downtown Sioux Falls won't start this month as previously expected. And the private developer and city officials aren't on the same page as to if and when the work will get done.

Sabrina Metz, marketing director for Lamont Cos. told the Argus Leader on Thursday that construction on the first phase of private development is expected to start some time this summer, contrary to a previously expected start date of May.

"Village River Group has a request in with the city on a modification to the private design," Metz wrote in an email. "Once that is approved, we will finalize the rest of the design details and construction documents for the private improvements of this project."

However, the city says a start-date for construction on the private portion of the project hasn't been determined. That's because the city has yet to receive proof of a performance bond and a $350,000 fee spelled out in the development agreement.

City officials repeatedly did not answer whether the developers are in default of their contract on the project.

Earlier:Developer tweaks price tag, color scheme for Village on the River

The lead contractor on the project, Journey Group, began constructing the seven-story parking ramp portion of the building a year ago. The city is footing the $20.6 million bill for the ramp, which is nearing completion.

But work on the hotel portion or any other privately-funded work on the project can't commence until the city receives its fee and the developers get their performance bond.

"City is not in receipt of executed payment bond and performance bonds outlined in Article V of the Development Agreement," stated a response to an inquiry sent to the city by the Argus Leader on April 18.

T.J. Nelson, deputy chief of staff for Mayor Paul TenHaken, confirmed that the development agreement called for proof of performance bonds, but to date, none have been received.

Zach Pate, a bonding expert who works with Pate Bonding in St. Paul, said performance bonds are insurance for a developer that guarantees a project gets completed and its sub-contractors and employees get paid.

"I will say it's not the easiest to get a bond of that size," Pate said, referring to Village River Group's $50 million share of the project. "If you have really bad credit or other issues you might not be able to get a bond at all."

The development agreement calls for Village River Group to pay a $1 million fee in three payments to the city. The first payment of $150,000 was made following the approval of the deal, which former Mayor Mike Huether signed on Dec. 5, 2017. A second payment of $350,000 was to be made by the developer before work on the private portion of the project begins.

That payment hasn't been received, according to the city.

Construction on the hotel and other private elements had been slated to begin this month, according to the lead contractor on the project Journey Construction's monthly project newsletter.

Village River Group says project will finish

In a press release issued in the hours after an original version of this article published, Village River Group maintained the project will get built, but the private portion won't begin until the parking ramp is completely finished and the city approves the design changes, which it characterized as "improvements."

"Once approved by the city, the group will finalize the design details and related construction, architecture, and bond requirements and move forward with construction," the press release said.

The release notes that certain tax benefit programs such as tax increment financing "did not materialize" for Village on the River, but the city has offered BID tax rebate incentives and a real estate tax reduction incentive to support the project.

The project has been controversial from the start.

While the Village on the River concept earned the blessing of both City Hall and the City Council, the support came amid public outcry over the background of Legacy Developments, which partnered with Lamont Companies after the deal was approved in 2017.

A year earlier, a Legacy Developments project to renovate and remodel the former Copper Lounge drew public attention when the building collapsed and killed a construction worker.

After city councilors approved the project, federal officials confirmed that they had launched a criminal investigation into the collapse. When some city councilors wanted to back out of the deal, the Huether administration shored up support by assuring the council that the city would be insulated from any fallout from the Copper Lounge collapse.

Multiple lawsuits against Legacy Developments and Hultgren Construction, the construction company working on the Copper Lounge when it collapsed, are pending.

Hultgren Construction's shareholders are Legacy Developments executives also listed as guarantors on the Village on the River project.

The original plan called for the city to build the parking ramp. The developers promised a 15-story building that would have wrapped around the parking ramp, which would consist of the lower seven floors where about 515 public spaces would be provided.

Along with the parking ramps, plans call for two different hotels with a total of 215 guest rooms.

The city paid a premium for the parking ramp at nearly $40,000 a space - well above the national average of $20,000 - because the ramp needed to be strong enough to support the upper floors of the development.