ANN ARBOR, MI – A legal fight might be brewing over the city-owned Library Lot in downtown Ann Arbor.

Chicago developer Core Spaces is objecting to Ann Arbor’s decision to cancel a $10 million deal to sell the Fifth Avenue property to the developer to make way for a 17-story high-rise.

City Administrator Howard Lazarus laid out the city’s reasons for canceling the sale agreement with Core Spaces in a Dec. 31 letter to the development team and its attorneys.

Since voters recently approved a city charter amendment stipulating that the Library Lot can’t be sold and must be transformed into an urban park and civic center commons, the deal to sell to Core Spaces is off, Lazarus said, also noting there’s pending litigation from central park proponents challenging the Core Spaces deal.

"We strongly disagree with the city’s position as stated in the letter,” Andrew Wiedner, chief acquisitions officer of Core Spaces, said in a statement on Wednesday, Jan. 2. “We are evaluating our options and will be responding in more detail shortly."

An attorney for Core Spaces appeared before the City Council on Dec. 17, hinting at the possibility of “very expensive litigation.”

The Library Lot is the surface of the city’s underground parking garage next to the downtown library.

The city has spent the past decade considering options for a high-rise development on the lot.

The City Council voted 8-3 in April 2017 to approve selling the development rights to Core Spaces for $10 million. After more than a year of negotiations, the sale agreement was signed last spring, after which central park proponents filed lawsuits challenging it.

The central park proposal on the November ballot ended up passing with 53 percent support.

Citing an out-clause in the sale agreement, Lazarus wrote in his letter this week, “Because this situation is obviously one that cannot be cured, the agreement with Core Spaces is terminated. We will arrange for the return of the deposit paid as part of this transaction and await your direction on where and how to send it.”

As proposed, the Core Spaces development included ground-floor retail/restaurant space, office space, 131 hotel rooms, 360 apartments, and a 12,000-square-foot plaza.