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May 15, 2019

The developers of a proposed mixed-use downtown project that would have included a city-owned parking ramp said they’re “very disappointed” in the city’s decision to terminate their agreement and have taken legal action.

Village River Group received notice this week that the city of Sioux Falls planned to terminate its development agreement after what the city called multiple defaults on the developer’s part that weren’t corrected in 30 business days.

The city hasn’t specified publicly yet what those defaults were.

“Village River Group had spent a significant amount of time and resources updating the private development piece of the mixed-use parking ramp in downtown Sioux Falls to ensure that this project exceeds the requirements of the development agreement,” the developer said in a statement.

“Village River Group had presented design modifications to the city of Sioux Falls last month and was told that the city was reviewing those changes for approval and that the city liked the changes and had no issues with them. The development agreement called for written notices of approval or denial for certain changes made to the private development plans. Village River Group did not receive any notice from the city of objections to or rejection of the proposed changes to the plan.”

Village River Group had planned to scale back its development along 10th Street east of Phillips Avenue from a 15-story building to an 11-story building and to one hotel – AC by Marriott – instead of two, which had included a Residence Inn by Marriott. It also reduced the amount of retail, office and event space in the project. Work has been progressing on the floors for the parking ramp.

The developer said the city canceled meetings and “failed to reply to numerous calls and communications from Village River Group concerning the design modifications.”

For its part, the city said in a statement issued Tuesday that it “has invested significant time and resources working with VRG in furtherance of performance of the development agreement.”

The city had notified the development group April 1 that it was in default on multiple points of the development agreement.

“In response, Village River Group provided formal responses on three occasions indicating that it did not agree that a default existed and also provided details showing that the project would still be completed on time and as initially scheduled as per the development agreement,” the developer said in its statement.

“Village River Group is very disappointed in the decision that was made by the city of Sioux Falls to terminate the development of an ideal $45 million project in downtown Sioux Falls. This project would have brought in millions in real estate tax revenue, sales tax revenue, entertainment tax revenue,and downtown business improvement district revenue and notably without the use of tax increment financing.”

The group said it served the city with legal documents today “outlining its position on this matter” but didn’t specify what sort of legal documents they were.

“Because of the potential litigation arising from these events, we cannot provide further comment on the matter at this time,” the developer said.

The city also said Tuesday in its statement that “Consistent with protecting taxpayer interests, the city has reserved any and all of its legal remedies available to it under the terms of the development agreement.”

The city has said its goal now is to complete the parking ramp, although a new private development on the site remains an option at some point.