This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
A Utah company that was chosen to develop a multicultural center of shops, restaurants, condos and offices in West Valley City is suing over the city's decision to drop the project.
The West Valley City Council voted unanimously March 25 to reject Ascent Construction's proposal for the first phase of the Jordan River Marketplace, which was to be built at 3300 South and 1200 West, south of the Utah Cultural Celebration Center. A development agreement between the city and Centerville-based Ascent has expired and was not renewed.
Ascent — which formed Jordan River Marketplace LLC (JRM) to bid on the project — claims that it appears the city or its redevelopment agency decided several years into the development process that because the real estate market was recovering, it had made too good of a deal with the company.
"Instead of being a 'partner' cooperating in the development, WVC searched out ways to delay the project or excuses to deny it," JRM alleges in its suit filed Oct. 13 in 3rd District Court.
But West Valley City Manager Wayne Pyle said JRM's claims are "completely without merit."
"The city intends to pursue its own counterclaims against the developer for breach of contract and the losses caused to the city by the developer's failure to build the contemplated project despite repeated extensions and assistance from the city," Pyle said.
JRM is asking for a court order giving it the right to develop the 17-acre project site, title to the property and an unspecified amount of money. West Valley City and the Redevelopment Agency of West Valley City are named as defendants.
Bruce Baird, the attorney for JRM, said the company spent "hundreds of thousands, if not millions" of dollars doing engineering and other work to get approval for its plan.
The lawsuit is the latest twist in a decade-long effort to develop the vacant land next to the Cultural Celebration Center.
The idea for an international center came from a 2004 master plan that said the property should be used as the gateway to West Valley, the state's second-largest city, which has about 130,000 residents. In addition, the plan for the area was to reflect the diversity in a municipality where ethnic minorities make up nearly half of the population.
After West Valley City solicited proposals in 2008 to develop about 32 acres at the site, JRM principals assembled a team of architects, economists and other consultants to bid on the project, according to the suit. The JRM proposal, which the company says was created "at considerable expense," was selected in late summer 2008.
The parties worked to develop an agreement for disposition of land (ADL) for private development, a process that was completed on Sept. 11, 2009. The agreement committed West Valley City to sell the project property to JRM and included a provision that if the company failed to meet certain performance parameters, it would lose ownership of some portions of the land.
The city had paid $4 a square foot for the land in the late 1990s. Under the development deal, JRM was to pay $3 a square foot, with the payment coming from tax increment — the taxes generated from the increased assessed value of a property within a redevelopment area. The ADL also required the developer to complete $8 million worth of construction by Sept. 1, 2013. That deadline was later extended to Sept. 1, 2014.
The project was behind schedule even before it began, the suit claims, noting that the original plan called for construction to begin in spring 2009, several months before the ADL was finalized.
It also was smaller than the original vision, ending up at 17 acres instead of 32 acres after a land transfer process that took more than a year to complete because of the time needed to determine who owned what and what could be developed where, the suit says.
But although the commercial real estate market was in a wait-and-see mode, JRM worked diligently to develop the international marketplace, the suit says. However, there were more delays because of the difficulty of getting council members and the mayor to agree on a project design, according to the suit.
"Another problem endemic to dealing with local governments on a longer term development is that the cast of characters kept changing, which made the development planning even harder than it already was," the suit alleges.
JRM cites the proposed Esperanza charter school, designed to accommodate 500 students and geared to the Hispanic market, as an example of the problems it faced. The company says it wanted to put the school on a spot that was not suited for retail construction because it was separated from the rest of the development by a pond and a power corridor.
Esperanza received universal support at a public hearing, JRM says, but the West Valley City Council voted against the proposal on the grounds that a school would not generate revenue.
In May 2013, the council modified the site plan and changed the requirements for the tenant mix, according to the lawsuit. It says JRM then prepared engineering and other plans and obtained signed lease agreements and letters of interest from businesses.
But on March 25, the West Valley City Council rejected JRM's plan, the suit says.
Councilman Steve Buhler said the development would work as a private project but too much time had passed for it to make financial sense to fund it with taxpayer money. Under the redevelopment time-frame, there would be just five tax-increment payments left, estimated to total about $950,000 from 2015 to 2019 — less than the city's nearly $1.2 million purchase price for just the 9 acres earmarked for the first phase.
And Councilman Corey Rushton noted the property was appraised in 2009 at almost $11 a square foot and said "the payoff isn't there" with the marketplace. He recommended a fresh look at what types of development should be built along the entire waterway.
The suit claims the city's actions breached the development agreement and that JRM has the right to continue its ownership of the project land, which remains undeveloped.
"Ascent/JRM has lost the significant resources of both time and money it spent over the years trying to please the unpleasable," the suit alleges.
In addition, it says, JRM "also potentially lost the ability to make substantial profits by building out the development and leasing/selling the developed space."
Twitter: @PamelaMansonSLC