Developer blames economy in response to city suit

Times-Herald Newspapers


DEARBORN — Attorneys for Burton-Katzman Development Co. last week refuted most of the allegations made in a breach of contract and silent fraud lawsuit filed by the city in January about the stagnant West Village Commons development.


The response, filed in Wayne County Circuit Court, said that despite Burton-Katzman’s best efforts to get the project finished, the economy has made it impossible.


Company attorneys also filed a motion for summary judgment on the silent fraud count, calling it “baseless.” Additionally, B-K officials said a University of Michigan-Dearborn student-housing complex proposed for the largest unfinished portion of the site now could be in question, although many around the city are skeptical that a deal on the land is close.


“To bring a lawsuit now, in the due diligence phase of this agreement, is mystifying and could jeopardize that transaction,” said Chuck DiMaggio, the project’s manager. “We regret that the city chose litigation over negotiation.”


City officials denied that they have been closed to negotiations.


“We gave them time after time to come up with something that would satisfy the criteria that we laid out for the project,” Mayor John O’Reilly said. “And time and time again, they have failed to do that. At this point it’s apparent that this just isn’t going to work.”


City attorneys filed the complaint in January after more than a year of inactivity at the former Jacobson’s department store site on Michigan Avenue between Tenny and Howard. The city purchased the building in 1999, and in 2004 selected Burton-Katzman as the preferred developer for the land.


Initial plans for the project called for 48 rowhouse-style condominiums to the south, 75,000 square feet of office and retail space along Michigan and dual midrise buildings – one a hotel, one an office and retail building – in between. Although Burton-Katzman completed construction on the mixed-use portion in June 2006, to date only 36 condos have been built, and the site of the midrise buildings remains empty.


Dimaggio said the company was disappointed that the city chose to file the suit in the midst of a recession.


“Where other developers failed to get a shovel in the ground, we have built 75,000 square feet of retail and office space and 36 condominium units that converted the site of the abandoned, former Jacobson’s department store into an attractive, upscale and key component of downtown west Dearborn.”


The company’s recently filed statement also said that in addition to the student-housing complex, the company also made proposals for a senior housing facility and a hotel in lieu of the midrise buildings outlined by the development agreement, only to be rebuffed by the city.


City officials said the projects were rejected because they did not generate enough tax revenue to support the parking decks the city built as part of the developer’s agreement. The underutilized decks are a key point to the city’s complaint, and have cost the city $2.5 million from the general fund since 2005.