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The Minot City Council voted unanimously Thursday after meeting in executive session to take steps to terminate the City’s agreements with Cypress Development, LLC, and to initiate a lawsuit against Cypress.
In 2015, the City and Cypress entered into lease agreements for the Central and Renaissance Parking Structures. Cypress failed to make required lease payments, which were due October 15, 2017, and owes the City over $256,000 in unpaid rent. As a result of this, the City is exercising its contractual right to terminate its 2015 lease agreements with Cypress.
The City has been negotiating with Cypress for more than nine months, but little progress has been made.
“It’s unfortunate we couldn’t make this partnership work, but we need to be sure we act in the best interests of our citizens,” said City Manager Tom Barry. “We cannot waive the payment schedule the developer agreed to and make the taxpayers pick up the bill.”
The City is taking action to terminate all other agreements between the City and Cypress. This includes development agreements from 2012 and 2013 and a development management agreement from 2015. The City is also providing notice of breach of a 2015 development agreement that provides two loans to Cypress for use in completing construction of the projects. Termination of these agreements will effectively end the relationship between the City and Cypress.
“In addition to terminating the agreements, the City is pursuing all outstanding monies owed to it, including lost revenue, construction overruns, outstanding lease payments, and legal fees,” Barry said.
The City and Cypress entered into an agreement in 2012 for the downtown parking structure projects. The City was to commit $9.8 million to the projects, the majority of which was funded using Community Development Block Grants-Disaster Recovery funds. The development agreement outlined the developer was responsible for any costs exceeding that amount. The projects were to include parking structures, with additional commercial spaces and residential housing built around and above the parking structures.
In October 2013, Shaw-Lundquist and Associates, the General Contractor for the projects, began work on the structures. Work stopped in the fall of 2014 when Cypress encountered funding issues. City officials met with Cypress and Shaw-Lundquist to restart the projects. In December 2015, to help facilitate completion of the projects, the City agreed to provide a $1.5 million forgivable loan and an additional $1 million loan at the rate of 1% per year.
The Renaissance and Central parking structures opened for vehicle parking in February 2016 and May 2016, respectively. To date, construction of the residential portion of the projects has not begun, and Cypress has failed to complete the commercial structures.
“We’re disappointed that Cypress’s actions have forced the City to terminate its relationship with them,” said Mayor Chuck Barney. “We have to move forward, make progress, and finish what we set out to do originally, and that’s to improve our downtown.”
As a result of the termination of its agreements with Cypress, the City intends to take over management of the parking structures, and will work to facilitate a smooth transition.
The City remains committed to seeing the commercial and residential portions of the project completed, including the construction of low-to-moderate income housing units, and intends to seek Requests for Proposals from private developers at an appropriate time.