Fort Wayne will notify Barry Real Estate later this month that the Atlanta-based developer has defaulted on its contract to build a $14.5 million retail/condominium project downtown.
The Redevelopment Commission on Monday unanimously supported sending the company and Hardball Capital, the owner of the Fort Wayne TinCaps, a notice of default. No vote was taken, but no member expressed opposition to the action. The letter will be written over the next two weeks and then formally adopted by the commission.
Greg Leatherman, executive director of redevelopment, said Barry Real Estate has been acting in good faith in trying to get the project done, but it is time for the city to act. The retail/condominium project, dubbed The Harrison, was supposed to be complete by June 1, 2009, but has yet to begin construction.
“There is a point in time when it is wise to consider other options,” Leatherman said.
The letter will go to both companies because while Barry Real Estate is the developer of the project, Hardball is a kind of guarantor for the project. After the letter is received, the developer has 90 days to reach a resolution with the city, which Larry Shine, associate city attorney, said would mean proving they have adequate financing to begin construction.
Although the default process would allow the city to negotiate compensation or damages, Shine said it was more of an effort to bring everyone to the table to reach a resolution and get the project constructed.
Chris Schoen, CEO of Barry Real Estate, could not be reached for comment Monday afternoon, and Jason Freier, CEO of Hardball Capital, declined to comment until learning more about the city’s actions. Leatherman said both were informed the action was imminent and understood the city’s position.
The redevelopment commission discussed taking this action in July, Leatherman said, but then learned that Scotty’s Brewhouse signed a letter of intent to take 7,500 square feet of the first floor of the project. The city decided to wait to see whether that announcement would generate more commitments, but Leatherman said waiting two months was enough time.
The city sent letters to both companies in June 2009 letting them know they weren’t in compliance with their contracts. Shine said that letter reserved the city’s rights to place the companies in default while the new letter will actually begin the default process.
The liquidated damages clause that allows the collection of $5,000 a day from Hardball wouldn’t begin until the 90-day extension ends, but Leatherman said the negotiations with the companies will be far broader than that one penalty.
Tom Obergfell, redevelopment commission member, said it is important to begin that process to ensure other companies have an opportunity to develop the land if Barry Real Estate can’t.
Several companies have expressed concern about developing the site because of legal concerns about Barry Real Estate’s rights to the property, according to the city.
City Councilman Tom Smith, R-1st, attended the meeting and said he was pleased with the commission’s action.
“It was the right move, an important move,” he said. “It’s time to send that letter.”
