Legal analyst cautions Burlington against CityPlace lawsuit

Published: Aug. 26, 2020 at 12:41 AM EDT|Updated: Aug. 26, 2020 at 10:41 AM EDT
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BURLINGTON, Vt. (WCAX) - The city of Burlington is preparing to take legal action against the developers of CityPlace, but does the city have a case?

Mayor Miro Weinberger’s office says the city is demanding that construction resume on the eight blocks of public infrastructure improvements, including work to reconnect some city streets. According to their letter to developers, the city says it is no longer responsible for reimbursing them for that work.

As the city threatens to sue, Vermont Law School professor Jared Carter is warning them they may be digging themselves into an even bigger hole.

“So I think the city’s legal strategy is tenuous and an uphill battle at best,” Carter said. “And we’re not talking about months. We’re talking about years to get a final legal resolution on a case like this.”

Carter says there are two components of the 2017 development agreement that could work against the city in court.

“Number one: any agreement to do a development is based on financing. And if the developer exercises due diligence and is unable to get financing, then you can’t sue them for the failure to get financing. The financing is coming from an outside bank or outside party,” he said.

The second component is what’s called a “force majeure.” It’s defined as an unforeseeable circumstance, or an act of God, that can prevent someone from fulfilling a contract.

“And the act of God, in this case, is COVID-19, which I think also plays into the difficulties around getting financed,” Carter said.

Instead of a lawsuit, Carter suggests the city negotiate partial ownership of the land, also known as an equity stake. He thinks that would be a more efficient and a more certain outcome for the city.

“We’ve spent money, capital, political capital, a lot of energy around trying to move this forward and the people of Burlington deserve a return on that investment,” he said. “And litigation going on for years and years while the hole sits dormant is not the return the people of Burlington need.”

Carter also says the city cannot force the developers through litigation to complete the project since it’s privately owned land.

WCAX News reached out to Don Sinex for comment. He defended Devonwood Investors and says:

“Every time the Mayor issues negative comments he makes it harder to finance this project, which is already laboring under the weight and adverse impact from COVID-19 on real estate financing in general. At some point the atmosphere will be so poisoned by these types of actions that the project will not be financeable and therefore not be feasible.”

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