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|City Makes Deal to Resolve Dispute In Wake of Developer's Default|
By Lookout Staff
April 14, 2011 -- The city council took a step toward resolving a dispute between two litigants, Prudential and NMS entities, over property and money they say they were owed after developer Craig Jones defaulted, leaving them both in the lurch.
Tuesday night, City Attorney Marsha Moutrie asked the council to vote for a deal with Neil Schecter of NMS Properties to resolve “a dispute among various parties regarding fulfillment of affordable housing obligations attendent upon construction of market rate units in the downtown by Craig Jones.”
The city had stepped in to facilitate an agreement between the litigants, Chief Deputy City Attorney Alan Seltzer told the Lookout Wednesday.
The terms of the agreement are that Prudential will give NMS the property at 1437 5th Street – developed by Prudential and Jones – and a $1.75 million refund, and NMS will build 15 affordable housing units Prudential and Jones owe the city, Seltzer said.
Prudential and Jones partnered to build market rate housing at 626 and 525 Broadway Street but never built the 15 off-site affordable housing units the city was owed, Seltzer said.
Since his default, Jones has left the country.
After hearing from Moutrie, the city council approved the deal with NMS Properties in which NMS will fulfill the developer's obligation by building 15 affordable housing units at 1650 and 1660 Lincoln Boulevard by February, 2015.
The deal includes two levels of security for the city.
First, NMS has to deed restrict 1548 6th Street – also known as The Luxe apartments – so that if the affordable housing units on Lincoln aren't built on time, 15 units at The Luxe will be restricted as affordable units by the city.
And, as a “secondary level of security,” NMS will record a performance first trust deed on the property at 1437 5th Street, the property Prudential is turning over to NMS. If NMS doesn't build the affordable units on time, the property on 5th Street will be transferred to the city.
“We think that the security for the performance of this obligation to build 15 units of affordable housing is more than adequate,” Moutrie told the council.
Six council members gave the deal a unanimous thumbs up. Council member Kevin McKeown was absent for the vote.
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