In a statement released today, EM Properties claims it…
…has satisfied all conditions of the Redevelopment Agreement required to proceed with a closing for the Downtown Marriott Project. We believe we have provided sufficient evidence of financing. We plan to confirm the financing we currently have and further solidify our submissions to the City Council within the next week. We share the City of Peoria’s urgency for a real estate closing and look forward to one this fall to bring this great project to fruition.
And they are threatening to sue the City for breach of contract if the project is cancelled. You can read the letter from their attorney here:
Husch-Blackwell-LetterHere’s the bottom line: The redevelopment agreement listed thirteen things that Matthews/EM Properties had to fulfill. The City’s termination letter said that EM Properties had not fulfilled them. Now EM Properties’ attorneys are saying they did fulfill them, and therefore the City has no right to terminate the agreement.
But there’s one thing that EM Properties’ attorneys are missing. The redevelopment agreement states in section 6.7, “If the conditions precedent set forth in Section 6.4 do not occur on or before December 31, 2010, then the City may cancel this Agreement by notifying the Redeveloper in writing.” Note the date: December 31, 2010. It’s a publicly-established fact that these conditions were not met by the deadline. So EM Properties doesn’t have a leg to stand on. They can argue until they’re blue in the face that they’ve satisfied all the conditions, but if they weren’t satisfied by the deadline, the City has every right to cancel the agreement. Case closed. This is nothing more than a scare tactic — an act of desperation.
This is a poor move to make if GEM wishes to have a shot at any future projects in Peoria. But the city did the right thing, even though they should have done it 9 months ago.
“December 31, 2010”
Who EXTENDED this intill this week? If 12/31/10 was a drop dead date someone approved the extensions and why? If there is a need to kill this project ASAP why is the council waiting until the 13th to vote? Call a special meeting or add it to the meeting next week. Smell funny.
CJ-I know I’m not an attorney and don’t pretend to be one, but why do you assume you are one? You seem to only report one side of everything and I don’t think that’s what journalism is for, if you want to call this that.
pagtem — This is a “blog.” Since you’re apparently new to the concept of a “blog,” I would recommend familiarizing yourself with it by reading this Wikipedia article. I’ve never claimed the posts here express anything other than my point of view. I’ve also never claimed to be an attorney, but I do know how to read a contract and recognize a deadline when I see one.
Interesting….a wonderful development goes under and a lot of 1st time posters show up for a circling of the wagons.
“We plan to confirm the financing we currently have and further solidify our submissions to the City Council within the next week.”
So, they need to double check with their nameless financiers to see if they still have financing? One would think this would all be in writing/signed commitments. What is there to confirm?
I believe the Redeveloper cannot enforce the contract because of 6.4(h)which states”
Evidence that the Redeveloper has secured financing from a lender reasonably acceptable to the City . . . .
That is very UNfavorable language for the Redeveloper. Is “reasonably acceptable” financing a term defined elsewhere in the contract between the partied?? Otherwise, it seems the City is able to establish what ever reasonable standard for proof of financing that it sees fit and it appears it has. 🙂
Doesn’t this still have to be voted on by the Council before an actual cancellation can be finalized?
Also, the fact that a cancellation letter wasn’t sent by December 31, 2010, by the City and approved by the Council, implies that the deadline was null and void to the City.
I think Matthews does have a legal leg to stand on.
I also think that Patrick Urich will be lucky to last 2 years on this job.
Itchy — The cover letter from Jim Ardis states, “The Corporation Counsel believes this letter would serve as sufficient legal notice for termination, but I have asked the City Manager to place the item on the agenda for everyone’s concurrence at our September 13″ meeting.”
Your theory about the deadline is nonsense. There simply is no stated or implicit deadline for the City to terminate the agreement after the redeveloper misses his deadline. Your argument defies both law and logic.
A few things:
1} One thing I have learned as an attorney is to not make absolute statements about a legal situation that you aren’t intimately involved in. In fact, don’t make them even in cases you are… 🙂
2} Based upon my limited knowledge of this situation mostly from this blog), I suspect Matthews is fighting an uphill battle.
3} Husch and Blackwell is a terrific and very expensive firm
Whether you like the project or not, I have to agree with Itchy. Why would the city wait until the developer has submitted everything or by all accounts is close to pull the plug? I think there is more to this than the public is being told.
C.J., you were hardly born yesterday. You think that GEM’s attorneys wouldn’t run with the City waiting till almost 9 mos. past the supposed deadline, before sending out a cancellation letter? It certainly does imply that the City didn’t care too much about the deadline, one way or another. If the deadline was that important to the City, then a letter would have been sent out the first part of this year.
That’s not nearly as far-fetched or illogical as you want to make it. Everything is on the table in a court of law; and everything has meaning, at some point or another. Brush back your Pollyanna curls and read up on legal findings.
D150 & Itchy — I have no doubt they’ll use some sort of legal mumbo-jumbo to try to mitigate the fact that Matthews missed contractual deadlines. That’s a given. I just don’t believe they will be successful. I think the contract language is clear and unambiguous as far as the deadline goes. I think it would be a frivolous lawsuit if it indeed gets filed, and I suspect it might just be an empty threat to try to get the council to reverse this action out of fear of legal fees. I admit I could be wrong; we are all fallible human beings. But I’m nonetheless entitled to my opinion, just as you are entitled to yours.
Pagtem — “Why would the city wait until the developer has submitted everything or by all accounts is close to pull the plug?” That is unsubstantiated. The developer has admittedly not submitted everything, and how “close” he is to submitting everything is up for debate — the City and the developer have different views on that point.
It’s worth noting that in May 2010, Mr. Matthews stated emphatically to the Council that he was ready to begin construction “immediately” — immediately! — if the council approved the second redevelopment agreement. He stated emphatically that he had all his financing in place. He wasn’t just “close” in May 2010, he was ready to start at once. And yet, we can now see that that was obviously a lie. He didn’t have his financing in place. He couldn’t and didn’t start construction immediately. And this was the second time around, you know — he never made the deadlines on the first redevelopment agreement from 2008, either. Now he’s trying to get the Council and the public to believe that, once again, he’s got everything in order and is ready to start — ready to close on the property in just a few more days. Why should anyone believe him this time?
I think Matthews is a sore loser and wants to rattle his saber a bit before riding off into the sunset. Kudos to the Mayor and City Manager for doing the right thing and pulling the plug on this bad deal. Now, maybe another way can be found to rehab the Pere as a private development, which would be truly “wonderful.”
Isn’tMr Mathews free to continue the project without the COP involved? Oh yeah, I forgot this project makes no sense based on merit.
Hiring this City Manager is the best thing this City Council has ever done.
CJ, the PJStar is behind as usual. They haven’t reported this yet. They must still be counting their money from their subscription increase. 🙂
While I had hoped all along that the Marriott-Pere hotel project would be successful, I understand the City’s point of view. They have waited VERY patiently for GEM to get things rolling. I know I was tired of waiting for the wrecking ball to show up on Main Street.
CJ – you may want to become intimately familiar with the terms “detrimental reliance” and “promissory estoppel” before being so certain of the possibilities of a Matthews’ suit. I think he would be unsuccessful ultimately, but I suspect that it is far from the certainty that you suggest.
Spikeless — Thank you. I looked up the terms as you suggested, and it’s very interesting. I think I understand better what Matthews’ (or rather, his lawyers’) argument is. Do you think that such a defense, if not successful in forcing the City to execute the contract, could at least result in some sort of settlement to cover some/all of Matthews’ expenses?
The last statements from spikeless and C.J., I believe, back up the earlier statement I made:
Patrick Urich will be lucky to be employed by the city for more than two years. I think he’s already digging himself a pretty big hole, and the mayor and council are too enamored with him to question what he’s started.
A rational developer would not throw good money into attorneys fees on a project that everyone knows was being underwritten by the Commercial Real Estate Bubble that followed the Residential Real Estate Bubble.
But reason has only as much to do with these projects as ego, greed, and an old man facing mortality and trying to construct something that is going to be around 5 years after he has his last bypass.
I won’t apologize for being cynical. I know many of you appreciate it.
Itchy — No, it doesn’t. You said, “Also, the fact that a cancellation letter wasn’t sent by December 31, 2010, by the City and approved by the Council, implies that the deadline was null and void to the City.” Besides the fact that they couldn’t have legally sent a cancellation letter before he missed the deadline (“sent by December 31, 2010”), your description is not the definition of “detrimental reliance” and “promissory estoppel.” Regardless, I agree with Spikeless in that I think he will be unsuccessful with this defense.
CJ – it certainly crossed my mind that this may be more of a “Let me try to recoup something” than an “I really want to build this”.