St. Paul's Lowertown market and condo project on hold again

The big hole in the ground at Fifth and Wall streets in St. Paul's Lowertown is going to remain there for a spell.

It's the site of the Farmer's Market Flats project, a proposed 15,000-square-foot indoor market and housing complex which has been going in fits and starts over the years.

The latest wrinkle is that developer Brian Sweeney dropped out of the project.

"Unfortunately, given the specific legal actions initiated by the contractor, I believe my presence now is a hindrance in achieving our mutual goal of building St. Paul's new Indoor Farmer's Market, which I am confident will be completed in 2009," Sweeney wrote in a June 24 letter to the city.

What that means for the future of the city-backed project is unclear. For the past several months it has been stalled in a flurry of lawsuits, countersuits and finger pointing.

The original contractor, Flannery Construction, has sued the city and Sweeney Development, alleging it was wrongly fired from the project and is owed $1.1 million.

The city sued back, accusing Flannery of fraud and claiming the contractor broke its contract. St. Paul wants $250,000.

Sweeney fired Flannery in early March after Flannery suspended work. The parties disagreed over who was responsible for about $2 million in added costs.

"We're still trying to get paid," said Tom Yardic, Flannery vice president.

City officials won't say much because of the legal situation. Mayor Chris Coleman and others say, however, that they're committed to seeing the project through to completion.

The city and HRA have pledged up to $1.4 million in financing on the $13.5 million project.

"Absolutely it's a priority project," said Natalie Fedie, spokeswoman for the city's Planning and Economic Development Department. "We'll be able to regroup once we get the land back."

Despite moving aside, Sweeney said he wants to help the city find a team that can get the project done.

"This has been on the drawing board for 20 years, and in its present incarnation for four years, so what's a little more time?" he said.

Growers wait

The plan is for Farmers Market Flats to have a 15,000-square-foot indoor market area, which would be owned by the city and leased to the St. Paul Growers' Association, which runs the market.

The association is in a wait-and-see mode, said manager Jack Gerten. Planning efforts are on hold, he said.

"Now we're trying to do what we do best -- the outdoor market."

When a new development team has firm plans and a concrete timeline, Gerten said, the association will pick up discussions.

"Right now, everything's too vague," he said.

The project has been in the works for years. A previous developer pulled out of the deal in 2006, and Sweeney, a former director of the city's planning and economic development department, stepped in last year.

Despite the soft real estate market and abundance of condos in the Twin Cities, he said pricing the units between $144,000 and $244,000 would attract buyers. He said he sold 32 of 48 condos. The buyers' deposits have been returned, he said.

Yardic said Sweeney didn't notify Flannery that he was stepping down. The contractor is "moving toward arbitration" with Sweeney, Yardic said. "We'd love to figure a fair solution to get out of this mess for everyone," he said. "We're builders; we love to build. It's a great project. It's great for us, it's great for St. Paul."

Fedie said she doesn't know what the next iteration of the project will entail or who will work on it. An indoor market, she said, will definitely be the foundation.

"This has been a series of unfortunate events," she said.