An arbitration panel has ordered the developers of the upscale Ivy Hotel + Residence in downtown Minneapolis to pay $7.1 million to Bor-Son Construction and five other firms that claimed they were wrongfully terminated from the project.
Bloomington-based Bor-Son, the general contractor for the $88 million development, was awarded $5.2 million, according to president Gary Heppelman. In discussing the dispute last December, Heppelman said Bor-Son billed about $60 million on the project.
The other $1.9 million was awarded to five firms that were subcontractors, Heppelman said. The money represents unpaid costs and fees the firms claimed they were owed after being terminated in July 2008 in violation of Bor-Son's contract for the project.
Bor-Son began work late in 2005 on the development, which included renovating the historic Ivy Tower and constructing a 25-story condominium tower and a 19-story Starwood Luxury Collection Hotel. The developers and contractors agreed to binding arbitration after disagreeing on which one was responsible for delays and cost overruns.
"We are happy to have this issue behind us," Heppelman said Friday.
The developers, Jeff Laux and Gary Benson, could not be reached for comment.
The arbitration award comes as lenders for the Ivy continue to seek to foreclose on the property. Built less than two years ago, the high-profile project fell victim to the depressed condominium and hotel market.
In suits filed in November in Hennepin County District Court, Dougherty Funding LLC said the developers owed more than $56 million on $69 million in loans for the project at 11th Street and 2nd Avenue S. The amount doesn't include interest or late fees, the suits said.
