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Questions loom over Village River Project

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Updated: May. 20, 2021 at 7:17 PM CDT
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SIOUX FALLS, S.D. (Dakota News Now) - Downtown Sioux Falls offers beautiful views of nature, architectural styles, busy shops, and businesses. A Sioux Falls City Councilor is asking questions about the wall of concrete downtown at 10th Street and Mall Avenue.

The alluring proposal to bring the 15 story Village River development has stalled and evolved to a parking ramp. Gravel is leveled on the space that was supposed to be the location for storefront businesses. Sioux Falls City Councilor Pat Starr is looking for answers.

“When government does things too fast and doesn’t bring the community along, that’s when we run into problems. There weren’t even blueprints ready when we started the city’s portion of the Public/Private Partnership,” said Starr.

The partnership plan with Village River Group LLC was for the city to build the ramp first. Village River Group guaranteed commercial space and a hotel in front of and on top of the structure, to complete the $50 million project.

Starr would like the city council to receive more information.

“We don’t know if there’s negotiating going on, really we’re looking for just information and being open about what we’re, where we’re at,” said Starr.

He’s had concerns about the project since the beginning. Back in December 2017, Councilor Starr walked out, as the Council voted to approve the development partnership. Groundbreaking was in May of 2018. A year later in May of 2019, the City terminated the contract.

“What I’ve been told is that there is potential for litigation to come forward. The contract was terminated because there was a breach of contract,” said Starr.

Starr wants to know about the guarantors named on the agreement.

“We were promised that there were four guaranteed guarantors that they would personally guarantee that the project would be built, no matter what. Why aren’t the personal guarantor is being enforced as part of the contract, that was the public’s guarantee with us going ahead without having our partner having financing and things in place in a plan,” said Starr.

Attorney Marty Jackley is an engineer and attorney, who has represented other clients in similar situations.

“And it appears in this project they’re at a crossroads where they’re either going to walk away from it or there could be litigation. There also can be that middle ground which can be a renegotiation or a scaling down of the project,” said Jackley.

When Jackley represented clients in other South Dakota cities, residents were updated on the progress.

“I’ve represented some counties and cities recently where they openly talked about how they had gotten gone the mediation route, a voluntary mediation where they were able to hire a neutral mediator and another lawyer in one instance it was a retired Supreme Court Justice to come in to bring the parties together to try to one instance avoid litigation in the other instance to try to resolve litigation,” said Jackley.

The costs for the city continue to mount. Interest accrues and legal fees grow. What once was 21 million dollars for the city’s parking ramp is over 23 million. A similar parking ramp in Sioux City was built for half the price.

“So there are extra pilings extra things that were done to build the hotel and the private part of it that was included as part of the city’s portion of paying for it,” said Starr.

The parking ramp is in use, but the answers of how and when the adjoining development will build up and out is a mystery.

“We can’t let our politicians say we’re open and transparent, and then let them off the hook, and not be open and transparent inform the community of where we’re at,” said Starr.

Dakota News Now has reached out to a representative of Village River Group LLC and did not receive a response. Village River Group’s liquor license also is set to expire this month, after a two-year period of inactivity.

Four city councilors responded that they would not be able to provide a comment.

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