Judge Finds Former Governor Was Wrong To Fire Developer
A lawsuit over the now vacant Front Street development in Hartford concluded last week when a judge decided in favor of the developer, who was fired by former Gov. M. Jodi Rell’s administration.
The Front Street project was part of former Gov. John G. Rowland’s Adriaen’s Landing development, which includes the Connecticut Convention Center and Connecticut Science Center. It was supposed to be a mix of residential, retail, and entertainment, but was plagued with problems almost since the start.
“Unlike a typical government project in which the final plans are put out to bid and presumably everyone understands the specifics of the project, this was different,” Judge Marshall Berger wrote in his decision. “The parties here were creating the specifics of the agreement and designing the project. Unfortunately, there were too many moving parts and both sides underestimated the complexity and the time required for this project.”
Capital Properties, the developer for the Front Street project, sued the state at the end of 2004 after Rell’s administration gave them an ultimatum to sign an amended contract or get lost. Rell was just three weeks into her administration at the time. Rowland resigned on July 1, 2004 and later served time in federal prison on corruption charges. The decision said Rowland’s resignation came at a very delicate time for the project.
The second contract the state wanted Capital Properties to sign would have reduced the state’s responsibilities to the public-private partnership created for the development, and developers felt it wasn’t in their best interest to accept the offer since it already had a contract with the state.
The ultimatum was made July 26, 2004 by Rowland’s former Budget Director Marc Ryan.
According to the court decision the state argued Capital repudiated the development agreement by not signing the proposed second amendment and that it decided to abandon the project by the early winter of 2003 to 2004.
“This court finds no support for these arguments,” Berger concluded.
Capital spent hundreds of thousands of dollars on the project throughout the summer right up until it was terminated.
According to the footnotes in the decision, by July 2002 Capital had already spent $1 million on the project and by July 2003 it spent a total of $4.5 million. According to the state, Capital spent $5 million but was only reimbursed by the state for $3.8 million leaving an unpaid balance of $1.2 million.
“This court holds that the state breached the development agreement by unilaterally demanding that Capital sign the proposed second amendment on July 26, 2004, threatening to terminate Capital if it did not sign the amendment and terminating Capital because it did not sign,” Berger wrote.
The decision could end up costing the state millions of dollars.
Already, according to Associate Attorney Perry Zinn-Rowthorn, the state paid the law firm of Halloran & Sage $3.1 million in legal fees, and it still owes them about $14,000.
Andrew McDonald, Gov. Dannel P. Malloy’s chief legal counsel, said the conflict or the problem described in the lawsuit came under Rowland’s administration, management of it spanned the entire length of the Rell administration, and now the Malloy administration is left cleaning up the mess.
“John Rowland’s legacy to the state of Connecticut was not only corruption, but apparently incompetence as well,” he said.
It’s unclear how much the state may have to pay the developers, but a hearing on damages is expected to be scheduled in the future.