City failed to expedite lake work, suit states

Jahna Berry The Arizona Republic Jan. 20, 2006 12:00 AM

A developer building a $100 million project on the northern shore of Tempe Town Lake has slapped the city with a lawsuit.

Gray Development Group alleges that Tempe cost the company "tens of million of dollars" because the city failed to "fast track" the project, according to the complaint filed in Maricopa County Superior Court on Jan. 6.

"The City broke its promises, breached its contractual obligations and failed to act fairly and reasonably toward the Plaintiffs. . . . Because of the City's wrongful actions, the Plaintiffs have incurred millions of dollars of damages including increased expenses, lost opportunities and lost profits," the lawsuit states.

Tempe's lawyer said she expects that the city and developer will patch things up. It's important to keep the project on track, said City Attorney Marlene Pontrelli.

"We have a great working relationship with Gray, and we think we will be able to come to a solution that's mutually beneficial to both parties," Pontrelli said.

Several calls to Gray Development Group officials were not returned Thursday. John Moshier, the company's attorney, said his client has not authorized him to comment.

Mondrian Tempe Town Lake is a 523-unit development that will include apartments and condominiums. It's scheduled to be completed in March.

According to the lawsuit, project negotiations began in 2002, when the apartment market was in the post-Sept. 11 doldrums. The project took so long that the real estate market recovered, which forced the developer to pay more. Delays also led to higher design and loan costs, the suit states.