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Developer sues Harrisburg over town center
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Published: October 9, 2009
HARRISBURG — The developer of Harrisburg Town Center is suing the town for breach of contract.
Harrisburg Town Center IV claims the town violated a purchase and lease agreement on the first floor of Harrisburg Town Center building when the town forced out one of the tenants.
The lawsuit, filed August 17, claims Harrisburg owes the developer about $365,000 in back fees stemming from the original contract the town had with HTC IV over the first floor office condominium in the Town Hall building.
Harrisburg and HTC IV entered into two contracts in October 2003, where the town agreed to purchase the first floor of the Town Center, then lease back a portion of that space to HTC IV for five years. The town put down $600,000 as a down payment on the $1.6 million base sale price.
The town did not close on the purchase until Jan. 10, 2008. In the meantime, HTC IV leased out space to Robert MacLeod, owner of Hibernian Hall, to keep revenue coming into the building while the town sorted out its financing.
The contract between HTC IV and the town stipulated the town would pay $200 a day to HTC IV in damages for delaying closing on the deal, according to the lawsuit.
Then, in August 2008, then-Town Administrator Joel Davis sent written notice to HTC IV to vacate the leased portion of the first floor because the town needed more office space.
HTC IV complied and Hibernian Hall vacated the space in November 2008.
But then the town came back to HTC IV, saying Davis was not authorized to take such action and HTC IV needs to pay rent on the vacated space, despite the town asking HTC IV and Hibernian Hall to leave.
Attorney Brett Dressler, representing HTC IV, said his client has bent over backwards to accommodate the town.
"This latest thing was the straw that broke the camel's back," Dressler said. "The elected officials have looked a gift horse in the mouth. They need to learn how to conduct business."
But Harrisburg disagrees, said town attorney Richard Koch. The town takes the position that HTC IV owes Harrisburg back rent on the first floor leased space.
"The town hasn't received any money from the developer," Koch said. "The bottom line is the town disputes it owes Town Center IV anything. In fact, the town claims they owe us."
Koch said the lease money HTC IV was paying to the town would go toward paying off the loan the town took out to purchase the first floor office space.
"Obviously, there is a dispute over all this, and (HTC IV) has forced the issue," Koch said.
The town has until Oct. 23 to file its response to the lawsuit.
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