The parties are seeking resolution as City Council prepares to vote on $32.9 million to purchase three parking garages.
The Downtown Investment Authority’s and the city’s legal fight with Metropolitan Parking Solutions over the company’s 2004 redevelopment agreement for three parking garages is headed to mediation in the 4th Judicial Circuit Court.
Attorneys for the three parties are scheduled for a Zoom videoconference at 9:30 a.m. May 5 to begin mediation in the case, according to records filed Feb. 18 with the Duval County Clerk of Courts.
MPS filed a lawsuit in September alleging the city and DIA were in breach of contract and in default when the city withheld portions of several development loan payments owed to the company for parking garages at the Duval County Courthouse and VyStar Veterans Memorial Arena owned and operated by MPS.
The city is required in the agreement to make the payments to cover MPS’ operating losses and to ensure a 6.75% annual return on the company’s $3 million required investment.
City attorneys and the DIA filed a counterclaim in October alleging Jacksonville-based MPS is in default for failing to meet financial reporting obligations under the 26-year-old deal.
The city’s counterclaim cites a 2019 City Council Auditor’s review of the contract that found reports for the garages’ revenue provided by MPS were incomplete and not compliant with the redevelopment agreement.
Documents filed March 23 with Council said MPS has not paid property taxes on the garages after it acquired the properties from the city.
A March 30 memo from DIA CEO Lori Boyer to the DIA Finance and Budget Committee says city officials have reconciled the city’s loan obligations for fiscal year 2020-21, which the General Counsel’s Office said was $2.18 million from July-December 2020.
Boyer declined to speak further April 2 due to the pending litigation.
MPS has $71.66 million in outstanding city development loans including principal and interest as of June 30, according to an email from the city Office of General Counsel.
That breaks down to $58.85 million in principal with $12.81 million in interest, the email states. The Council Auditor’s office says the loans are at 2.85% annual interest.
Attorneys listed for MPS are Cody L. Westmoreland, Matthew T. Jackson, Joshua R. La Bouef and Darren C. Jones.
General Counsel’s Office attorneys Christopher M. Garrett and Helen P. Roberson are representing the city and DIA, according to court filings.
The possible mediation comes as legislation authorizing the city and DIA to borrow $32.9 million to purchase the garages and pay off outstanding construction debt, should the court find MPS in default, is moving through Council.
The DIA board and the Mayor’s Budget Review Committee each voted unanimously in March to file Ordinance 2021-0179, which will require a two-thirds majority of Council to pass.
The scheduled mediation to resolve the dispute is in line with the position of Mayor Lenny Curry’s administration, which doesn’t want to take on debt to buy back the garages.
“The best outcome would be that all parties are content and the garages are making money to help us pay the debt related to it. But there’s some conflicts right now in the process,” Chief Administrative Officer Brian Hughes said March 8.
“It’s been a long-standing deal that may not have ultimately been in the best interest of taxpayers,” he said.
“Hopefully, the DIA and the parties at MPS will get together and find a solution so that we don’t have to go down a road we don’t want to,” he said.
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