Easement settlement reached in Washington Square dispute, unclear when work will resume

City commissioners unanimously approved a settlement agreement with developers of the Washington Square project opening an opportunity for work to resume.  

Construction on the Loews Hotel project was grounded this summer over a dispute tied to a 2016 easement agreement with its developer, Fairmont Tallahassee. During a 10-minute special meeting Tuesday, Mayor John Dailey thanked city staff and the developer's team for reaching the settlement. 

"I want to personally thank all parties involved," he said. “When you have these large developments, they are not easy. All parties agree to that. If they were easy, then it would have all been figured out many, many years ago. But I’m very proud of this community coming together.”

Both Fairmont representatives and city officials spent the weekend hammering out a deal days before they were set to face off in court Wednesday. Last week, Leon Circuit Judge John C. Cooper continued an injunction hearing and was expected to rule on a declaratory judgement at Fairmont's request.

The nine-page agreement called on Fairmont to drop its lawsuit against the city and pay $10,000 to buy the easement on the first floor of the city-owned Eastside parking garage without a competitive bid. Fairmont also agreed to pay $177,000 to purchase no-build air rights on the hotel site's southern border — giving the company control over what can be built over the easement.

“We’re very pleased with the outcome,” said Ken McDermott, a Fairmont developer. When asked to elaborate, McDermott offered before walking off, "This has been a wonderful outcome."

The $150-million Washington Square mixed-use redevelopment project is located on Calhoun Street behind the Leon County Courthouse. Plans include a 19-story Loews Hotel, office space and an on-site garage. Several attempts for comment on the easement dispute were not answered by Loews. 

It wasn't immediately clear when construction will pick up. The company will have to pay liens filed earlier this month by its general contractor Yates & Sons Construction for $8.2 million in unpaid work. SRM Concrete, the development's concrete subcontractor, also filed a lien on July 25 for more than $640,000 when it stopped getting paid. Fairmont said the city's position on the easement hamstrung financing.

City Attorney Cassandra Jackson said the government's position on the dispute was rooted in protecting its asset, the Eastside garage, where the easement is located on the first floor.

She said the developer requested the easement be tied to the land and not the garage during negotiations for the 2016 agreement, but Jackson said the city didn't agree to those terms. Both sides disagreed on when the city's position was presented. But, based on a flurry of emails, it appeared friction mounted in fall 2018 and spilled into this year. 

Jackson said the best way to avoid future easement disputes is "to assure with the greatest extent possible that both parties have a meeting of the minds on what the easement means."

“Sometimes in an excitement to do a project, perhaps you don’t put all of the intentions in, or one party may feel that you didn’t," she said. "I think when you read the city agenda item, it was clear that it was for the first floor of the parking garage for particular uses."

Jackson added the parties did their best to communicate their understanding, adding "sometimes you just have ambiguity. And that’s why the courts are there, to help us resolve these ambiguities.”

Read more about the Washington Square project: 

• Settlement agreement proposed on Washington Square easement dispute
• 'A very odd reason for a no vote': Maddox, Carter-Smith intersect Washington Square project
• Washington Square on 'life support' as city and developer battle in court
• City commissioners react to halted Washington Square redevelopment project

Dailey, who attended the Tallahassee Chamber of Commerce Conference in Amelia Island this weekend, said he participated in several conference calls from afar while city staff were huddled back home. Fairmont developer Walter Hall also was spotted at the conference. 

The easement dispute became a high-interest topic in the pages of the Tallahassee Democrat and was mentioned during the Chamber's conference. Most discussion centered around seeing the project resume. 

After the vote, Commissioner Jeremy Matlow said the dispute could have been resolved sooner if the garage could have been purchased by the developer, a proposal previously discussed and now back on the table as part of the new settlement agreement. 

“When something pauses midway, everybody wants to see it through completion,” Matlow said. “So I’m glad we were able to work through an agreement both sides could agree on that was reasonable and responsible and cleaner. Sell the air rights. Sell the easement. There’s clarity there.”

Contact TaMaryn Waterse at tlwaters@tallahassee.com or follow @TaMarynWaters on Twitter.