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Potsdam, developer unsuccessful in mediation talks over water tower


POTSDAM — An attempt to mediate a dispute between the village and the developer of a water tower off Route 56 has failed, according to a document filed Tuesday in federal court.

Jeda Capital-56 LLC, Skaneateles, which erected the tower in 2009 as part of its development of a Lowe’s Home Improvement Center, filed action in May 2011 in U.S. District Court, Syracuse, claiming it was owed $500,000 in unpaid rent and changes to a lease agreement.

The development company is asking that it either be paid the money allegedly due or be fully compensated for the $1.83 million appraised value of the property where the 300,000-gallon tower stands. The village, which now owns the tower, denied the allegations and filed a motion in September 2011 to have the case dismissed. A judge denied the motion in September.

In October, U.S. Magistrate Judge Andrew T. Baxter set a March 1 deadline for mediation to be completed, although he later amended the deadline to March 31. According to a joint report of mediation filed with the court, a mediation hearing was held March 28 in Syracuse with Syracuse attorney James E. Hughes acting as mediator, but the efforts were unsuccessful.

“The parties were unable to reach a resolution or settlement of this action at this mediation,” according to the report signed by Timothy J. Higgins, Malta, an attorney representing the village, and Kevin M. Mendillo, Auburn, an attorney for Jeda Capital.

Mr. Higgins said Wednesday that the parties will now continue discovery, sharing information and potential witnesses in preparation for a trial, although no trial date has been set. Mr. Higgins declined to specify particular issues that caused the mediation to end unsuccessfully, but said, on the village’s end, there is still room for negotiations that could result in a resolution of the case without need for a trial.

“There is always a possibility that this claim can get resolved before it goes before a jury,” he said. “Certainly, from our perspective, that door is not closed.”

Jeda Capital initially proposed a smaller tower to meet fire protection needs for Lowe’s, but the village asked for a larger tower to accommodate additional village purposes. The village agreed to pay the $825,000 difference between the cost of the smaller tower and the tower with the capacity it sought. The company built the larger tower using an $825,000 loan through Community Bank N.A. as part of a deal that called for the village to lease the tower for about $9,400 per month for the first 10 years and $1,000 a month for the next 10 years.

The village contended that there was an elevation problem with the tower and that Jeda Capital never provided documents required under a project completion agreement before the village would make any payments. Jeda Capital claimed it executed the project completion agreement in August 2009 and agreed to perform additional work because it was “under duress,” as the village was holding up the opening of Lowe’s by refusing to issue a certificate of occupancy. The store opened in December 2009.

The village claims its actions did not amount to duress. It claims it was “legally justified” in withholding the certificate of occupancy until the Lowe’s building was in compliance with building codes and it could be demonstrated that there was sufficient water supply for fire protection. The village said the delay amounted to “nothing more than an inconvenience” to Lowe’s and did not constitute duress for Jeda Capital.

The village took title to the tower in December 2011 after Community Bank foreclosed on the site and sold it at public auction. The village will pay about $700,000 over the next 20 years for the property.

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