University City is fighting a developer in court to win back a patch of ground on Olive Boulevard where it once hoped a brewery would sprout.
The deal for the Senn Bierwerks brewery went flat a year ago, but not before University City had sold the ground to developer Tim O’Donnell.
O’Donnell was to be the landlord and partial investor in the brewery planned by Dustin and Kristen Chalfant and James Hellmuth. But the brewery partners said in June they couldn’t reach a deal with O’Donnell and plans for the brewery died.
University City had assembled the parcels a decade ago for about $860,000 and paid to demolish the site’s rundown buildings, including the Arcade Lanes bowling alley that burned in 2003 after 60 years in business.
It issued a request for proposals to develop the site in 2015, and in April 2016, the Senn Bierwerks plan was announced. University City agreed that month to sell the roughly two acres at the northeast corner of Olive Boulevard and North and South Road to O’Donnell for $100,000.
But in an October lawsuit, the city says O’Donnell breached the terms of its agreement by not completing any of the commercial development by May 2017, a year after the sale closed.
“Our interest is in seeing a quality development there,” said University City Manager Gregory Rose, who was hired following the property deal and the lawsuit’s filing. “We’re sorry that it didn’t work out but we certainly believe that the property is the people’s property so we’re working very hard to try and get control of that property and ownership again.”
The problem is that University City’s April 2016 agreement with O’Donnell doesn’t include a buyback provision, something the city says in court filings was the result of “mistake or inadvertence.” Nor does it include a right of reversion, which gives the city an interest in the property so it can buy it back.
O’Donnell’s lawyer says in a letter that University City deeded the property with a quitclaim deed that contained a provision barring future claims by the city.
“As a result of the quitclaim deed, it does not appear that any part of the Purchase and Sale Agreement continues to be operative for a lot of reasons the most important one being that in Missouri the terms and conditions of a real estate contract merge into and become part of the quitclaim deed upon the effective filing of said deed,” O’Donnell’s lawyer, Robert Devereux, wrote to the city in September.
Devereux says in the letter that the developer incurred $150,000 in out-of-pocket costs trying to attract a microbrewery to the site. After the Senn deal fell apart because the partners couldn’t raise the capital, his lawyer’s letter says, “it became clear that the St. Louis market appears to be completely saturated with microbrewery developments.”
O’Donnell did offer to sell the property back to the city for $975,000, saying he had another offer for the property. He gave the city 15 business days to exercise a right of first refusal. That was in September and O’Donnell still owns the property, according to real estate records.
University City’s contract does contain a right of first refusal clause to buy back the property for $100,000. It wants a judge to rule that its contract has survived the closing of the sale and let it enforce its right of first refusal to buy back the property for $100,000.
O’Donnell’s attorney couldn’t be reached for comment.
University City’s effort to redevelop the corner is one of several efforts on Olive Boulevard. It’s currently moving towards a massive redevelopment to the west at the Interstate 170 interchange that would add big box retail using local tax subsidies.