'Talking past each other': Elyria Council discusses outstanding Reaser Pointe Crossing issues

ELYRIA — City Council members and attorneys representing Elyria discussed the outstanding issues in negotiations with developer DBR Commercial Realty pertaining to the Reaser Pointe Crossing development on Monday. The city and DBR are embroiled in both contract negotiations and a lawsuit regarding a proposed mixed-use 420 townhome development, a public financing plan proposed to help build it and the city construction of a public road, also called Reaser Pointe Crossing. Attorneys for both sides are actively negotiating an amended development agreement which would allow the project to proceed, with the help of public improvements which are now to be funded by the Lorain County Port Authority. Last Thursday, an attorney for DBR and its owner Dan Reaser sent a letter to attorney Russ Balthis, who is representing the city in the negotiation, complaining about suggested edits the city had made to the agreement on June 19 and accusing the city of unnecessarily frustrating negotiations. "Based upon the revisions that you made to the ADA, it appears to me that the city has no interest in finding a resolution to this situation and moving the development forward," David Lum wrote. "Moreover, it appears that the city is trying to set up additional roadblocks and hurdles for the project in the future." Balthis said that the letter on Thursday was the first time the city had received any feedback from DBR attorneys on its latest round of edits. On Monday, Balthis and fellow Squire Patton Boggs attorney Steve Friedman, who is representing the city in the lawsuit filed by DBR against the city, spoke to Council members during a Strategic Planning Committee meeting. They discussed the letter and what they saw as the current outstanding issues in the negotiation. DBR attorney David Lum outlined five changes he said the city had made in its last revision that prevented DBR from signing the agreement. No representatives from DBR from present at Monday's public meeting. Balthis said that he felt a few of the issues mentioned in the letter were less serious hurdles and more examples of attorneys for each side "talking past each other," but that two of the items mentioned were more fundamental disagreements. The first of what Balthis and Friedman said were key issues was the insistence on removing a line which said that City Council would approve the same project plat for the project that was approved by Planning Commission. Balthis said that agreeing to this would surrender the city's legislative authority to approve the design plans for the project, which it maintains for all other developments. Assistant Law Director Erik Breunig shared a similar sentiment at the meeting. "Council is the legislative authority that accepts the easements, the rights of way (and) the public improvements as they're indicated on that plat," Breunig said. "With this language, you're sort of abdicating the right to review those things. It is kind of a big deal— at least in my mind — for Council to be accepting rights of way and easements and public improvements, right? That's a big part of your job. For you to not have the ability to review that is something that we wanted to at least have a conversation with you about and discuss it." Several Council members voiced issues with the city giving up any authority over approvals for a development, saying it was a step they required every other developer in the city to pass. "I speak only for myself, but I don't think the Council should give up our obligation and duty to approve each phase (of development) as it comes along," said Councilwoman Donna Mitchell, D-6th Ward. "We do that with every other developer, this developer should be no different. So I would not be willing to approve that." Another significant sticking point in the negotiation was related to the outstanding litigation, the attorneys said. DBR is suing the city because it alleges that city contractors built drainage for the property improperly, and then failed to abide by a 2023 continuation agreement regarding that initial claim. Friedman said that DBR had complained about the city's removal of a line saying that Elyria would cover any remedial public improvements for the project. Such remedial improvements would be used to correct flooding that DBR claimed was occurring due to improper construction of the road, but Friedman said the city had not agreed any such flooding or issues existed. "As for the litigation, we have to have that language," Friedman said. "If we reach this agreement and everything goes through, that's great, it becomes a non-issue. But even if we sign this agreement, there are ways it doesn't get fully implemented. And we would then be agreeing to their (DBR's) right to litigation, which of course we don't agree to. … Maybe we're just talking past each other with them and we need to clarify with them. But, we can't have language out there agreeing that they win the lawsuit." Later in the meeting, Friedman said the city had asked to edit out another section of the contract pertaining to DBR's claims about the work done on the Reaser Pointe Crossing Road. He said that in the 2023 continuation agreement reached with DBR, the city agreed to be responsible for any future issues with detention basins on the property which stemmed from any mistakes city contractors might have made in their construction. Friedman specified that the city had never agreed any such mistakes were made, but if there were any issues the city would take responsibility. He said that DBR was now insisting on removing the specification that the city's responsibility was limited to issues with the initial design, instead making the city liable for any future issues with the basins, regardless of their cause. The language the city's attorneys are insisting on in this instance is identical to what DBR agreed to in the continuation agreement, Friedman said. Balthis and Friedman also explained to Council how the public funding of the project would work, now that the Port Authority has expressed interest in providing the bonding. If the plan moves forward, its public improvements would be funded by a tax increment financing, or TIF, agreement. In that agreement, the Port Authority would issue bonds to pay for the public improvements the project still needed, like additional streets, sewers and sidewalks. Property owners in the development would then pay into a TIF fund based on the increase in the value of the land, rather than paying property taxes. That money would go through the city and back to the Port Authority, which would use it to pay off the bonds. Elyria would also have a right to receive repayment for its own bonds that went to build Reaser Pointe Crossing, as well as for some other purposes, from the TIF. Even if the Port Authority provides the funding, the TIF still needs to be approved by both the city and Elyria Schools, Balthis said. Mayor Kevin Brubaker, who has been a proponent of the DBR development, said he still felt that the city and DBR could work through the issues before them. He urged the city's attorneys to talk on the phone or in person with DBR's attorneys, so they could stop talking past one another and come to an agreement. "As we move forward I would implore you guys to have verbal conversations if that's not what you have already been doing, so that you are talking to each other versus sending letters back and forth to each other," Brubaker said. "But now that we are onto these things I think we can get to the point where we're gonna get this done. Councilwoman Mitchell, I agree with you… I think it is imperative that you guys (Council) still have a say in that (plat approval)." Brubaker also acknowledged that he had previously told Council that a debate about assignment language — DBR's right to transfer the development agreement to another developer — had been the main sticking point in the negotiations, but that it now appeared there were a few additional problem areas. After Balthis and Friedman completed their update on the negotiations, Council entered an executive session with its attorneys and other city officials to discuss the litigation. Following the executive session, Council President Vic Stewart, D-at-Large, said he would set a tentative date for another discussion and possible vote on the agreement for July 22. Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.