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Mason City terminates agreement with downtown hotel developer
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Mason City terminates agreement with downtown hotel developer

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MASON CITY | Mason City is moving forward with the downtown River City Renaissance Project and it’s leaving Philip Chodur behind — again.

On Tuesday, the Mason City Council unanimously approved a resolution to terminate its Purchase, Sale and Development agreement with G8 Development, Chodur’s San Diego-based company, during a special meeting.

“The path forward obviously we’ll provide the notice of termination and then the staff will work to provide further recommendations from that point,” said Aaron Burnett, Mason City administrator. “We really have to take this step before we can do anything else.”

The city council did not vote on any other items. Its next regular meeting is Nov. 6.

• The long, winding road of Mason City's downtown project

The 7-minute special meeting, which took place at City Hall before more than 10 residents, was held after G8 Development failed to cure a notice of default Mason City sent Sept. 7 because it didn’t provide full proof of financing for its hotel.

Chodur had 45 days — or until Monday — to remedy the default.

On Oct. 5, the city received a letter from Stephen Fitch of Fitch Law Firm in San Diego, California, threatening legal action against Mason City for conduct related to the notice of default.

When Councilman Joshua Masson asked Burnett if he had any response to the letter, he said, “I don’t think it would be appropriate to respond to that.”

“I think that’s something if that does come up, then that’s something that’d have to be addressed in litigation,” he continued. “I think the argument that’s been put forth by the city through the default notice, through multiple request, I would continue to assert that that’s the position of the city and the appropriate position.”

Chodur provided the first and last pages of what he calls a financing agreement in July but nothing in between. That piece has been tardy since an initial deadline in May.

“I’m not going to try and defend their position for ‘em, but they’ve argued several different positions,” Burnett said. “The city council’s position is that the financing documentation is something that had to be provided to the city, and I think that’s an appropriate position so that the city council is able to verify those improvements can be made.”

• Here's everything you need to know about Mason City's River City Renaissance Project

The city’s written notice of default and G8 Development’s full proof of financing were two contingencies approved by the Iowa Economic Development Authority, or IEDA, in August for Mason City to retain about $9.1 million in state funding for its $39 million project.

G8 Development was selected to build a hotel in the Southbridge Mall parking lot that would connect via skywalk to The Music Man Square, which would be remodeled into a conference center.

The hotel is a key component in the city's project that also includes a performing arts pavilion and an ice arena and multipurpose center. One of the state requirements is $10 million in private investment. The hotel is valued at $15 million.

Chodur originally pitched a downtown hotel in 2013. When he failed to meet several construction deadlines to build next to City Hall, the city found him in default and the deal fell through. At the time, city officials said Chodur could not get financing.

That delay led the city to work with another developer, Gatehouse Capital. Local opponents forced a referendum on the overall project in November 2017, but voters overwhelming approved the plan. About the same time, Chodur filed a lawsuit against Mason City and the Chamber of Commerce Foundation, claiming a breach in contract.

But the plan's changes in the contract negotiations between Gatehouse and Mason City forced the city to open the project for bid. G8 submitted a bid the Mason City Council found more favorable and accepted.

As a condition of the new agreement, G8 dropped its lawsuit against the city and the Chamber.

Photos: Downtown Mason City before demolition for Southbridge Mall

Reach Reporter Ashley Stewart at 641-421-0533. Follow her on Twitter at GGastewart.

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