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Flour mill, lake project lawsuits nearly settled

Jahna Berry
The Arizona Republic
Jun. 10, 2006 12:00 AM

Tempe city leaders are close to settling two thorny lawsuits, including one that's held up development of the city's historic flour mill for years.

According to draft documents released Friday, the city would sell the mill site to developer MCW Holdings for $7.4 million, if it meets certain conditions, and the city would spend $6 million to help preserve the mill and silos.

In another, unrelated proposed agreement, Tempe could pay $10 million to lake developer Gray Development Group, which has claimed that city delays cost its Mondrian project millions. In the proposal, the city gets up to $15 million in performance payments and Gray gets to develop land near the light-rail route on Apache Boulevard, according to Mayor Hugh Hallman.

The City Council could vote on both pacts Thursday, but details aren't final, City Attorney Marlene Pontrelli said.

Hallman was cautiously optimistic about the talks.

"Reaching these types of agreements are always difficult and tenuous," he said. "They are difficult to work through and I hope we get through them."

Under the proposed settlement, the city would retain ownership of the property until the developer is ready to pull building permits to construct a project, the mayor said. If MCW doesn't move forward with permits, the sale won't happen and the city won't pay out preservation funds or credit MCW for millions in infrastructure costs, Hallman said.

MCW Holdings was supposed to transform the mill property with lofts and shops years ago but sued Tempe in 2004 over a dispute that revolves around an $11.8 million bank loan. Tempe, which says it was forced to acquire the mill because MCW didn't pay the loan on time, sued MCW.

In the proposed settlement, MCW also has the right to "assign" the project to another developer, city documents say. Other companies have expressed interest in developing the site. The settlement proposal says that 469,160 square feet of space on the site can be used for development.

If the settlement talks move forward, it could be a watershed moment for the 1918 Hayden Flour Mill and its silos, built in 1951.

City leaders say the mill is a crucial development link between downtown and Tempe Town Lake.

Martin Aronson, a Phoenix attorney who represents both MCW and Gray Development Group, could not be reached for comment on Friday afternoon.