The Town Council has approved a settlement agreement and an amended development agreement with N-Shea Group that will allow construction of Park Place Phase II and Phase III to move forward. The vote was a unanimous 6-0 vote with Councilman David Spelich absent and Councilman Alan Magazine participating by phone.

The agreement settles and dismisses a $67 million claim by N-Shea Group against the Town of Fountain Hills.

Park Place began with construction of Phase I in 2017 under a development agreement approved in 2016. With completion of Phase I, the second and third phases were delayed for reasons that included the pandemic. The time schedule outlined in the original development agreement expired in June this year with the council denying an extension to the time limit. This resulted in a lawsuit by the developer seeking remedies related to the expiration date.

“Over the past several weeks, the Town of Fountain Hills and the developer have worked together to resolve differences and issues between the parties, including resolving the litigation relating to the Park Place development,” Town Manager Grady Miller reported to the council. “As a result, both sides have negotiated key provisions to amend the development agreement that are important to each side. If approved by the Town Council, the prior claims from the developer against the Town of Fountain Hills will be dismissed with prejudice [within 10 days of the settlement approval].

“Under the terms of the amended development agreement, the developer will have a 12-month extension of time from the date of the settlement agreement to obtain the permits to construct the remaining phases of the Park Place project. The settlement agreement also reaffirms a number of existing provisions contained in the previously approved development agreement.”

Additional provisions of the settlement include the developer agreeing to repaint all the exterior of Phase I buildings using the same color scheme approved for the Phase II and III buildings. Additionally, the previously unpainted/unfinished concrete surfaces, such as beams, patios, and other edges, will be repainted using the same color scheme approved for the Phase II and III buildings.

Other additions to the agreement include installing plantings and trellises (“screens”) in place of the green screens for buildings C and D.

The settlement agreement release states, “each party has made a careful and independent investigation into the facts deemed by such party to be material to the covenants and agreements set forth herein, and all past, present, or potential disputes or claims existing among the parties.

“Because of the desire of the parties to resolve these matters, and because of the expense and uncertain outcome of any litigation involving such claims, the parties desire to enter into this agreement to resolve the dispute.

“Each party believes that this agreement is in their best interest, and each party represents that the agreement is the product of a compromise and settlement of disputed claims.”

As of Sept. 22, the Town had paid $22,075.52 in legal fees related to the lawsuit, according to Town Community Relations Director/PIO Bo Larsen.

“For these specific types of cases, the Town pays 50% of the first $25,000 of expenses,” Larsen said. “[The Town would pay] 75% of the next $25,000, and the Town pays for all expenses above $50,000.”

The Town of Fountain Hills is a member of the Arizona Municipal Risk Retention Pool (AMRRP), which would pay the balance.