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Restaurant funding argument sends Bielenberg Sports Center issue to court

The progress of this would-be restaurant at the remodeled Bielenberg Sports Center has ground to a halt amid a clash between the city and Gartner Restaurant Holdings. (Submitted image)

Woodbury and Gartner Restaurant Holdings will now have to hash out their disagreements in court about why a new Bielenberg Sports Center restaurant hasn’t progressed as planned.

Woodbury officials filed a civil suit against the company citing failure to comply with the lease and refusing to pay construction and architectural fees, according to a complaint filed in Washington County District Court Thursday.

The dispute between the two parties stems from an expanded vision by Gartner that upped the city’s share to $1.3 million, up from $500,000, according to court files. The proposed additional features included doubled seating areas, kitchen space and equipment.

The lease, signed last August, states the city agreed to pay for fixed capital like mechanical, electrical, plumbing and a fireplace at an estimated $500,000, while Gartner agreed to cover smaller capital items like seating, pizza ovens, grills, fryers and smaller coolers totaling $300,000.

According to the complaint, Gartner Restaurant Holdings (GRH) owners Greg Gartner and Bill Kulesa’s vision not only expanded the design, but also the overall geothermal system costs by more than $350,000.

The two parties had been arguing over who pays for what in meetings and via email for the past several months.

The email exchanges between staff and GRH owners, which the Bulletin reviewed under the Freedom of Information Act, included a memo from GRH’s attorney Matthew Resch stating that all mechanical work should’ve been the city’s responsibility regardless of the designs.

“The city cannot metaphorically ‘set the table’ and then surprise Gartner with over $400,000 in additional costs when the city and Kraus Anderson knew all along of the condition identified by them for the increase in construction costs,” he said.

But City Administrator Clint Gridley said expanding the design from 1,789 square feet to 2,877, and from 106 to 235 seats in addition to the equipment that comes with it shouldn’t be local taxpayers’ responsibility and that the city’s share of the budget cannot exceed the $500,000 cap.

“To think aspects of the restaurant could substantially grow without a corresponding impact to the overall project budget is unrealistic,” he said in an email to GRH. “Simply put, the city of Woodbury cannot be expected to pick up the tab for your expanded vision.”

The back and forth continued last week with the city refusing to provide a breakdown of where it spent $500,000 so far, Resch said in an interview – a claim Gridley refuted, saying the city outlined costs in numerous meetings with the restaurant group.

Resch alleges the city spent some of the money on other aspects of the facility and continues to refuse to pay for a geothermal system to support the expanded vision that officials have been on board with since the beginning.

“Show us that you’ve spent the $500,000 and show us where you’ve spent it, show us that you’ve spent it on the restaurant,” Resch said, adding, “It’s like ‘we’re not going to tell you what we did, we’re not going to tell you where we spent it. We’re just going to ask you to cut us a check.’”

Gridley says others can independently attest to the fact that funding details were explored extensively during two mediation sessions.

Resch said the restaurant is just one piece of a large facility that was originally estimated to cost $17 million and then went up to $22 million.

“They’re already $5 million over budget,” he said. “So when they say they don’t have any money.”

Gridley rebuffed the budget claim, stating the initial cost was a preliminary estimate that wasn’t finalized at $21.8 million until later, following a task force design process.

The city is treating GRH’s failure to pay an $88,000 bill for architectural services, rent since April and the inability to complete the restaurant and first floor concession stand on time as a breach of contract and is asking for a settlement in excess of $50,000, according to court documents.

“We’ve exhausted all other options seeking resolution, including many meetings and mediation sessions,” Gridley said this week. “Our action is to hold Gartner Restaurant Holdings accountable for failing to meet their obligations outlined in the agreement.”

He added that construction on other parts of the building was delayed, in part, due to GRH’s failure to fulfill its lease obligations and the resolution efforts.

GRH responded to the city’s complaint late Thursday denying allegations of default and stated that the city approved a construction change order for the increased costs without consulting GRH, according to court documents.

Editor’s note: This story includes additional comments from Woodbury City Administrator Clint Gridley that did not appear in an earlier version.

Riham Feshir
Riham Feshir is a reporter and photographer for the Woodbury Bulletin. Her coverage includes Woodbury City Hall, Washington County Board of Commissioners and business news.  Follow Riham on Twitter @RihamFeshir for the latest updates.