SIOUX FALLS, S.D. (KELO) — After being stalled for almost 3 years, a major downtown Sioux Falls development could soon move forward. Friday, Mayor Paul TenHaken announced a settlement with the Village River Group, the developers of what is now a downtown parking ramp.

The settlement means the project, which was put on hold in 2019, can once again move forward.

In 2019, Mayor Paul TenHaken and his staff terminated the agreement with the developer, which was made under the previous administration. Village River Group filed a lawsuit and the project had been in limbo ever since.

Thursday, the two sides reached a settlement.

“Which will allow a clean and final end to the development agreement and a path forward for the city to immediately proceed with improving the appearance of and developing the site of the downtown parking ramp,” said TenHaken.

In a news conference on Friday, the mayor said that the city had signed an agreement with the group that would include reimbursement of $500,000 to the Village River Group as well as a $150,000 developer’s fee that was paid to the city at the start of the project. Both parties have waived further damages claims.

The mayor indicated much of this is because of the extra money Village River Group put into the parking ramp so it could hold more stories on top of it. The city also settled because it did not want to continue to get bogged down in litigation.

“To move forward with the private development on this site, we will begin working to clearly define expectations for a future developer and development and ultimately we will select a partner that will add to the already exciting growth that is taking part downtown,” said TenHaken.

So far, the city has not had any conversations about what projects may come to that location. But, TenHaken added, the city will look to maximize the parking ramp space to get the most value out of the investment the city made in the project initially.

Looking back on the Village that never came to be

Village on the River was supposed to be a one-of-a-kind development in Sioux Falls: 15 stories tall with a hotel, restaurants and shops all built on top of a city parking garage. The parking ramp portion is standing today.

Talks first began in 2014 to potentially bring a private mixed-used element to downtown but that idea wouldn’t turn into a reality until three years later. In February of 2017, Legacy Developments and Consultants was chosen to partner with the city on such a development that would combine residential, public, and commercial use into one space.

  • City of Sioux Falls terminates agreement with Village River Group
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After months of debating whether the City Council would move forward with the project, the designs for the Village on the River were released in November of 2017. The plan stated that the city would invest $20 million into the project with $30 million coming from a private investor. An additional $4 million would come from the parking system cash fund and $16 million in bonds would be used, repaid by the parking system in the future.

Immediately there was controversy about the proposed structure.

Aaron Hultgren, of Hultgren Construction, LLC was in charge of Legacy Development and Consulting, the firm that would build the ramp. But at the time he was under investigation for the 2016 collapse of the Copper Lounge building in downtown Sioux Falls. In 2019, Hultgren Construction, LLC was sentenced to a $50 fine and one year of probation after pleading guilty to one count of a willful violation of the Occupational, Safety, and Health Act causing death to an employee.

Following the announcement of the project, Jeff Lamont formed the Village River Group LLC to take over Legacy’s role in the project.

City councilors Pat Starr and Theresa Stehly expressed opposition to the project and attempted to repeal the use of bonds for the ramp. Their repeal failed and the project continued on. The city broke ground on the site in May of 2018 and continued through the end of the year. In January of 2019, updated renderings of the project were released.

But in April of 2019, Village River Group fell behind on payments and the project was delayed. Seven days after it was announced that Legacy was behind on payments, the agreement between the City of Sioux Falls and Village River Group, LLC was terminated on May 14, 2019.

That’s when the project stalled.

In October of that year, Village River Group claimed that the city had breached the contract on the project and was planning to sue the city. That legal process stretched on for some time and was eventually resolved with the settlement announced this week.

The COVID-19 pandemic presented some challenges but eventually, the parking ramp portion of the project was completed in July of 2020. Now that the settlement has been reached, the city is looking ahead to all possibilities for the structure and is open to ideas from developers on the project.

“The city, at this point, is focused more on doing things right than doing things quick,” TenHaken said. “Now that the settlement agreement has been reached, we’re going to see what opportunities come up and we’re not committing to any timeline to get that done. We just wanna do what’s right for that project and maximizes the value for downtown.