April 12, 2018

City settles skybridge lawsuit with Hilton Garden Inn for $12.5 million

Photo | Grant Welker
The Hilton Garden Inn in Worcester.

The city will pay the owners of the Hilton Garden Inn $12.5 million after a settlement was reached in a 12-year-old spat in which the city was said to have breached an agreement to build elevated pedestrian walkways between the hotel, Major Taylor Boulevard Garage and DCU Center.

Under the settlement, announced by the city Thursday, the city will not be required to build the walkways, dubbed "skybridges," and avoids a potential $25 million expense.

Instead, the city will pay the hotel, owned by Fargo Management LLC, $12.5 million over six fiscal years, including a down payment of $1.5 million to be paid upon settlement and $11 million in five equal installments of $2.2 million between this July and July 2022.

"By reaching a settlement the City has been able to resolve a large liability that had been ongoing for 12 years," said City Manager Edward M. Augustus Jr. "We're looking forward to putting this situation behind us."

In 2016, the Worcester Superior Court ruled that the hotel was entitled to both the skybridges being built by the city and to monetary damages for failure to have the skybridges for a 10-year period.

Construction would have cost $15 million, and the city would have been responsible for another $10 million in damages had the case not been settled through mediation, the city said in a press release Thursday.

Existing parking terms between the city and hotel at the Major Taylor Boulevard Garage above Mezcal Tequila Cantina will be amended to give the hotel 150 guaranteed spaces and another 150 reserved spaces.

That agreement is also extended until 2037. Fargo Management will begin $15,000 monthly payments immediately, which rise three percent each year for 20 years.

According to the city, Fargo Management was the successful bidder in 2003 of the land, a former city fire station, for the construction of a hotel next to the DCU Center. Fargo promised a $25 million hotel, and the company and city agreed to build the elevated walkways at an estimated cost of $2.5 million, with a federal grant covering half and the parties splitting the balance.

The agreement also required the city to complete the skybridges by October 2006, and the hotel was allowed 200 parking spaces in the garage, with another 100 reserved.

The next year, Michael O'Brien took over as city manager for Thomas Hoover, and when bids came in at more than double triple the initial estimated cost, the city rejected those bids and O'Brien informed the city council that he "could not in good faith" proceed with the project.

From 2007 to 2012, the city and Fargo Management explored solutions, but Fargo eventually filed a lawsuit in 2012 seeking a court order to require the city build the skybridges and award monetary damages.

The court in 2014 ruled that the city breached the agreement and in 2016 ruled that the hotel was entitled to both the bridges and monetary damages. The city was ordered to build the skybridges and a trial was convened to determine damages.

Last year, the city and Fargo Management began mediation, which resulted in the settlement announced Thursday.

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