Despite being told its decision could spark a lawsuit, the Lincoln City Council on Monday voted to let the developers of The Railyard out of their requirement to continue the Public Market.
The council voted 5-2 to allow TDP Phase One, a partnership between WRK LLC of Lincoln and Chief Industries of Grand Island, to lease out the space without the restrictions that were contained in the original redevelopment agreement when the entertainment district was developed.
As part of the agreement, TDP Phase One will pay back $266,666.67 of the $400,000 in tax-increment financing that was tied to the Public Market.
The West Haymarket Joint Public Agency, which oversaw construction and is paying off bonds that built Pinnacle Bank Arena and the street system, approved the settlement in late May. City Attorney Jeff Kirkpatrick determined at the time that the City Council also needed to approve it.
At its last meeting, the council delayed a decision on the agreement for two weeks, after Tom Huston, an attorney for TDP Phase One, said it was negotiating with several businesses interested in leasing space.
Monday, Huston said no leases had been signed and there were financial considerations that were “unresolved.”
Jeff Galyen, one of the owners of Yard Investments, which owns Railyard tenant Gate 25, said he and other investors had proposed putting six different businesses in the space — current tenants Maize Popcorn and Breezy Island Ice — and four new tenants, at a proposed rate of $40 a square foot.
Galyen said TDP Phase One did not seem interested in leasing the space to businesses that would fulfill the Public Market’s goal of supporting local small businesses.
Mark Hunzeker, an attorney representing Yard Investments, said the restrictions on the Public Market are legal covenants that can be enforced by other Railyard tenants. Hunzeker suggested the city may face a lawsuit over removing the restrictions.
Huston said TDP Phase One would continue to negotiate with Yard Investments, and the removal of the Public Market restrictions does not mean a deal will not be struck.
Cyndi Lamm, one of two council members who voted against the agreement, said she did not want to expose the city to potential legal liability.
Jon Camp, the other "no” vote, said he could not support it because he felt the developers had not made a “good-faith effort” to lease out the space, charging rents that were well above market rates.