CHDC claims project held hostage' by Ryan's lawsuit.

Byline: Brian Johnson

A nonprofit affordable housing developer claims in a court filing that Ryan Cos. US Inc. overstated the amount of work it did for a project in downtown Minneapolis, and that Ryan's lawsuit over the $37 million project is without merit.

In its response filed Friday, the Minneapolis-based Community Housing Development Corp. said Ryan is holding the East Town Apartments affordable housing project "hostage" for services Ryan is "not entitled to receive."

Minneapolis-based Ryan is suing the nonprofit developer and First Covenant Church, claiming the company is owed $2.3 million for design management, estimating and other services tied to the 169-unit project.

The project is to be constructed on the First Covenant Church's parking lot at 618 Ninth Ave. S., across from the U.S. Bank Stadium. The project team, which now includes Frana Cos. as the builder, hopes to begin construction within 30 days, though it's not clear if that is still possible.

The Community Housing Development Corp. warned in its response to the lawsuit that closing on the project's construction loan "will be stopped" if Ryan's motion for a temporary injunction is successful.

Ryan and the CHDC never executed a design-build construction contract for the project because Ryan never proposed an "acceptable" guaranteed maximum price for an affordable housing project, according to CHDC's response to Ryan's lawsuit.

The nonprofit developer claimed that Ryan used "comparables" from a "high-end luxury apartments" as the basis for its cost estimate, which made Ryan's estimate "unworkable" for an affordable housing development.

In February 2015, Ryan entered into an agreement with CHDC for "services related to the development" of the project, according to Ryan's lawsuit filed last week.

Ryan claimed it was dismissed from the project team in August and replaced by Hopkins-based Frana Cos. because CHDC believed that Ryan's services were too expensive for a project with an "incredibly tight" budget.

Mike Ryan, market leader for Ryan Cos., said in a statement last week that the company is "incredibly disheartened to find ourselves in this situation" after "three years of working diligently on this much-needed affordable housing project."

Another point of contention is whether or not Ryan owns the project's design.

CHDC is working with Minneapolis-based UrbanWorks Architecture on the design, but Ryan claims in the lawsuit it spent "significant hours to meet with UrbanWorks...

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