St. Paul: Appeals court rules against city in downtown lofts bid

The Lofts at Farmers Market is fully constructed and occupied, but legal woes continue for the five-story, 58-unit luxury apartment building developed using city money.

The Minnesota Court of Appeals has found "the appearance of both folly and favoritism" in the city's decision to allow a building contractor to withdraw its $7.33 million construction bid and then alter it upward it after the contract was already awarded.

The appeals court sided with Rochon Corp., a construction contractor that made a bid for the project, and against the city of St. Paul in a lawsuit. Rochon maintains the city violated its own bidding procedure when it awarded a construction contract to Shaw-Lundquist, the company that completed the $8 million building in February. Three appeals court judges have agreed.

The decision, filed Monday, May 7, effectively orders the city to sever its contract with Shaw-Lundquist, but it gives little to no indication of how to do that. The building is already complete.

"What effect this ruling has on the project is unclear," Jeffrey Wieland, an attorney with Fabyanske, Westra, Hart and Thomson P.A., the Minneapolis law firm representing Rochon, wrote in an email Monday. "Tenants have started moving into the building, but there may be progress payments and retainage still outstanding for Shaw- Lundquist and its subcontractors. That money cannot be paid on a void contract. More litigation on this project is possible."

Joe Campbell, a spokesman

In a later email, Campbell added: "Projects like the Lofts at Farmers Market are a key component to enhancing vibrancy in the city."

The ruling is the latest curveball for a project that has had its share of struggles. The city acted as developer of the Lofts project, which overlooks the Lowertown farmers market, after a previous developer and construction team parted ways and dropped the project.

The city put out a request for bids in November 2010. Shaw-Lundquist won the contract with a bid of $7.33 million. The contractor quickly realized it had underestimated costs by $619,000 and told the city it had to withdraw from the contract. Instead, the city invited Shaw-Lundquist to rejoin the project and allowed it to add $89,000 on top of the $619,000, for a total contract of $8.04 million.

The city attorney's office pointed out that after the revisions, Shaw-Lundquist's bid was still lower than those of its competitors. Doran Construction bid $8.29 million, the Sand Companies bid $8.39 million and the Rochon Corp. bid $8.72 million. Other bidders, Stahl Construction Co. and Morcon Construction Co., bid even higher sums.

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St. Paul: Appeals court rules against city in downtown lofts bid