King's Landing developer Audubon faces lawsuit ahead of pivotal meetings in coming week
FORT PIERCE — As it awaits city approval on a potential project-saving deal, King's Landing developer Audubon Development is facing a breach-of-contract lawsuit from an early investor and one-time expectant resident.
Deborah Downs, of Indian River County, said she paid $1.5 million to Audubon in May 2022. Now she wants her money back, and more.
Meanwhile, city commissioners have two meetings in the coming week that could decide the fate of the wider project.
No houses built, payments have stopped
That $1.5 million payment was for one of 10 houses — described by Audubon as "villas" — that was promised to be built as part of King's Landing.
Those houses, like the rest of the project, have not been built, despite missed deadlines. No vertical construction has taken place at the former H.D. King Power Plant site, which the city chose Audubon to develop in 2019, over a bid from the company that would become Brightline.
The house, according to Audubon CEO Dale Matteson, was intended to take eight months to build. It was then to be used for 10 months as a model to sell the other nine, before it was handed over to Downs.
According to the lawsuit, in exchange for her $1.5 million upfront payment, Audubon was to pay Downs $8,000 per month until she received the house. Those payments, she claims, stopped in February, with a "stop payment" indication for March.
On April 12, Downs served Audubon with a notice of default for stopping the payments.
At a special City Commission meeting one week later, Matteson was asked about the issue. He claimed that he stopped the payments because the initial agreement was for 18 months, and 18 months had passed. Unfortunately, Matteson said, the house had yet to be built.
As for the notice of default, Matteson said, "I don't blame her" for taking legal action. That said, he told the commissioners he believes he will eventually deliver the house to Downs, and that he met his commitment of 18 months of payments.
In her lawsuit, Downs said she sees things very differently. She claims the payments had no timeframe associated with them. While 18 months was the estimated completion target, she claims the contract payments were to continue until the property was transferred to her.
She is now seeking repayment of the initial $1.5 million, interest, legal costs and $500 for other costs she has incurred.
The lawsuit also alleges Audubon missed a key deadline. The initial contract required completion of the residence and transfer to Downs within two years, which would have been May 6. On May 23, Audubon was served with a second default notice related to that missed deadline.
Audubon "has failed to complete or even begin construction" on Downs' house, the lawsuit claims.
In a text message Friday, Matteson said that neither he nor his attorneys were aware of Downs' lawsuit, which she filed July 23.
"I just spoke with my attorney, who is in regular contact with Deborah's attorney. He knows nothing about it, either. We will look into this on our end," Matteson said.
Possible path forward to come before City Commission
The lawsuit was filed two days before Audubon reached a tentative joint venture agreement with Harbert Realty Services, a partnership that city commissioners have called a "hail Mary" and potentially the last chance to save King's Landing before the city attempts to take the land back from Audubon.
That agreement was signed July 25. In it, Harbert and Audubon together form a limited liability company to take over the development of King's Landing.
Harbert would take over majority control, with a 60% stake, while Audubon would retain 40%.
Overall, the project is expected to cost the joint venture more than $182 million, according to the agreement. That includes $6.1 million that would go to Audubon for the land.
Of that, $127,278,600 would be for the condos, retail, restaurants and parking, while $55 million would be for a 140-room independently branded Marriott hotel affiliated with its Tribute Portfolio. The villas were not explicitly mentioned in the joint-venture agreement.
Those figures are significantly higher than the $85 million estimate first given when Audubon was chosen for the project. The project has changed — including the addition of more stories to the main building — and there have been a number of unforeseen costs that Matteson has cited for delays. There also was the global COVID-19 pandemic, followed by supply-chain issues and inflation.
The signed agreement is scheduled to come before the City Commission at 9 a.m. Monday.
While commissioners have indicated they have lost both patience and trust with Audubon, the possibility of Harbert taking majority control appeared to be the only thing keeping the project afloat at the June 11 meeting, where the project was discussed.
Commissioner Michael Broderick, who works in real estate, said that night that he came into the meeting ready to start a lengthy, and potentially costly, legal process of taking the land from Audubon and starting the development process over. However, he said, his familiarity with Harbert gave him some hope.
"Potentially — and I stress potentially — this is a game changer," Broderick said in June. "These guys are the real deal."
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Other commissioners were willing to give Audubon and Harbert time to reach a deal as well. Now, that deal will come before them.
The joint venture would need approval of both the City Commission, which next meets Monday morning, and the Fort Pierce Redevelopment Agency, a board comprised of city commissioners and the mayor that next meets Tuesday evening. Discussion of the joint-venture is also on the agenda for that FPRA meeting.
Wicker Perlis is TCPalm's Watchdog Reporter for St. Lucie County. You can reach him at [email protected].
This article originally appeared on Treasure Coast Newspapers: Fort Pierce will soon decide fate of King's Landing as lawsuit looms