Future of mixed-use, gateway project in doubt; developer files suit against NKU

A Cleveland-area developer is suing Northern Kentucky University for breach of contract, claiming the university "soured" on a mixed-use gateway project after the developer had already incurred millions of dollars in expenses.

Now, the future of the long-planned, multimillion-dollar-development appears to be in jeopardy, though the developer is asking the court to order NKU to give the approvals needed for the project to move forward.

The complaint, filed Tuesday in Franklin County Circuit Court, claims the university coordinated with Campbell County and the city of Highland Heights to hinder the multiphase project's development.

Fairmount Properties completed the first phase of the project, a 65,000-square-foot St. Elizabeth Healthcare office building, in April 2020, according to university records.

The “town center,” the project's second phase which was announced in 2017, outlined a plan to add new restaurants, retail space, market-rate apartments, a hotel, structured parking and public gathering spaces adjacent to NKU's Highland Heights campus.

In March 2021, NKU entered into a 75-year lease with Fairmount Properties as part of a public-private partnership for the town center phase.

Under the agreement – obtained through a Kentucky open records request ‒ the university, which owns the roughly 16-acre site at the corner of U.S. 27 and Nunn Drive, wouldn't be responsible for the construction, financing or operation of the development.

The complaint states that before construction could begin, NKU insisted on several changes to the site plan "without any knowledge or expertise as to planning a mixed-use development."

NKU approved the developer's design after a lengthy delay, the complaint states, though Highland Heights and Campbell County later expressed concerns about the project as well. Some of those concerns surrounded the project's design and construction of a hotel, which had been temporarily delayed due to the economic impacts of COVID-19, the lawsuit states.

NKU made misrepresentations to the developer, the lawsuit says, assuring that construction would continue if Fairmount worked to address the city and county's concerns. But after several months of working with officials to address those issues, according to the complaint, the university, city and county withdrew their support for the project.

According to the lawsuit, NKU rejected a proposal to extend the project's timeline, a result of lengthy discussions with city and county officials, claiming it believed Fairmount could no longer finance the development.

However, the developer says it had secured financing that would've generated an additional $10 to $15 million for the university.

"Highland Heights and Campbell County pressured NKU to end the project because they did not like the design," the complaint states, adding university officials knew NKU might face a lawsuit if it caved to pressure to breach its contract.

University officials believed they could evade responsibility by interrupting the development's progress, the lawsuit states.

In a statement issued Tuesday afternoon, NKU denied the allegations presented in Fairmount's lawsuit.

"It is disappointing that Fairmount would rather file a lawsuit over this project than actually complete it," the statement reads. "Instead of building the vibrant development it promised, and years after it was selected, Fairmount has left NKU with nothing but costs, delays and a vacant site. Fairmount’s allegations are false, and NKU will vigorously advance its interests in this litigation.”

In a statement sent to The Enquirer late last month, the university pointed to "on-going challenges in the broader commercial real estate industry" as the cause for delays in the project's construction, adding it was in talks with Fairmount about "next steps."

Fairmount is asking the court for compensatory, punitive and lost profit damages, as well as an order forcing NKU to extend the project's timeline so that work can continue.

"In short, but for numerous delays and obstructions created by NKU and other public officials, this project would be well underway by now," Adam Fishman, principal at Fairmount Properties, said in a statement. "We are disappointed the project has not come to fruition as planned and we have never experienced anything like this in our company’s history."

This article originally appeared on Cincinnati Enquirer: Lawsuit: NKU delayed gateway development over city, county pressure