Local developer Brad Hoyt said Wednesday he’s seeking more than $12 million in damages from the city of St. Anthony in connection with Hoyt’s ill-fated multifamily development proposal on the Lowry Grove mobile home property in the city.
In a lawsuit filed Monday in U.S. District Court, Hoyt alleges the city “fraudulently induced” a Hoyt entity, The Village LLC, to pay $6 million for the site of a proposed 837-unit housing development the city never intended to approve. The original plan included 90 affordable housing units. Hoyt, owner of Wayzata-based Continental Property Group, said the city prompted him to close the racially diverse mobile home park – at a cost of $5 million — to make way for the new development. He alleges that city officials were motivated by racism.
On Wednesday, Hoyt said in an interview that he planned to amend the lawsuit to include a claim that the city violated the federal Fair Housing Act in connection with its alleged role in the Lowry Grove drama.
The city denies any wrongdoing. In a statement, St. Anthony City Manager Mark Casey said, “The city believes the lawsuit is completely without merit. Mr. Hoyt apparently made a bad real estate transaction that displaced hundreds of vulnerable people, and now he wants to shift his loss onto the city, which is wrong and irresponsible.
“We will vigorously defend this ridiculous lawsuit and cannot provide further comment at this time due to active litigation.”
The developer shuttered the mobile home property last June, displacing 96 households from the 15-acre site at 2501 Lowry Ave. The property has since returned to original use as a mobile home park – and will stay that way for the foreseeable future now that the redevelopment plan has been sidelined, Hoyt said.
Developers, elected officials and residents have long sparred over the fate of Lowry Grove, and this isn’t the first time the courts have weighed in. Since 2016, other parties that entered the fray include Minnesota Attorney General Lori Swanson, the U.S. Department of Housing and Urban Development and Minneapolis-based affordable housing developer Aeon.
“Aeon is sad about how many people were hurt by what’s happened at Lowry Grove,” Aeon said in a statement Wednesday. “We’re dismayed about some of the allegations in the lawsuit. But our job is to work with the city of St. Anthony Village to meet its affordable housing needs.
“At this time, Aeon does not have further comment on the situation.”
In June 2016, Aeon and a group of Lowry Grove residents filed a lawsuit in Hennepin County District Court to block Hoyt’s $6 million purchase of the property. The Aeon team submitted a matching offer. But a judge ruled in September 2016 that the sale to Hoyt would not be reversed. The Minnesota Court of Appeals later upheld that decision.
Minnesota Lawyer previously reported that HUD launched an investigation in October 2016 as to whether the sale to Hoyt would disproportionately affect people of color. Swanson accused The Village and previous property owner Phil Johnson of taking actions to “undermine, circumvent and violate” the state law.
Aeon and The Village agreed in August 2017 to co-develop the site, with Aeon being responsible for the affordable housing. One iteration of the development called for nearly 200 affordable units and 100 “deeply affordable units,” Hoyt said.
In August 2017, Aeon and The Village proposed 823 housing units in five buildings, including a 110-unit affordable apartment building intended for displaced mobile home residents.
The developers later trimmed the plan to include 615 dwellings, of which 97 would have been affordable. Citing objections to the project’s density and the height of the buildings, the City Council rejected the plan in October 2017.
From October 2017 until the spring of 2018, Hoyt and representatives of the city talked about the potential use of Tax Increment Financing to make a lower-density development economically feasible, according to the lawsuit.
During that time, Hoyt incurred more than $1 million in expenses related to “carry costs,” architectural and engineering fees, city escrow, legal fees and property taxes, the lawsuit said.
Plans for a lower-density development hit the skids in May, when the city indicated in a staff report that the project “could be developed without any TIF assistance from the city,” according to the lawsuit.
Hoyt claimed in the lawsuit that the city “intentionally induced” his development group to “incur enormous costs” to close the mobile home park “in order to rid the city of low-income, multicultural citizens that the city deemed undesirable.”
“They used us to close their mobile home park to get rid of brown people and people of color,” Hoyt said in an interview. “They double-crossed us. … This is a town of 9,000 and they want to keep it 9,000 white people. That is the true color of what is going on here.”
Hoyt said his total out-of-pocket losses are “well in excess of $12 million.” That does not include lost profits, he said. The lawsuit, in boilerplate language, calls for a judgment “in excess of $50,000.”