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St. Paul plans further appeal after losing decision in Lofts construction suit

St. Paul officials plan to ask the state Supreme Court to review an Appeals Court ruling this week that went against them.

St. Paul officials plan to ask the state Supreme Court to review an Appeals Court ruling this week that went against them, one that essentially said city officials screwed up in letting a winning contractor withdraw its bid and then sweeten it.

The case involves the Lofts at Farmers’ Market, a luxury apartment building  in downtown St. Paul’s Lowertown area.

Because the project is already built and all 58 units are leased, it’s unclear how the issue will be resolved if the ruling against the city stands, according to City Attorney Sara Grewing.

But they do plan to go to the Supreme Court.

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“We are disappointed in the verdict, believe that [the original trial judge] made the correct call at the trial court level, and we are planning to petition the Minnesota Supreme Court for review,” Grewing said today.

Rochon Corp., which had unsuccessfully bid on the project in 2010, claimed that the city had violated its bidding policy when it let the low bidder, Shaw-Lundquist, withdraw its bid of $7.3 million because it had added some subcontractor figures incorrectly. And then the city let Shaw-Lundquist adjust its bid to $8.04 million.

That was still lower than bids by Rochon and other companies, but Rochon sued to have the new bid declared illegal and void.

At trial, the district court judge district court ruled for the city, saying that Shaw-Lundquist still had the lowest bidder after the changes. It declined to declare the contract void. The city did, however, have to repay  Rochon its bid preparation costs of $33,652.

The state Court of Appeals, though, reversed that ruling Monday, noting that the other bidders were not given a chance to correct their bids.

“So the appearance of both folly and favoritism arise,” said the Appeals Court ruling.

While planning the next move, city officials are pondering what the consequences might be if they lose the case.

Said Grewing:

“We’re a little unclear on what would happen if the appellate court’s ruling were upheld.  The Lofts are already built, with 58 units that are 100 percent rented.  Obviously the Appellants were not a party to the contract between the City and Shaw-Lundquist, and we’ve already paid the Appellants nearly $35,000 for the cost of preparing their bid, so to whom damages would be owed, if any, is something we are still trying to sort out.”

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Two Cities blog, which covers Minneapolis and St. Paul City Halls, is made possible in part by grants from The Saint Paul Foundation and the Carolyn Foundation.