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Federal judge denies request by Potsdam to dismiss property dispute

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POTSDAM — A federal judge has denied the village’s request to dismiss a lawsuit brought by the developer of a water tower off Route 56 seeking nearly $500,000, alleging unpaid rent and changes to a lease agreement.

Jeda Capital-56 LLC, Skaneateles, which erected the tower as part of its development of a Lowe’s Home Improvement Center, filed action in May 2011 in U.S. District Court, Syracuse, asking that it either be paid the money allegedly due or be fully compensated for the $1.83 million appraised value of the property where the 300,000-gallon tower stands. The village, which now owns the tower, denied the allegations and filed a motion in September 2011 to have the case dismissed.

In a decision filed Thursday, Judge Norman A. Mordue denied the motion, stating that Jeda Capital has adequately demonstrated that there is a sufficient basis for some of its claims under federal law, claims which will require additional litigation to resolve.

Jeda Capital initially proposed a smaller tower to meet fire protection needs for Lowe’s, but the village asked for a larger tower to accommodate additional village purposes. The village agreed to pay the $825,000 difference between the cost of the smaller tower and the tower with the capacity it sought. The company built the larger tower in 2009 using an $825,000 loan through Community Bank N.A. as part of a deal that called for the village to lease the tower for about $9,400 per month for the first 10 years and $1,000 a month for the next 10 years.

The village contended that there was an elevation problem with the tower and that Jeda Capital never provided documents required under a project completion agreement before the village would make any payments.

Jeda Capital claimed it executed the project completion agreement in August 2009 and agreed to perform additional work because it was “under duress,” as the village was holding up the opening of Lowe’s by refusing to issue a certificate of occupancy. The store opened in December 2009.

The village claims its actions did not amount to duress. It claims it was “legally justified” in withholding the certificate of occupancy until the Lowe’s building was in compliance with building codes and it could be demonstrated that there was sufficient water supply for fire protection.

The village said the delay amounted to “nothing more than an inconvenience” to Lowe’s and did not constitute duress for Jeda Capital.

The village took title in December after Community Bank N.A. foreclosed on the site and sold it at public auction. The village will pay about $700,000 over the next 20 years for the property.

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