Local developer facing potential lawsuit after unfinished grocery store

NOW: Local developer facing potential lawsuit after unfinished grocery store

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SOUTH BEND, Ind. --- A local developer is not only facing backlash over his latest project at 300 E. Lasalle, but now a potential lawsuit. In a Saint Joe County Redevelopment Commission meeting Thursday morning, the council authorized the city attorney to begin the steps of filing a lawsuit in order for the city to get its money back, in the total of $7.5 million.

“I think the vast majority of people feel cheated and insulted, and they just want what was promised," says Troy Warner, 4th district council member.

South Bend residents are feeling cheated and insulted after the soft opening of the city's newest grocery store project. The addendum to development agreement for the market required fresh fruit and vegetables, fresh and uncooked meats, fresh or frozen seafood, and dairy products at the minimum. What they saw instead was rows of Pringles laid out on plywood and frozen meals in pop coolers.

“What we saw open on New Year’s Eve briefly had none of those things, and obviously was a quick attempt using plywood and sawhorses to make shelving," Warner says.

City leaders say what's there now is not what they agreed to six years ago.

Now the city's Redevelopment Commission is in the beginning steps of a lawsuit against Matthews, seeking $5 million of their money used to assist in the project, and an extra $2.5 million in damages.

“We authorized the city attorney to retain outside council to file necessary litigation to seek the return of the funds that the city provided," says Warner.

However, the developer, David Matthews, says otherwise. He says he met his contractual obligations with New Year's Eve's soft opening.

"We met our contractual obligation when we opened the grocery store on New Year’s Eve, but that grocery store isn’t up to my standards, and the city isn’t happy with it," says Matthews, developer with Matthews LLC.

He says the $5 million was for more than just the market, but also for the luxury ten-story townhomes above it.

"The city didn’t give five million dollars to open a grocery store, they gave five million dollars to build a fifty or forty some million project that would generate a million dollars a year in tax revenue," explains Matthews. "The grocery store is a portion of it.”

After multiple extensions given by the city, Matthews says the zoning process alone took almost two years, then Covid-19 put a halt on the progress, making the project take longer than expected.

He says they're going to continue to build an appealing grocery store for downtown South Bend, and city leaders hope the lawsuit will push the progress forward.

“We are going to keep doing what we plan to do which is finish the work; make it nice, make it delightful, make it a shopping experience that I, a resident that lives across the street, would want to go to," Matthews says. "But it’s going to take time, and it’d be nice if we didn’t have this political theater to deal with.”

"What the city wants is a grocery store and a pharmacy," Warner says. "We want the promises kept and met, and maybe this lawsuit is the leverage to be able to bring those things to fruition.”

As far as attending the Redistricting meetings to discuss the progress of the grocery store, the city says they invited Matthews to four meetings including Thursday's. Matthews says he didn't attend because they never returned his requests for meetings prior to the public meetings.

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