Shorewood purchases other cities’ interest in Southshore Center

Southshore Center. (Sun Sailor file photo by Paige Kieffer)

On Jan. 9, the City of Shorewood approved the $311,000 purchase of Deephaven, Excelsior, Greenwood and Tonka Bay’s undivided interest in the real estate of the Southshore Center.

The defendant cities received the following amounts from the payment: Deephaven, $139,639; Excelsior, $90,812; Greenwood, $24,569 and Tonka Bay $55,980.

“This lawsuit took over 16 months to come to a conclusion, and I am glad it finally is over,” said Greenwood Mayor Deb Kind. “The lawsuit was frustrating on so many levels. A lot of money in attorney fees, and a lot of time could have been saved if Shorewood would have just paid the other cities according to the 1996 agreement instead of initiating a lawsuit.”

The cities have been involved in litigation since September 2015 regarding each of their interests in the center.

The city councils of Deephaven, Excelsior, Greenwood and Tonka Bay each approved resolutions authorizing the sale of the center to Shorewood in 2015.

The cities entered into an agreement March 4, 1996, for the purposes of creating a community center to serve residents and specifically senior citizens in the five cities.

The agreement provided the amounts that each city would contribute to fund the project and that Shorewood would act as a financial manager of the property and oversee construction.

According to the agreement, Deephaven contributed 22.45 percent, Excelsior 14.6 percent, Greenwood 3.95 percent, Tonka Bay 9 percent and Shorewood 50 percent of the center. The five cities contributed a total of $622,000 to build the center.

Also in 1996, the cities agreed to enter into a 25-year lease agreement with the non-profit Friends of the South Lake Minnetonka Senior Community Center, which would own and operate the center. In 2008, the non-profit defaulted on the lease. Shorewood signed a lease in 2009 to take over operations and maintenance of the property.

In the lawsuit, Shorewood contested the amount the city should pay the other cities, arguing that the sale percentages in the original agreement were higher than the current value of the building.

On March 15, 2015, the estimated of the value of the property was $130,000, as appraised by Insight Realty Advisors Inc., a company hired by Shorewood.

After exhausting all appeals, Shorewood must now comply with a court order to acquire the interests of the four cities for the amount of $311,000.

Contact Paige Kieffer at paige.kieffer@ecm-inc.com.

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