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April 2, 2020

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Tech firm sues city of Vancouver over office

CloudOne claims it was pushed out, not fairly compensated

By , Columbian Assistant Metro Editor
Published:

A Vancouver-based tech company is suing the city for $1.2 million, alleging that it was pushed out of its office space due to the planned Tower Mall redevelopment on Mill Plain Boulevard.

CloudOne LLC also alleges in its lawsuit, filed March 4 in Clark County Superior Court, that it was unfairly compensated for rent payments and relocation of its employees over the last two weeks to Tennessee.

When the city purchased the Tower Mall property, 5411 E. Mill Plain Blvd., in 2017, it assumed the leases of the tenants in the building, including CloudOne, a 185-employee marketing company that connects consumers with retailers, mainly in the automotive sector. The company’s main headquarters is located at 2105 C St., but it had about 12,000 square feet of office space at the Tower Mall building, called Town Plaza. The lease agreement included an option to extend the lease by five years, according to the lawsuit.

In January 2019, the city told CloudOne that it planned to demolish the building as part of the redevelopment, and that CloudOne would need to relocate by June 30 of this year. The city told CloudOne it would compensate the company for costs for terminating the lease early, which would cover increased rent and relocation expenses, the lawsuit states.

“Then, the city dragged its feet for roughly an entire year,” CloudOne founder Bryan Hunter told The Columbian. “Meanwhile, we watched commercial office space prices go higher and higher.”

Employees at CloudOne also learned that the building would be demolished, “which subsequently led to the highest turnover we have ever experienced,” he said.

In August, the city offered an undisclosed amount for the compensation costs, but CloudOne stated that it was “well less than the rental rate for comparable office space,” according to the lawsuit.

“The city is disappointed that efforts to reach a mutually agreeable transition plan for CloudOne’s relocation from the Town Plaza (formerly known as Tower Mall) have, so far, been unsuccessful,” city spokeswoman Carol Bua wrote in a statement to The Columbian. “The city had indicated to CloudOne that it would honor the terms of its current lease agreement through Oct. 31, 2021. The parties disagree about the availability of a five-year extension clause which, if applicable, would have allowed CloudOne to remain in the building through 2026.”

According to the lawsuit, the parties negotiated for months until the city told CloudOne that it was “incurably in default” because of late rent payments from months earlier. The city then told CloudOne that the renewal option was to be forfeited, the lawsuit states, and the company could not renew its lease. The lawsuit also maintains that CloudOne was current on its rent payments and had not received any previous notice of default.

“We were informed by the city that it was no longer going to provide any relocation assistance whatsoever,” Hunter said.

CloudOne has been in the process of relocating about 140 employees to Nashville Tenn., he told The Columbian.

“We made the difficult decision to relocate those jobs outside the state,” Hunter said.

The company will pay about $659,000 more in rent through 2026 compared to its former space at Town Plaza, according to the lawsuit. It also will have spent about $574,000 relocating the business and another $25,000 in attorney fees covering the lawsuit.

CloudOne has requested a trial, but no date has been set.

The company was founded in 2010 by Hunter and moved from Portland to Vancouver in 2013.

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