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The lawsuit against Faulk-nerUSA Inc. comes as the City Council prepares to authorize a letter of intent tonight with Minneapolis-based M.A. Mort-enson Co. to rework final designs. Mortenson has emerged as the city's new preferred firm, offering a scaled-down project and low bid of $48.4 million.

City plans show the Marriott anchoring redevelopment of the old industrial park, southeast of Interstate 80 and First Avenue. The area, dubbed Iowa River Landing, would be home to commercial businesses and restaurants. It also is the site for the proposed Environmental Project, a $180 million indoor rain forest and education complex.

"Mortenson is committing to getting us open on the same date that we originally planned," City Administrator Kelly Hayworth said. That means substantial completion by Aug. 1, 2006, and opening by fall. Problems with Faulkner have not disrupted that timeline, he said, "other than it compresses their (Mortenson's) construction time period."

Faulkner officials issued a statement Monday denying the allegations. According to the lawsuit, filed Feb. 23 but only made available Monday:

The city of Coralville hired Faulkner in March 2003 to design the project within an initial budget of $57 million.

Numbers fluctuated, but Faulkner officials assured the city that "plans were proceeding satisfactorily and the budget estimates were realistic." Then, last November, bids received on a portion of the project came in nearly 50 percent more than estimated.

That forced the city to devise a new, "turn-key" plan in which an outside firm builds the project for a set amount by a certain date, then turns the keys over to the city.

In the lawsuit, city officials estimate they paid Faulkner and its vendors about $3 million. The lawsuit claims breach of contract, fraud and negligent misrepresentation. The city also is seeking punitive damages and reimbursement for legal fees.

"FaulknerUSA disputes the city's allegations contained in the lawsuit, and we plan to fully defend ourselves against those allegations," Faulkner spokeswoman Terri Dusek said, reading from a prepared statement.

She declined further comment. Faulkner also is being sued by project architect Cole+Russell, which claims it has yet to collect $667,206 for work on design development and construction documents.

Hayworth said the city reopened booking for the hotel and conference center within the past two weeks. Tonight's letter of intent agreement sets out various protections for the city but essentially is a pledge that the city will hire Mortenson and, if not, will pay the firm for its design work, he said.

"There are 37 different contracts that need to be finalized, and it just takes time to do this," Hayworth said of finishing the needed paperwork so construction can begin in April. "(The letter of intent) is a way for them to get moving in doing the final design during that time."

Councilors approved a letter of intent with M.A. Mortenson Co. of Minneapolis to build the construction portion of the $60 million Marriott hotel and conference center for $53.8 million. The city is expected to approve final contracts on April 12.

"Can we break ground that night?" Councilor Jean Schnake asked, smiling during the council work session.

The eight-story building will anchor redevelopment of the old industrial park, southeast of Interstate 80 and First Avenue. Recent years brought lawsuits challenging, among other things, the city's involvement in the hospitality market. Last week, however, it was the city heading to court, filing a $3 million lawsuit against its former construction manager, FaulknerUSA Inc.

Bids for the Marriott came in more than $10 million above expectations in November 2004, leading to the city lawsuit that claims Faulkner's designs and cost estimates were fraudulent. After dropping Faulkner, the city began to pursue a turnkey agreement in December 2004. In a turnkey agreement, a firm agrees to build for a set price and completion date when it would turn over the keys to the city.

Three organizations submitted proposals at the end of January, including Mortenson, which proposed saving money by reducing the square footage by about 23 percent in areas such as hallways and office and storage space, while keeping program areas such as ballrooms and exhibit halls the same. It also proposed consolidating what once was a maximum nine-story, 286-room hotel into eight stories with the same number of rooms.

The Coralville Hospitality Corporation -- tasked with overseeing the project -- moved into three weeks of exclusive negotiations with Mortenson soon after, asking it to add some space to support, making it only 19 percent smaller than the original size.

City Administrator Kelly Hayworth said that cost the city about $5.4 million more, but that the cost could be offset by altering the parking plan.

On Feb. 24, the hospitality corporation recommended going with Mortenson.

Rob Lillich, of Hanscomb, Faithful & Gould, which the city hired to solicit potential turnkey partners, said Mortenson's willingness to stay with the city's timeline, its proposal to keep program space the same and its experience building Marriott and other upscale hotels put it on top.

Lillich said in addition to putting all 286 rooms in eight floors, Mortenson created more of a linear, "T-bone" design instead of the angular "C" shape originally proposed.

"It (the "C" shape) was a great design," he said. "It was just too expensive."

Hayworth said the completion date is October 2006. Hayworth also said demolition in the area is in its second phase, sewer and street infrastructure are completed or nearly finished with planning, and at least 37 contracts are being hammered out among the stakeholders.

A groundbreaking date should be set soon, he said, and options for installing furniture, fixtures and equipment are being explored.