A Kennewick-based development company is suing the city of Sunnyside, alleging breach of contract over a housing project on Outlook Road.

Munson Vedder Developing entered into an agreement to purchase the 146.7-acre Monson property at 2920 Outlook Road from the city in spring 2023. It planned to build “Sunnyside Oasis,” a community with a mixed use of space including up to 550 homes, commercial lots, and a 10-acre neighborhood park.

The $4 million purchase agreement fell through when the council said the company failed to meet its stipulations, including proof of financial backing, after multiple extensions.

“After he didn’t meet his final deadline, we terminated the contract,” said Mayor Dean Broersma. “I feel like he’s reaching for straws. I don’t feel (the suit) should have any merit.”

Aaron Racicot, the president of a Kennewick-based development company, believes that the city breached its contract and acted in bad faith, according to a news release from his attorney, Jeff Sperline of Sperline Law. The lawsuit seeks $250 million in damages.

“In my opinion, the Sunnyside leadership has lied to us, colluded and conspired against us, and discriminated against us, resulting in the destruction of our dream project. It’s been devastating,” Racicot said in the release. He said that he met his terms of the agreement.

The sale of the property to Munson Vedder Developing was factored into the 2024 city budget. When it didn’t occur, it led to financial issues, with council setting a lean budget for 2025.

Monson property

The city took over the Monson feedlot - once home to 25,000 cows - in 2007. Many officials wanted to remove the source of unpleasant odors, spruce up the city’s west entrance, and bring new industries, businesses and homes. It was long on the agenda: Sunnyside Port officials also looked into purchasing the property in 1999.

But the 2008 recession made attracting developers difficult. The council relisted the property in 2015. In 2018, OneEnergy Renewables was given a five-year option to lease the property, to decide if it was right for an 80-acre solar project. That agreement did not materialize.

The city ended the agreement with Munson Vedder in November 2024.

In May 2025, Sunnyside City Council members entered into an agreement to sell 77 acres of the property, pending a feasibility study, to local housing developer F&M Investments for $1.7 million.

A lien placed on the property by Racicot prevented the sale from moving forward, but that was lifted, Broersma said. He said he is cautiously optimistic that the sale with F&M Investments will move forward.

The remaining property is listed at $48,000 per acre through NAI Tri-Cities.

This story was originally published by the Yakima Herald-Republic. Questen Inghram is a Murrow News Fellow who focuses on government in Central Washington communities.