LONGMONT - City officials so far have spent about $312,000 on a condemnation lawsuit against the Dillard's department store at Twin Peaks Mall in Longmont.

The amount includes $110,000 in 2012 and an estimated $202,000 in 2013, based on a city document provided to city council members Tuesday, Dec. 4. City officials filed a suit in May against Dillard's Inc. (NYSE: DDS) for the 94,000-square-foot store in Longmont and the seven acres of land it sits on.

The store stands in the way of a planned $80 million development of the Village at the Peaks shopping center at the Twin Peaks Mall site on Hover Street north of the Diagonal Highway. That's because Dillard's owns the store it occupies and has veto power over any redevelopment at Twin Peaks Mall.

Longmont city council members approved a $205,000 loan from the city's "fleet fund" on Tuesday, Dec. 4, to help cover legal costs. Longmont finance director Jim Golden did not immediately respond to a request for comment Wednesday to explain details of the "fleet fund."

City council members on Tuesday also approved a $110,000 loan for 2012 legal expenses.

All of the loan money is expected to be repaid with interest in 2014 from bonds expected to be issued for the Twin Peaks Mall redevelopment project, according to a city document. The reimbursement date is set for Sept. 30, according to the document.

Those bonds - called "certificates of participation" - are expected to be repaid from the additional tax money generated after the shopping center reopens, through a government financing mechanism called tax-increment financing. City officials have pledged $27 million toward infrastructure improvements at the site, which is expected to be paid back through bonds.

Another loan for an unspecified amount is expected to be needed to pay for legal expenses incurred in 2014 related to the lawsuit, according to the city document.

Adding to the potential legal cost of the suit, court hearings are scheduled for three days next week to set a preliminary estimate of what the property is worth. A five-day trial slated for April to set the final price also is expected to increase the legal bill.

A Dillard's appraisal states that the land and store at Twin Peaks Mall in Longmont is worth $6.3 million - nearly double the $3.03 million appraisal commissioned by the city of Longmont in November 2012.

All other stores in the mall are owned by NewMark Merrill Mountain States, a real estate development company based in Fort Collins.