TEMPLE TERRACE — The developer of the stalled Downtown Temple Terrace project has filed a countersuit against the city, asking the court to award it more than $15 million in damage compensation or declare it the owner of the land the city turned over to the developer to build the complex.The two sides have accused each other of breaking the contract to build the $150 million office-retail-residential-cultural community that would serve as the downtown Temple Terrace has never had. The Mediterranean Revival-style development would take up 29 acres on the east side of 56th Street from Bullard Parkway south to the Hillsborough River.The city sued Vlass Temple Terrace LLC in Hillsborough Circuit Court last month, accusing the developer of default in failing to timely start construction of a cultural arts building and a separate building for retail shops. The city's suit asks the court to force Vlass to turn over the undeveloped portion of the property, about 22 of the original 29 acres the city gave to Vlass in order to build according to the city's vision. The city also asked for damage compensation "to be established at trial.''In response, Vlass filed a lawsuit this week in the U.S. District Court, asking that the case be transferred to federal court under a provision that allows it jurisdiction over civil cases in which the parties are from different states — Vlass is based in Georgia — and the amount in dispute exceeds $75,000.In its countersuit, Vlass charged that the delays on construction of the cultural arts center and adjacent building were the city's fault. Vlass also asked the court to rule that the city failed to use "reasonable discretion'' to alter the project because of changing market conditions in a depressed economy.Although the two sides have disagreed over many details of the project, the big issue centers on the apartment buildings the developer had planned to build in the northeast corner of the property. The city's vision, which the city said is outlined in the contract the parties signed on June 30, 2009, was to have retail businesses along the bottom floors of the apartment buildings to create a Main Street atmosphere across the park from the cultural center.The Vlass suit states that real estate experts determined "that the demand for retail space in Downtown Temple Terrace was not as great as originally thought'' and Vlass accordingly had to eliminate the ground-floor stores in the apartment buildings. The company offered to build the first floors so that they could be converted to retail if conditions improved. City Council members said such a plan would not allow potential retail tenants to see what their storefronts would look like. Vlass' Tampa attorney, David Smith, said the City Council and residents were distracted — "hysterical,'' he said — by unfounded concerns that the apartments, which Vlass said would be luxury residences, would eventually become "Section 8'' or subsidized housing for low-income people."Unfortunately, it blocked the use of reason,'' Smith said.City Attorney Mark Connolly said the city disputes the events as characterized by the Vlass countersuit."The city worked diligently to try to make this project a success with this developer,'' he said.Philip Morgan can be reached at [email protected] or (813) 226-3435.