LANESBOROUGH, Mass. — Potential Berkshire Mall buyer Cypress Equities has pulled out of the deal to turn the former mall into a shopping center.

Current mall owner JMJ RE Holdings had a purchase-and-sale agreement with the Dallas shopping center developer since May. 

In August, Cypress's managing director, Scott Harrington, presented the company's hopes on developing the defunct property. The company aimed to attract top national brands while incorporating green spaces, murals by local artists, and more. At the time, Harrington said two large tenants had already expressed interest.

Last week, Cypress Equities pulled out of the current contract, but did not say it was completely done with the mall. 

Harrington said in an email Wednesday that the company's due diligence discovered four primary challenges in developing the project.

• There is not enough service/pressure to the property to support redevelopment project without constructing costly water tanks.

• The current septic system and former treatment facility is not acceptable for a project of the scale and magnitude proposed.

• There is existing asbestos and bad soil from the treatment system that needs to be remediated off site.

• And, "Baker Hill Road District, as it is currently constructed, the District assessments and governance will not work for our project."

"All these challenges must be resolved before we proceed with the project. We hope to continue our conversations with the various stakeholders to find solutions," he said.

The road district, established back in the 1980s when the mall was built to oversee the Connector Road and assess for certain town services, has been a sticking point for JMJ and prior mall owners. They've pushed for its dissolution along with reducing assessments on the vacant property.

Earlier this week, Tim Grogan, development consultant for JMJ RE Holdings said in a statement through email that Cypress had terminated the contract because of the costs of the Baker Hill Road District, now renamed the Baker Hill Business District.

"Cypress has terminated the existing contract citing the extraordinary costs of the Baker Hill Road District under its current structure. While they did back out of the current contract, they have expressed interest in still purchasing the property if the issues with the Baker Hill Road District are resolved," he wrote. "These issues include moderating its operating budget, addressing the disproportionate past due assessments, altering its organizational structure, and being able to leverage the District to cover various infrastructure costs. All these issues would need to be addressed before they would be willing to move forward."

Last month, Jay Jones of JMJ said a key obstacle to the sale remained unresolved: the lawsuit between JMJ and the district over property taxes. He said the purchase-and-sale agreement with Cypress had a deadline, and argued that the transaction could not close without an agreement.

"You have to have a settlement in order to have Cypress receive the property with a clean title, and I don't know what in the world everyone is discussing moving forward for when that's the biggest issue and the biggest hurdle," Jones said in the October meeting.