Freed ‘exploring all avenues’ to regain control of Willits in Basalt
BASALT – The developer of the Willits Town Center project in Basalt was surprised last week when its lender started foreclosure proceedings – an action that may be retribution for a financial battle between the parties in Chicago, a spokeswoman said Tuesday.
Joseph Freed and Associates (JFA) believed it had an agreement with lender Bank of America that would allow it to move forward with development of the Whole Foods Market building, according to spokeswoman Jayne Thompson. Bank officials allegedly indicated they wanted to make “defensive financing” for the project.
“Freed understood the rationale to be that by funding improvements to the project – like the addition of the Whole Foods Market – the bank was actually increasing the value of its collateral,” Thompson said.
But when JFA contested Bank of America’s foreclosure of a major retail development in Chicago last year, discussions about the defensive financing in Basalt stopped, she said.
Bank of America moved to foreclose on the Block 37 project in downtown Chicago in October, contending that JFA was in default on a $205 million construction loan. JFA mounted a legal challenge to the lender’s attempt to have a court appoint a receiver to run the mall while it worked through the foreclosure.
The Illinois Appellate Court on April 6 denied JFA’s motion to overturn a lower court’s decision to appoint the receiver, according to the Chicago Tribune. That opens the door to foreclosure there.
In Basalt, Bank of America claimed JFA is in default of a loan with $36 million remaining on the principal. An Eagle County District Court judge last week appointed a receiver to run the day-to-day operations. A public trustee sale of the property is set for Aug. 25.
Thompson said JFA will “pursue all avenues” to regain control of Willits Town Center, which has 281,000 square feet of approved but unbuilt commercial space and between 119 and 177 residential units. The approvals from the town of Basalt allow flexibility on the number of residences.
Thompson said the development firm will continue to seek an agreement with Bank of America, challenge the foreclosure proceeding in court and try to find alternative financing.
The last option appears daunting since JFA not only has $36 million allegedly outstanding on a loan, but also millions of dollars of mechanics liens filed by its former contractor and subcontractors on the job.
The abrupt change of circumstances in Basalt has town officials and Whole Foods Market in a wait-and-see mentality. An initial lease with Whole Foods expired when construction stalled on the project in September 2008. The contract required the developer to turn over the shell of a building in June 2009 so the grocer could complete the interior. Whole Foods signed a new contract last month.
“We’ve got a store designed. We’re ready to go,” said Will Paradise, Whole Foods regional president for the Rocky Mountain region.
The troubles of the developer aren’t wearing down his patience because the natural foods grocery chain wants to be in the Roaring Fork Valley at Willits Town Center, Paradise said. “We want to be there. We’re excited about the prospect,” he said.
Paradise said he couldn’t discuss terms of the existing lease.
The project manager for the company appointed as receiver, Cordes and Co. of Denver, said he couldn’t comment yet on whether Bank of America will act to secure the lease with Whole Foods.
“It makes sense that Whole Foods would add value to the Willits Town Center project,” said Mike Staheli of Cordes and Co.
The receiver’s responsibility is to preserve the value of the property, he said. The company will manage the financial decisions until the issues between the lender and developer are resolved, through whatever means.
“I think everybody’s concerned about what happens there,” Staheli said.
The Basalt Town Council was scheduled to consider amendments to Willits Town Center approvals Tuesday night, tailoring the documents to a scaled-down store, according to Town Manager Bill Kane. The hearing was postponed because of the latest developments.
Kane said the project took one step forward and two steps back recently, referring to the new lease with Whole Foods, then the foreclosure action.
Mayor Leroy Duroux said the uncertainty puts the completion of Willits Town Center “in jeopardy.”
“We were hoping this would finally move forward,” he said.
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It was not difficult to hear the excitement in Nancy Merrill’s voice late Tuesday morning as she talked about capturing the arrival of one our areas most anticipated babies on the Crane Camera. These nesting cranes were photographed in the spring of 2021.