Lenders aim to foreclose on Aspen housing project
November 12, 2011
ASPEN – A property on Aspen’s east side, which developers have slated for future free-market and employee housing, faces the threat of foreclosure.
This week two lenders filed foreclosure notices on 404 Park Circle, accusing the property’s owner of “failure to make timely payments” on two loans.
The owner, Minnesota-based PFG Aspenwalk LLC, allegedly owes $5.5 million on a $45.4 million loan it secured from Bank of America in December 2007, according to the foreclosure notices. And it owes another $1.26 million on the $1.4 million note issued in October 2010 by Rapid Financing LLC, records show.
The foreclosure actions come when PFG Aspenwalk has a pending application before Aspen City Council that seeks to demolish the dilapidated housing developments at 414 Park Ave. and 404 Park Circle so it can build 14 free-market condominium units, 24 employee-housing units and 53 underground parking spaces, according to the developer’s most recent proposal.
The proposal is scheduled to go back to City Council on Nov. 28. Aspenwalk’s local representative, Aspen planner Stan Clauson, said Friday he’s unsure of the proposal’s status given the foreclosure action and other legal issues surrounding the project.
“It’s unfortunate because of the time and effort put into this,” he said.
Recommended Stories For You
Clauson added that “if there continues to be an issue we might ask to continue” the Nov. 28 hearing date, which would mark the second part of an October meeting in which City Council members told the developers to come back with a revised plan. Council members’ concerns chiefly centered around the project’s size and scale.
Likewise, Chris Bendon, the city’s director of Community Development, said that his department is waiting for architectural revisions to the project – if there are any – in order to prepare for the hearing.
“We’ve got to get them from [Clauson] and he doesn’t know any more than we do,” Bendon said.
Tom Salmen, the Minneapolis contact for PFG Aspenwalk, could not be reached Friday.
Aspenwalk’s financial problems aren’t just restricted to this week’s foreclosure actions.
On Oct. 28, Bank of America filed a complaint in Pitkin County District Court to have a person appointed to oversee financial aspects of the proposed housing development. Bank of America’s court complaint, like its foreclosure notice – which is technically called a notice of election and demand – says that PFG is in default on a $45.4 million construction loan.
Aspenwalk is also in default because Petters Real Estate Group, which owns 67.5 percent of the LLC, is controlled by convicted Ponzi schemer Thomas Petters, who is serving a 50-year prison sentence, the complaint says. Part of the loan agreement stipulated that Aspenwalk, as guarantor, could not have any ties to criminal activity or an ongoing criminal investigation, according to the complaint.
Other recent developments also have put Aspenwalk in default, including the LLC’s Chapter 11 bankruptcy filing in September 2010 in Minnesota, and Petters’ assets being put in receivership through an additional court action in Minnesota, the lawsuit in Pitkin County District Court says.
Bank of America attorney Holly Shilliday, who is handling the foreclosure action and court complaint against PFG Aspenwalk, declined comment when reached at her Denver office Friday. An attorney for Rapid Financing could not be contacted for immediate contact.