Maitland’s Town Center developer has a new backer and is ready to move forward with the project as planned, his attorney said Monday.
But Maitland City Attorney Cliff Shepard said the Town Center development agreement has to be terminated.
Frank Wolff, attorney for Maitland Downtown Property Owners, formerly Brossier Co., told City Council that a Texas investment group has purchased the $8.3 million mortgage from Mercantile Bank, which ends the foreclosure suit filed by the bank against the Maitland developer.
“The documents have been finalized and exchanged, and the money has been wired,” Wolff said.
But Shepard said Monday he hadn’t seen proof of a closing and that the agreement between Maitland Downtown developer Bob Reese and the city was no longer viable whether or not the sale goes through.
“It’s not realistic to say the developer’s agreement will survive, no matter who’s on the other side,” he said. “It cannot survive. It’s not practical that it will survive.” He didn’t give specific reasons, but said he would be testifying in court on Wednesday about it.
Maitland Downtown developer Bob Reese filed Ch. 11 bankruptcy in March to stop the foreclosure auction of the former Winn-Dixie and Royal Plaza, properties crucial to the Maitland downtown redevelopment plan.
A confirmation hearing for the reorganization plan was scheduled for Oct. 6, but the judge gave Reese a 60-day extension to complete the sale of the debt to the Texas investors. At the last minute, Mercantile canceled the foreclosure auction, which was to be held Oct. 8 if Reese’s reorganization plan was not confirmed.
Reese’s March bankruptcy filing froze the Town Center development agreement. A judge will consider a motion Wednesday, after press time, to give Maitland back the ability to terminate the agreement. If the deal with the Texas group closes before the hearing, it lowers the city’s chances of getting that ability, Maitland’s bankruptcy attorney Roy Kobert said.
“If the sale goes forward, it will be more difficult and challenging,” Kobert said. “I’m sure you’d want to hear from your new neighbors if the Texas investors own one-third of downtown Maitland.”
The Texas investors would essentially be stepping into Mercantile’s shoes as a lender. Their identity is unknown. Nothing is filed in court about them and they have not reached out to the city, Kobert said, they are an “affiliate of the developer.”
Reese’s reorganization plan, which was submitted in August, included a letter from Harrell Hospitality Group of Dallas, Texas, which stated that they will provide $5 million in financing or capital in order to purchase more property for the project. It’s unclear if these are the “Texas investors.”
Developer wants to continue
Reese is ready to move forward with the project as planned, Wolff said.
“It’s difficult for me to understand the reason we’re litigating over this issue,” Wolff said. “It’s the choice between if you want a developed and planned downtown city or not. … We have somebody who showed up with money who wants to do the deal, and we’re prepared to do it.”
The development agreement was approved in 2007, just as the real estate market started to crumble. Reese has been unable to secure funding for the $400 million mixed-use project. Wolff said the developer will pay the city for the delay.
“It’s unfair to the client that we’re being blamed for the great recession under these circumstances,” Wolff said. “There will be a check for Maitland if you let us confirm (the reorganization plan).”
The city has spent about $40,000 so far on legal representation in the bankruptcy case.