Receiver to take over Willits Town Center

Scott CondonAspen CorrespondentGlenwood Springs, CO Colorado

BASALT, Colorado – Joseph Freed and Associates lost control of the Willits Town Center project in Basalt last week when a judge appointed a receiver to oversee the property while a bank attempts to foreclose on the developer.Bank of America started foreclosure actions last week, claiming that Willits Town Center Partners LLC has defaulted on two loans and owes nearly $36 million, according to court documents. Willits Town Center Partners is a company controlled by Chicago-based developer Joseph Freed and Associates (JFA).An Eagle County district judge approved the lender’s request to appoint the receiver to oversee the day-to-day operations and make financial decisions regarding Willits Town Center.”The immediate appointment of a receiver is necessary because Borrower’s inability to fulfill its loan obligations raises the concern that the Borrower cannot afford to maintain, manage and staff the Property,” the bank’s complaint says.Judge Thomas Moorehead signed an order last week appointing Cordes & Co. of Denver as the receiver. In a related action, Judge Fred Gannett of Eagle County District Court signed a separate request to appoint Cordes and Co. as receiver. Two complaints were filed because Bank of America holds two loans on Willits Town Center.The center is a partially developed project that includes approvals for another 150 residences and 281,000 square feet of commercial space. Whole Foods Market has an agreement to open a grocery store there once a new building is constructed. It is uncertain how the dispute between the lender and developer will affect construction of the Whole Foods building.JFA released a statement Sunday morning that said “things were looking up” for Willits Town Center until last Wednesday, when Bank of America pursued the new course of action. The development firm said it is seeking a lender to replace Bank of America so it can complete development of the Basalt project.JFA’s statement, titled “Bank of America’s curious way of doing business,” criticized the massive lender for business tactics that it claims hurt small-town economies and the ability of the country to recover from the recession (see the statement in full on page A4).The developer concluded its statement by saying it remains the owner of Willits Town Center and remains committed to the success of the project. Tim Belinski remains the Basalt-based vice president of development for JFA.The Eagle County public trustee has scheduled a foreclosure sale in August at the request of Bank of America. JFA’s statement suggests it will fight to maintain ownership of Willits Town Center.The foreclosure action and receivership doesn’t affect the Triangle Park lofts building, home of the popular El Korita and Smoke restaurants, according to legal descriptions of the properties affected by the foreclosure.JFA bought Willits Town Center in September 2006 from original developers Michael Lipkin, Clay Crossland and Paul Adams. Crossland and Adams were bought out; Lipkin remained an owner.JFA created Willits Town Center Partners LLC to buy the property. The development firm borrowed $56.5 million from LaSalle Bank for acquisition and development of the Basalt property, according to court documents. The loan was secured by a deed of trust to the property, court documents say. Bank of America contends that Willits Town Center Partners have defaulted on the loan, so it wants the property. Bank of American acquired the note through a merger with LaSalle Bank.When JFA bought the project, Lipkin had already secured building approvals from the town of Basalt. In May 2007, Whole Foods signed a lease to build a 44,000-square-foot grocery store.JFA started construction and completed most of the infrastructure and foundation of the Whole Foods building before the recession struck. The project stalled in September 2008 when financing dried up. JFA defaulted on its contract to provide a shell of the building to Whole Foods by June 2009. Whole Foods signed a new lease for a significantly smaller store in March 2010. Now questions surround that deal as

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