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The developer is working to retain ownership of the Mill Trace property.
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Two condo projects headed for foreclosure
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By Michelle Bruch
A Minnesota bank is foreclosing on land owned by two Downtown condo developers.
The sites in foreclosure are Mill Trace, a newly occupied condo building at 619 8th St. SE, and part of a block at Park Avenue and South 10th Street that was slated for two condo towers.
John Elliott, a real estate agent who is selling condos at Mill Trace, said there weren’t enough sales in the building.
“They couldn’t pay the construction loan,” Elliott said.
He said about a dozen people live in the 50-unit building, and several buyers backed out of their purchase agreements. The remaining condos are selling at low prices, he said, but sales would be better if the media would stop scaring off buyers.
“I’ve been in the business 42 years, I’ve seen it happen several times,” Elliott said. “It’s what happens when the market goes in the dumper and the media makes a big deal out of nothing. All the publicity about all these foreclosures exacerbates the problem.”
The developer now has until March 2008 to try to reclaim the property. Otherwise, Minnwest Bank M.V., the lender that foreclosed on the site, will own Mill Trace. Minnwest Bank was the highest bidder at a Sept. 13 execution sale, with a bid of $6.3 million. A representative of Minnwest Bank said he could not comment on the foreclosure because it is in litigation.
Niles Schulz, the developer of the project, blamed the foreclosure on poor marketing and sales.
“The overall housing picture has some influence on it, but I think that’s probably less of an issue than most people would assume,” he said. “We need to reach the right people.”
Schulz said the bank does not want to own the property, and he is confident that he will retain ownership through refinancing or closing more sales in the next six months.
Resident Carol Perusse has enjoyed living at Mill Trace for the past year. She visits the Mill City Farmers’ Market, she walks to the river about three times each week, and she loves Kafé 421.
“Apparently the builders are behind on paying their bills,” she said. “I am a little worried about it.”
She doesn’t understand why the building isn’t more full, because it had the most reasonable prices she could find.
Mary Selly-Navarro signed a purchase agreement last spring and closed on a Mill Trace unit two weeks ago. She has three children in school who will live in the building.
“I hope it doesn’t affect us at all,” she said of the foreclosure. “It really is a beautiful property. Hopefully they will fill up the building with good people.”
When banks acquire property through foreclosure, they typically work to sell the remaining units at a discount, according to Mary Bujold, president of Maxfield Research. Some banks rent out condos, Bujold said, but most financial institutions keep a tight rein on the property to protect its value.
“People who have purchased already won’t necessarily be affected by having the bank own the units, provided the bank continues on with a plan to sell the units,” Bujold said.
Sachin Darji, an adjunct associate professor at the University of Minnesota Law School, said existing homeowners could see their condo market values drop if the bank starts unloading units for much less than earlier purchase prices.
“To have a bunch of vacant units like that in limbo for a while is not a good situation,” he said. “It makes it difficult for existing owners, even if the market wasn’t already bad, to sell.”
According to the Hennepin County Assessor’s office, the site was originally purchased in August 2005 for $1.15 million. County records indicate that Mill Trace Properties took out a loan for construction from Minnwest Bank in August 2005 for $9.5 million, with the balance payable on or before Aug. 31, 2007. Minnwest foreclosed on the loan in July, saying that $6.6 million was still due at that time.
Bujold said the construction loan terms in this case are very typical. However, developers can run into trouble with construction loans if sales are slow and the developer has not secured permanent financing.
A second foreclosure
Minnwest Bank is also seeking foreclosure on the site of a proposed condo project in Elliot Park.
Heritage Development, a developer that is now called Omni Investment, has planned to build residential towers on much of the block at Park Avenue and South 10th Street.
Recently, Minnwest sent out a notice of foreclosure citing a default on conditions of a combination mortgage security agreement and fixed-year financing statement executed by Heritage Development.
The developer told residents at a Sept. 20 neighborhood meeting that he has no intention of losing the property.
“We’re moving forward with business as usual,” said Omni Principal Michael Moriarty. “We’ve spent about 11 months trying to come together with the lender. We don’t believe we are going to lose the property at all.”
Moriarty said they have not been able to come to terms with the lender. He did not elaborate further on the circumstances leading to the foreclosure.
Elliot Park Neighborhood Inc. Community Development Coordinator David Fields characterized the dispute as the bank “playing hardball with Omni,” and said residents would be astounded at a reappraisal of the site.
“This isn’t a case of them crapping out on payments,” Fields said.
A representative of Minnwest declined to comment on the foreclosure, due to litigation.
According to the Hennepin County Assessor’s office, the current owner purchased several parcels on the block from 1010 Partners LLC for $4.8 million in December 2004.
The redevelopment project has been on hold for several months.
Moriarty said Omni might build market-rate apartments, instead of only condos, in the first phase of construction about 18 months from now. He said the developers are in no hurry to build, however. Omni applied for a demolition permit earlier this year to take down the Enger building at 1010 Park Ave. Moriarty said they hit a hurdle when the city asked them to explain precisely what would replace the Enger building.
In the meantime, the developers have not been able to secure a new tenant for the Enger building since the Outsiders and Others gallery moved out in March.
Moriarty said he understands that the neighborhood continues to be curious about the status of the project.
“I don’t think it’s about curiosity, it’s about life,” replied Elizabeth Beissel, senior pastor of Augustana Lutheran Church.
Reach Michelle Bruch at 436-4372 or mbruch@mnpubs.com
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Combating cancer
UPDATED August 30, 2010, 11:42am
By Dylan Thomas
Decorated in neutral tones and blond wood flooring, the infusion room at the Hennepin Comprehensive Cancer Center was designed to feel calm and welcoming to the roughly 500 patients who receive chemotherapy treatments there each year. Center Manager Kelly Porter said one session may run up to six hours, so patients — who receive their infusions in recliners in one of 11 small patient bays ringing the room — are made to feel comfortable. They read, watch TV or, like 48-year-old Desiree Jackson of Minneapolis, three months into chemotherapy treatment for breast cancer in March, simply relax as much as possible. “I just try to nod off a little,” Jackson said. “I just like to get it done and over with.” From his desk in the center of
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The poison patrol
UPDATED August 30, 2010, 11:39am
By Dylan Thomas
A typical call to the Hennepin Regional Poison Center begins at a home on laundry day. A parent pours out a cup of bleach, preparing to add it to the wash. The phone rings and the parent leaves to answer it. A child reaches up for cup of the clear liquid. We’ll let poison center Managing Director Debbie Anderson take over from here: “A child takes a swig [and] they immediately throw up. So, what do parents do? They panic; they call 911.” Anderson said that call would be patched through to her call center in HCMC, where a staff of specially trained pharmacists and pharmacy students take calls 24 hours a day, seven days a week. The staffer would assure the parent vomiting was
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Savvy about sleep
By jake weyer
There’s little question that folks today are hooked on finding ways to stay awake. The massive collection of energy drinks on display in a room at the Minnesota Regional Sleep Disorders Center is a testament to that. Voluntary sleep deprivation, not surprisingly, is the most common cause of drowsiness during the day. Neurologist Mark Mahowald, director of the center, sees it all the time. “People always ask, ‘well how do you know if you’re sleep deprived?’ Our first question is, ‘do you use an alarm clock to wake up in the morning?’ If you use an alarm clock, you are by definition sleep deprived because if your brain had collected as much sleep as it needed, you would have awakened before the alarm went off,” he said.
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Triage time
By Sarah McKenzie
No one wants to end up here. But if you do end up in HCMC’s Emergency Department, you’re in place that has a long and successful track record in trauma care. The department, housed in the hospital’s Red Building, 730 S. 8th St., takes up an entire city block and has six specialized team centers. In 1989, HCMC became the first hospital in the state certified as a Level I Trauma Center by the American College of Surgeons. The distinction means that the hospital has significant operating room capacity and surgeons available to deliver emergency medical care trained in a variety of specialties. The hospital’s Emergency Department is the busiest in the state with more than 100,000 visits a year, said Michelle Noltimier, director
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Fruit-themed hallways and anti-smoking posters
By Cristof Traudes
Welcome to the part of HCMC that handles severe accidents but also cuts, scrapes and bruises, the part that deals with burn victims and pregnancy but also tonsil trouble and literacy. This is “peeds” — as staffers of pediatrics call it — where health care is only half of the story. Anybody up to age 18 is sent to the department and sometimes 21-year-olds are, too. As a result, peeds is set up much like a tentative parent — to entertain and educate wee ones but steer clear (as much as possible) from stepping on the toes of teens. It’s a department with yellow walls and fruit-themed hallways in one section and sleek grey walls and self esteem-boosting posters in another. Every child that walks through the door is given a
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Politics. Change. Prevention.
By Cristof Traudes
// Art Gonzalez talks about the health care landscape, General Assistance Medical Care and the future //
Art Gonzalez, CEO of Hennepin County Medical Center, sees change on the horizon. More than just health insurance is getting an overhaul; the way hospitals will be graded on success is, too. In the second and final part of his interview with the Downtown Journal, he talks about what that means for HCMC right now and what it will mean down the road.
Downtown Journal: What’s your sense of state leaders’ views of HCMC?
Gonzalez: I get the impression that we’re well known and well regarded. They recognize the impact that we provide in the region.
Obviously, the
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More than one way to give birth
By Sarah McKenzie
Hennepin County Medical Center is home to the state’s first Nurse-Midwife Service. Since 1971, midwives at the hospital have been helping women have natural birth experiences. Rita O’Reilly, director of the hospital’s Nurse Midwife Service, said HCMC practices the “true midwifery philosophy.” “We believe in the normal birth process; keeping birth as natural as possible,” she said. “We discourage elective inductions of labor without a medical indication. We encourage families to be participants in the decision making affecting their pregnancy, labor and births.” The hospital’s nurse midwives deliver more than 800 babies each year. The nine-bed unit’s cesarean section rate is 12.7
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