OREM -- Orem city officials won't be foreclosing on Midtown Village for now.
According to Orem's Assistant City Attorney Steve Earl, BankFirst, which was taken over by the FDIC in July, paid $472,474 a week ago after the city threatened to hold a foreclosure auction in November on the multi-million-dollar project when its developers failed to pay assessments for work done on underground public parking. The assessments were due June 1.
"They paid an extra $27,000 on top of the assessment for title work and legal fees that Orem had to do to file the notice of default, and also figure out who filed liens, or have a claim in the project, so we can give notice to those people of the foreclosure proceeding," Earl said.
South Dakota-based BankFirst -- whose deposits in Minneapolis were acquired by Grand Forks, N.D.-based Alerus Financial -- is the lead bank of a consortium of 45 financial institutions that provided a total of up to $62 million in financing to Midtown. BankFirst and First United Funding LLC provided around $20.7 million in financing in addition to $42 million provided by Marshall Investments Corp. in June 2005.
That the assessment was paid after the FDIC took over BankFirst showed that the federal regulator wasn't dragging its feet, Earl said.
"If Midtown had gone to a foreclosure sale, it may really have compromised the FDIC's interests," he said.
Midtown's developers, which haven't sold enough condos or commercial space to date and are therefore responsible for paying the annual assessments for about 20 years, failed to meet the June deadline. The next assessment is due June 1, 2010.
The city has liens against 152 residential units in the north and south towers -- except for four units that were sold -- and about 139,000 square feet of commercial space. The assessments total $2.31 million for the condo units, while the assessments against the commercial space total $3.34 million. Of the 152 units, 32 have temporary certificates of occupancy, six are close to getting those, and 114 are in various stages of completion.
The city plans to use funds from the assessments to make payment on a $3.5 million interim warrant it issued several years ago to pay for its share of three proposed parking structures at Midtown. The warrant, which was issued as part of the Special Improvement District created by Orem in 2004 to fund public parking construction, is secured by assessments against Midtown's completed condos.
The city is due to make its first payment on the warrant on Dec. 1.
Meanwhile, Midtown's developers and financial backers are embroiled in a lawsuit filed by Big-D Construction Corp. and several subcontractors to recover about $20 million in alleged unpaid work.
Both the contractors and the project's lenders, which have liens against the property, are fighting over who has priority to get paid first after Orem.
BankFirst and several other banks are also separately in litigation with Jerry Moyes, guarantor of the Marshall loan. Moyes is co-founder, chairman and chief executive of Swift Transportation Co. and also has an interest in SME Steel Contractors Inc.
Posted in Orem on Tuesday, September 29, 2009 12:05 am Updated: 2:11 pm. | Tags: Orem, Midtown Village
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