Mall auction halted; bank steps in to cover debts

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WALLA WALLA -- A foreclosure auction for part of the former Blue Mountain Mall property has been called off

A sale of the southern half of the commercial property had been scheduled for Nov. 2 as part of a proceeding to pay delinquent taxes and other assessments, said Walla Walla City Attorney Tim Donaldson.

The city on Oct. 28, however, received two checks from Key Bank, identified as the creditor for the property. One was for $54,884.77, the amount owed to the city for a Local Improvement District assessment related to the mall's development more than 20 years ago. The second was for $451,877.22 in delinquent property taxes owed to Walla Walla County, Donaldson said.

He said property taxes are still outstanding for the northern portion of the property. That section had not been part of the foreclosure process.

The payments mark another chapter in the tumultuous story of the mall's redevelopment.

Since the property was acquired and a conversion from an enclosed to an open air mall began in 2008, the property has been in a blighted state of demolition and construction chaos. The property has withered down to three operations, Sears, Shopko and Pizza Hut.

Bellevue area developer Winston Bontrager is believed by the city to be a common link in every listed ownership group that has been part of the redevelopment. He has been a principle investor in the project and is part of Walla Walla Town Center LLC, which is the mall's current owner.

Many contractors have gone unpaid for their work and have filed liens against the development, which owners originally said went belly-up because they hadn't secured financing before banks tightened lending.

This was the third foreclosure action at the property since 2009. The last one before this, also cancelled was set for July 2010.

The last was on behalf of the lender for the $10.5 million acquisition of the property several years before.

Key Bank had been listed in that bankruptcy filing as having been pledged the $10.5 million note.

Consequently, Donaldson said he was not surprised to receive Key Bank's payment for the delinquent assessments.

"Their security on that loan is the property," he said.

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