Bank rescues mall from auction

Key Bank delivered two checks totaling more than $500,000.

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Zach Zink with Braden & Nelson Construction wades through overgrowth at the Blue Mountain Mall property to survey the safety clean-up work to be done.

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A loader does some clean-up inside the old Blue Mountain Mall on a crisp autumn morning.

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Two lifts work to remove temporary supports holding a leaning wall on the old Blue Mountain Mall property. Swamped by overgrowth, the mall property is undergoing some safety clean-up work to keep the property safe.

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Two construction workers survey the scope of safety clean-up to be done at the Blue Mountain Mall property Wednesday morning.

WALLA WALLA - A portion of the former Blue Mountain Mall property won't be headed for the auction block next week after all.

A sale of the southern half of the commercial property scheduled for Wednesday as part of a foreclosure proceeding has been canceled after a creditor came forward Friday and paid the delinquent tax and other assessments, said Walla Walla City Attorney Tim Donaldson.

The city received two checks Friday from Key Bank. 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 check was for $451,877.22 for delinquent property taxes owed to Walla Walla County, Donaldson said.

He said Key Bank identified itself as the creditor. Donaldson did not have more details about the bank's role in the project or the redevelopment's standing.

He said property taxes are still outstanding for the northern portion of the property. That section had not been part of the foreclosure process. Donaldson said he was unaware of Key Bank's plans for any payments on the 10 parcels that make up that section of the property.

The payments mark another chapter in the tumultuous story of the retail property's redevelopment. But an ending for the redevelopment and improvements at the property are no more clear.

Since the retail property was acquired and a conversion from an enclosed shopping center into an open-air retail destination began in 2008, the property has been in a state of demolition and construction chaos. The once-thriving mall property has been whittled down to three operations, Sears, Shopko and Pizza Hut.

Too many contractors to list went unpaid for work at the property and have filed liens against the development, which owners originally said went belly-up because they hadn't secured financing before banks tightened up lending.

The listed ownership group has changed several times. However, since the operators are part of limited liability companies, the names of all of the investors are not public, so enforcement action has been difficult.

Bellevue area developer Winston Bontrager is believed by the city to be a common link in every 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.

This was the third foreclosure action at the property since early 2009. The last one before this was set for July 2010. The city was one of two parties that had filed separate foreclosure actions. The city's was for unpaid 2008 and 2009 LID assessments. The second was on behalf of the lender for the $10.5 million acquisition of the mall property, which had taken place several years before. The lender was foreclosing for failure to pay.

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 payment for the delinquent assessments.

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

The payment for the LID is the last of its kind. When the mall was constructed, the Local Improvement District was created to help extend Poplar Street for access to the shopping center. The improvements were paid for with the LID tax. This year was to have been the last for the payments, Donaldson said.

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