Holt & Haugh president Charlie Haugh told GlobeSt.com late last week he's examining three potential avenues that would lead to U.S. Bank being paid off prior to any foreclosure. "We're talking with two different investors and also working with a bridge financing program to take U.S. Bank out of the equation," says Haugh. One of those investors is an existing partner that previously declined to help. "We believe they were required by the operating agreement to provide capital in such an event," says Haugh, who is now working with the investor in a "mediation-arbitration type deal."

According to real estate sources, the financial trouble is the result of a failed effort to turn a portion of the new 56-unit Chinook Way apartments, for which U.S. Bank had loaned its money, into condominiums. U.S. Bank didn't want to fund condos, however, so Holt & Haugh brought in a New Jersey-based outside investor. When the condos didn't sell, the lack of income put Holt & Haugh behind on its payments, but the outside investor didn't want to help out.

Holt & Haugh has since reverted back to an all-apartment concept and is leasing up the complex, but the two loans are both more than three months past due. Now that the investor is back at the table, however, Haugh believes he will be able to get the interim financing necessary to pay off U.S. Bank and move forward. "It didn't feel good to be talking about foreclosure, but it was effective in getting (the investor) back to the table," says Haugh.

Still, as of three weeks ago, the bank says it is owed $412,000 of a $618,000 construction loan for two houses, and $7.31 million of a $7.5 million construction loan for the apartment complex, plus $516,544 in interest. The sale of all three properties is scheduled for the first half of June.

Meanwhile, Haugh says other portions of the project are continuing. The five-year-old project ultimately will include 600 residential units with more than 10 acres of retail and commercial space and 100,000 sf of office space, and will include a post office and a city hall, as well as parks and a restored creek. Haugh tells GlobeSt.com that the firm is currently negotiating the sale of a large block of land for development of a Target-anchored retail development. As well, says Haugh, there is another retail development in the works, and there are ongoing negotiations with a potential office user. "There's a lot going on," says Haugh.

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Construction Loans Past Due for Holt & Haugh's Fairview Village; Forced Sale Possible

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