The Lake Street and Excelsior Boulevard condo project is in foreclosure; sale closings and construction have been delayed.
Loop Calhoun, a 122-unit condominium project at 3104 W. Lake St., is in foreclosure and has been entangled for months in a dispute involving the developer, the contractor and the lending bank.
Developer Mathwig Development defaulted on its roughly $32 million loan in early March, nearly a year after firing general contractor Dew Corporation, of St. Paul, which in turn imposed an $8.6 million mechanics’ lien on the property in June for completed work. Wary of shaky financing, Dew halted construction on the project before getting the boot, and little has happened to the development since.
Foreclosing lender M&I Bank, based in Milwaukee, requested in March that Hennepin County District Court appoint a receiver to take control of the project. The receiver appointment was delayed because Dew Corporation voiced concerns about M&I’s mortgage interests trumping the lien.
A receiver still was not appointed in late April, leaving construction unfinished and forcing the sales team to delay closing on units.
“It’s super, super messy,” developer Troy Mathwig said of the foreclosure. He declined to comment further because of pending litigation.
Dew Corporation’s attorney, Dwight Rabuse, said in late April that the parties had reached an agreement to appoint
Gittleman Management Corporation, which manages Loop Calhoun, as the receiver, but it wasn’t a done deal.
Andrew Gittleman, vice president of
Gittleman Management Corporation, said his company would be willing to take on the duties, which basically include managing the property’s income, paying for upkeep and making decisions about marketing, the building’s nearly complete construction and other issues.
“The purpose of the receiver is to represent the interests of all parties and do what’s in the best interest of the project,” Gittleman said. “So what the receiver will be able to do, whoever it is, that we are not able to do now, is make decisions.”
Gittleman Management has worked with foreclosed projects in the past, including the Sexton Downtown. He said things are running as usual at the Loop now and the foreclosure should be largely unnoticed by residents there.
“We have experience dealing with these types of projects, and it’s not the end of the world for homeowners,” he said.
Susan Marsh, who has lived in Loop Calhoun with husband John since August, said she hasn’t lost any sleep over the foreclosure or mechanics’ lien notices she’s received.
“The foreclosure as far as I know isn’t going to affect us at all because we don’t intend to leave,” Marsh said.
She said she hasn’t noticed any problems except some minor unfinished construction details, such as missing trim. The foreclosure came as no surprise, she said.
“Looking at the market, knowing what Mathwig must have been going through trying to sell these units in this market, knowing what we had to do to sell our house even to get there, you know, it wasn’t a huge shock,” Marsh said. “It’s a horrible economy right now. (Loop Calhoun) should have been one of the hottest sells in town.”
Situated near Lake Calhoun and a variety of restaurants and other amenities, Loop Calhoun has garnered 73 sales; about 65 of those are closed. Berg & Wanninger, the development’s sales team, was still on the job in late April and planned to continue closings as soon as a receiver was appointed, said Barry Berg, one of the firm’s principals.
“We just need to clear up the chain of title, that’s the best way to put it,” Berg said.
Whether the development will be able to overcome the stigma of foreclosure is up for debate. And for buyers looking to sell, the liens could pose a problem.
“It’s a real bad deal because they end up not being able to sell their home because, in order to sell the home, there’s a financial hurdle and a legal hurdle to sell it, no one wants to buy into it, and it ends up sitting,” said Minneapolis Realtor Scott Parkin of Hoffman Parkin Urban Realty, who heard about Loop Calhoun’s foreclosure early on. “And it’s a real limbo for people.”
Some buyers noticed Loop Calhoun’s troubles early and backed out before the project went into foreclosure.
Buyer Melinda Myhre sought an attorney to get $22,000 in earnest money refunded when her unit wasn’t complete months after it was promised, according to court documents. She eventually won.
A sheriff’s auction of Loop Calhoun was scheduled for April 24. The developer has six months to retain the property after that date.
Reach Jake Weyer at 436-4367 or firstname.lastname@example.org.