Wednesday, January 14, 2009

High-rise condo land sold at auction. Land destroyed, nothing built

The Morning News

Local News for Northwest Arkansas


High-Rise Condo Land Sold At Auction

By Robin Mero
THE MORNING NEWS
BENTONVILLE -- Land being developed for the high-rise condominium project Grandview Heights at Beaver Lake was sold at auction Tuesday on the steps of the Benton County Courthouse.
A judge in December ordered the sale against Beaver Lake Properties, Eliyahu Spitzer and Michael Steinberg.
Helen Hawkins and her son, Herb Hawkins, were the sole bidders at $250,000 to repurchase land that's been in their family 35 years.
New York investors Mendel Group bought their former tracts of land for $925,000, but are owed $4.8 million, according to attorney Ed McClure.
The foreclosure sale marks the end of what nearby landowners called the most ambitious construction project in Northwest Arkansas.
"Conceptually, condos at the lake are not such an outlandish idea," said Lane Gurel, one of several adjacent landowners who had sued the Benton County Planning Board, objecting to permits granted for the project. "But such a high-density project takes a lot of infrastructure, which we believed would create enormous costs for taxpayers, not developers."
New York developer E&S Development and Properties announced plans in June 2005 for seven 25-story condominium buildings on about 177 acres near Coose Hollow at Beaver Lake.
They later reduced the project to three to five 100-unit towers.
Hawkins, who sold land that would be used for a sewage plant, said developers were not to begin work until they paid in full.
"This was to be something elegant and beautiful, it looked like a big-city hotel with lots of glass," Helen Hawkins said Tuesday.
Gurel said there was never enough demand for the property, but developers wouldn't listen.
"The project was based on pre-selling of units," he said. "I was leery of developers coming in who didn't have the financing."
Some dirt and road work was completed, but work began slowing early in 2008. Hawkins said that the bank began returning checks she received for interest payments about a year ago.
"They kept coming back and offering us $100,000 off a condo; they did that three times," she said. "We had picked one that cost $750,000."
The Mendel Group filed a foreclosure action in Benton County Circuit Court in May, asking for $3.8 million in principal payments due on loans. The Hawkins filed suit seeking $2 million.
In December, Beaver Lake Properties, Spitzer and Steinberg agreed to settle the suits and pay $5.8 million.
Helen Hawkins said she considers her debt paid.
The Mendel Group is still owed several million dollars and will ask for a deficiency hearing, said McClure. He didn't know whether his clients would seek to sell or develop their property.
Developers also owe $7,882 in delinquent taxes to the Benton County Tax Collector, which must be paid first, according to the settlement agreement.
Northstar Engineering and Jones Excavation have valid liens for work done on the property, and Greenfield Capital Development has an interest, but those liens and interest are subordinate and should be foreclosed, according to the settlement agreement. Jones Excavation dug the parking garage and foundation hole, according to court documents.

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