Southeast Valley Development News

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http://www.elevationchandler.com

Chandler project's developer gets loan
$24 million to help get through a year

Luci Scott
The Arizona Republic
Dec. 2, 2006

The developer of a partly built hotel-condo project next to Chandler Fashion Center has obtained a $24 million bridge loan, saving the project from a foreclosure auction that was scheduled for February.

"All those debts and liens and subcontractors and general contractor and Mortgages Limited and all those people . . . will be marching down to the title company to pick up their checks," said Richard Rollnick, CEO of Landmark Realty Capital of Scottsdale, which issued the loan.

The general contractor, Weitz Co., and multiple subcontractors are owed about $5.8 million, plus attorney's fees and interest.

The amount that developer Jeff Cline owes to the original lender, Mortgages Ltd., is unknown, but a default on a loan of $3.45 million from that company triggered the foreclosure action. The entire amount he owes the company is thought to be more.

Cline, developer of the Elevation Chandler project, "now has a year to put all the rest of the financing pieces in place, and we're confident he will," Rollnick said.

This loan won't be enough to let Cline resume construction on the project. Work on the project had stopped in April.

The bridge loan is only for the next year. But it gives Cline breathing room to find an equity lender to allow him to continue construction.

The 10-acre project is expected to cost roughly $250 million. That includes an eight-story hotel topped with two floors of condominiums, a second 15-story condo tower, parking garage and fitness center.

"We're very happy to see that the project may be resuming progress in the near future," said Doug Ballard, Chandler's director of planning and development.

"Obviously it's going to have to come through the permitting process again."

When construction stopped, workers were operating under a permit to construct the building's shell that has expired.

"Assuming there's no real changes to those plans, it shouldn't take us very long at all" to re-issue the shell permit, Ballard said.

One of the subcontractors, Tim Drexler, owner of Ace Asphalt of Arizona, was skeptical about whether he would go back to the site. Before returning, he would need reassurances that he would be paid.

The fact that he had to file a mechanic's lien has tainted the project, he said. "It won't be an automatic yes we're going finish the project."