Thursday, 26 January 2023

Vista Point lease holder faces foreclosure, possible eviction

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Vista Point Shopping Center, located at one of the entry points into Lakeport, is at the heart of a foreclosure action filed against the company that owns the building leases. Photo by Elizabeth Larson.

 

LAKEPORT – The company that has held the lease on the buildings at the Vista Point Shopping Center for three decades is facing foreclosure by the bank that holds its loan and eviction by the new owner of the property the center sits on.


Foreclosure proceedings were filed last November against Oakland-based Meridian Investments by Park National Bank, which holds the $1.9 million note on the Vista Point lease, according to court documents. Named as a co-defendant was Dianne Walters as the representative of the estate of her husband, Bill Walters, a Meridian partner who died last summer.


Last fall the city sold the nine-acre property underneath the 113,288-square-foot shopping center to developer Matt Riveras for $1,001,000, as Lake County News has reported.


Riveras said he filed a default against Meridian earlier this year seeking its eviction from the ground lease because of failure to perform and late payment.


Meridian has held the lease on the buildings since 1978, when it entered into a lease agreement with the City of Lakeport, according to the city's purchase contract with Riveras. With the ground purchase Riveras inherited that lease, !-- @page { size: 8.5in 11in; margin: 0.79in } P { margin-bottom: 0.08in which was scheduled to run for another 20 years.


As the city was preparing to finalize its sale to Riveras last October, Jeff Walters, Bill Walters' son who was representing Meridian, and Presidio Development Partners LLC of San Francisco asked the city to reconsider selling the land to Riveras and put a $1.2 million counter offer on the table.


By the time that offer was made in late October, Meridian had allegedly defaulted on an Oct. 1 loan payment, according to court documents. Meridian's filed response denies that it missed that or subsequent payments.


Jeff Walters, who Lake County News contacted about the situation, said he had no information about the foreclosure action.


Calls to Park National's attorneys were not returned. Meridian's attorney, Steve M. Morger, called the situation a “garden variety foreclosure,” and offered no further information on Meridian's reaction to the suit.


Donica was named by Park National Bank as a co-defendant in the judicial foreclosure in an amended complaint filed on Feb. 22.


Park National is seeking a number of findings from the court, including right to enter the property and collect rents or have a court-appointed receiver do so; a judgment for at least $1,914,103.02, which is the loan's principal through Nov. 20, in addition to accrued default interest; and whether Riveras' company, Donica LLC, can claim an event of default on the ground lease and commence its own repairs on the center.


A receiver has been appointed to manage the center, court documents show.


In the court documents, Park National said Riveras approached the bank to inform them that he planned to make $2 million in repairs to the property, which would be billed to Park National. The bank also accused Riveras of hatching a “scheme” to try to purchase Meridian's lease at a significantly lower price that its value.


Riveras said there was no scheme, merely an offer he made based on his experience in banking. He explained that most banks holding such notes usually have purchased them for pennies on the dollar.


Park National turned down his offer, Riveras said, saying they wanted in excess of $2 million.


Situation led to ground lease default action


Riveras said after he took possession of the center's land he asked Meridian to sign an Estoppel agreement, which new landlords often ask tenants to sign. It is meant to provide the new landlord with information on the tenant's situation; it also can be used to confirm lease requirements.


He said Meridian refused to sign it. Riveras said he also wasn't aware that, at that point, they had defaulted on the loan payment to the bank.


In addition, Meridian was late on its payment to him as the property owner, Riveras said, which jeopardized the company's ability to maintain their lease.


Riveras sent Meridian a letter asking for a response by Jan. 28 outlining their plans to remodel the center's buildings. He said they never responded, and about that time he was notified that the shopping center buildings had been placed in receivership.


Finally, Riveras filed a notice of default on the lease against Meridian based on the condition of the property.


He explained that the reason he is named in Park National Bank's suit is a simple one. “If my default were to beat their default I would get the property and they wouldn't get their money.”


The lease is supposed to go for a foreclosure sale at some point, and Riveras believes the bank will end up purchasing the lease rights.


“Nobody in their right mind would pay $2 million for this hornet's nest,” he said.


City Attorney Steve Brookes said the sale had been scheduled for last Friday but was postponed.


The effort to improve the center, Riveras added, continues to move forward.


Riveras said he met recently with Park National Bank to give them time to work out their issues separate from his.


He said he doesn't plan to let up on Meridian, with his civil action to evict the company moving forward.


“Right now my only interest is still the same,” he said. “I want to develop the property and make it a viable center again and with all of these people throwing lawsuits in the way it just postpones what I'm able to do with the property.”


Park National's suit said Donica – and its predecessor, the city – should have known of the center's condition. “ ... During all the years the property was in purported disrepair, Donica, through its predecessor never once raised an issue regarding the purported condition of the property,” Park National alleges.


The city did make such an effort, said Brookes. While the city hasn't done a complete inspection of the property, it did notify Meridian that certain improvements were required, said Brookes.


After the old Thrifty store's roof caved in Meridian took some steps to make the building safer, said Brookes.


City permit records also show that the company had taken out a permit to replace the roof but eventually voided it out. Meridian also fixed electrical concerns at the center after the city sent them a notice requiring it.


Riveras said when the city owned the property it should have put the lease into default based on the poor condition of the buildings. “In hindsight I bet they wish they would have.”


He added, “I'm coming in to do what the city should have done years ago, and that is either force Meridian to perform and redevelop the property and comply with their lease or get out and I'll do it.”


E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..


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