Fayetteville Bank That Foreclosed On Mountain Inn Site Looking For A Buyer
Posted: March 1, 2014 at 5 a.m.
FAYETTEVILLE -- The Mountain Inn property, which has been a hole in the city skyline for several years, should be for sale soon.
The property is being appraised to determine an asking price, and Bank of Fayetteville officials have been talking to several potential buyers, according to Darien Wells, a commercial loan officer. The bank got the property, at the corners of College Avenue and Mountain Street and College and Center Street, through foreclosure in November.
The legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Source: Staff Report
Washington County land records indicate the bank paid $1.25 million for the property after a judgment and foreclosure decree against the property in October. The property consists of several parcels owned by East Side Development until it defaulted on a $3.9 million loan.
Economic development officials and neighbors said getting the property sold and developed should be a priority because it's ugly and sends the wrong message about downtown.
"They need to tear it down. You walk by that and you're 'ugh'," said James Starzy, who works next door at Damgoode Pies on Center Street. "This place could be a lot nicer. We're getting a lot of new businesses on Center."
Steve Clark, president and CEO of the Fayetteville Chamber of Commerce, said he's been marketing the property to developers for the past couple years.
"We would love to get something done with that property. You would think that it would be one of the top five properties in the city to be developed," Clark said. "It's such a great location in a walkable city so you would think someone would be thinking that's a prized piece of property. We couldn't even get a nibble."
The city contracts with the chamber to recruit and retain businesses in town.
Clark said the property has high traffic counts, great access and is a great location for housing, an entertainment venue, retail center or hotel.
"Real estate is about location, location, location," Clark said. "Somebody's got to be thinking that original idea of putting a hotel and condos there is still a really good idea."
Clark said part of the problem may be explaining to developers why, in a booming economy, a prime piece of property in the middle of your downtown is vacant.
A couple of issues with the property could be providing enough parking and the cost to finish demolition and clean the site, Clark said.
Chad Ball, a code compliance officer with the city, said there have been very few complaints about the property. The last came sometime last year when a "Where's Waldo" picture on the wall of a remaining building at the site was defaced.
Developers John Nock and Richard Alexander, owners of East Side Development, at one time proposed building an 18-story hotel on the site, which would have been Fayetteville's tallest building, but the project never materialized and the site has been a parking lot since 2008. Developers managed to dig a big hole on the site, but it was later filled and paved over. A construction crane loomed over the site for nearly two years.
Construction dates for the Renaissance Tower hotel were repeatedly pushed back until financing for the project finally fell through.
Nock and Alexander had to make good on more than $300,000 in liquidated damages to the city. They pledged to pay that amount if the hotel wasn't completed by September 2007.
Nock and Alexander said they spent more than $6 million on planning and construction for a high-end hotel to anchor their redevelopment on the block between College and East avenues and between Mountain and Center streets. In 2005, with the pledge to build the hotel, city leaders used a taxpayer-backed financing mechanism to pay for demolition of the former Mountain Inn, a formerly glamorous building that had become a downtown eyesore and potential safety hazard.
The City Council formed Arkansas' first tax-increment financing district in 2005 to buy and destroy the "blighted" inn. In essence, the district anticipated property tax growth within a predetermined part of downtown and has used tax growth above a first year baseline to pay back the city's $3.7 million investment.
Tax growth from properties within the district continue to be used to service the debt, which was projected to be retired by 2029. To date, bond payments have lagged behind that projection.
A delayed payoff will allow the interest that must be paid on the debt to grow. Clark said development of the site could provide more tax money to speed the bond payoff.
NW News on 03/01/2014