HomeMy WebLinkAboutMemo - Mail Packet - 12/22/2020 - Memorandum From Josh Birks Re: Foothills Mall Foreclosure & Receivership
Economic Health Office
222 LaPorte Avenue
PO Box 580
Fort Collins, CO 80522
970.416.4349
fcgov.com
MEMORANDUM
DATE: December 17, 2020
TO: Mayor and Councilmembers, City of Fort Collins; and
Chair and Commissioners, Fort Collins Urban Renewal Authority
THRU: Darin Atteberry, City Manager, City of Fort Collins and
Executive Director, Fort Collins Urban Renewal Authority.
CC: Travis Storin, Interim, Chief Financial Officer, City of Fort Collins; and
Jacqueline Kozak-Thiel, Chief Sustainability Officer, City of Fort Collins
FROM: Josh Birks, Economic Health and Redevelopment Director
RE: FOOTHILLS MALL FORECLOSURE & RECEIVERSHIP
This memorandum provides an overview of the Foothills Mall (the “Mall”) foreclosure and receivership
process recently reported by BizWest (Foothills Mall lender to file foreclosure demands for remaining
$46.59M debt) on December 11, 2020.
BOTTOM-LINE:
Neither the City of Fort Collins (the “City”) nor the Fort Collins Urban Renewal Authority (the “URA”)
have any liability for the debt associated with the foreclosure. Additionally, the URA’s responsibility to
remit property tax and sales tax increment revenue to the Foothills Metropolitan District (the “Metro
District”) will not be affected by the foreclosure and receivership. Finally, the foreclosure does not
involve the City’s Foothills Activity Center (the “FAC”) nor will the FAC fall under the authority of any
appointed receiver. Once appointed by the Court, the receiver will take over the Owner’s responsibilities
for the operation and maintenance of the Mall during the period of the receivership. These conclusions
have been confirmed by the City’s and the URA’s attorneys.
BACKGROUND:
On December 10, 2020, MUFG Union Bank, N.A. (the “Lender”), filed a Verified Complaint for
Appointment of Receiver and Other Relief in Larimer County District Court (the “Complaint”). The
Complaint:
Relates to a $145.0 million construction loan made to Walton Foothills Holdings VI, L.L.C. (the
“Owner”), which owns the Mall.
Relates to the private debt the Owner incurred to undertake the redevelopment of the Mall. As
such, this debt is separate and apart from the public financing that supported the public
improvement portions of the redevelopment (details below).
Indicates a current outstanding loan balance of $46.59 million.
Requests the appointment of a receiver, a typical step in the foreclosure process for a large
commercial property, but it is not the foreclosure process itself which is happening as a non-
judicial foreclosure through the Larimer County Public Trustee.
DocuSign Envelope ID: E88577E1-96DC-4A17-9191-6D17D385E0EB
Indicates the Owner and the Lender have entered into a Cooperation Agreement, dated
December 3, 2020, suggesting they are cooperating in the foreclosure and may have agreed to
the appointment of Cordes & Company, LLP to be the receiver.
This likely cooperative appointment of a receiver indicates a desire by the Lender and Owner for
the Mall to continue to operate and suggests the foreclosure and receivership will not impact the
current retailers located at the Mall.
Does not name the City or the URA as defendants in the Complaint which is consistent with
them not having any liability to the Lender for the Owner’s private debt being foreclosed upon
and consistent with the receivership not affecting the FAC.
The City and the URA, along with the Owner and Metro District, are signatories to the Redevelopment
and Reimbursement Agreement (the “Agreement”) dated January 17, 2014, as subsequently amended,
supporting the redevelopment of the Mall. The Agreement covers a variety of topics including the
URA’s contribution of public financing for the redevelopment. The public financing includes:
A pledge by the URA to the Metro District of property tax incremental revenue generated from
the approximately 70 acres of the redevelopment (including both the commercial and
residential).
A pledge by the URA to the Metro District of sales tax incremental revenue generated from a tax
rate of 2.25% on sales by retailers at the Mall.
These revenues are pledged to pay the bonds issued by the Metro District, the proceeds from
which were used for the construction of certain public improvements supporting the Mall.
However, if the pledged property tax revenues and the other revenues pledged by the Metro
District and the Owner to pay the bonds are sufficient to pay the annual debt service on the
bonds, any unused sales tax revenues are returned to the City.
The pledge of these revenues is not affected by the current foreclosure or receivership nor are the
Metro District’s bond affected by them.
Based on the above, the City and URA do not have any liability for the Owner’s loan being foreclosed
by the Lender. The foreclosure and receivership will also not affect the URA’s continuing responsibility
under the Agreement to pay the property and sales tax incremental revenues it collects from the Mall to
the Metro District, and for the Metro District to use these revenues to pay its bonds.
Finally, ownership of the FAC, which was constructed using funds from the Metro District’s bonds, was
previously conveyed to the City without being subject to any monetary liens. Therefore, the lien the
Lender is now foreclosing, which secures its loan to the Owner, does not encumber the FAC. As a result,
the foreclosure and receivership will have no impact on the FAC or the City’s operation of it.
DocuSign Envelope ID: E88577E1-96DC-4A17-9191-6D17D385E0EB