Day 2 The West Glen Boys and their Sand Box Squabble continues to escalate as The bank throws in their 2 cents. Boy, what a mess…and good Iowa Small-business owners people are caught in the middle. Good Artical Tom Witosky
More West Glen troubles; bank files for foreclosure
10:02 PM, Feb. 1, 2011 |
Childhood friends and longtime business partners Gary Kirke and William Van Orsdel are on a legal collision course over the financially troubled West Glen Town Center in West Des Moines.
Monday, Kirke and three other partners accused Van Orsdel of fraudulent activities in his management of the mixed-use development. Their lawsuit against Van Orsdel demands compensatory and punitive damages.
Lawyers for Kirke and three partners are expected to try to get a court order within the next week to freeze Van Orsdel’s assets temporarily.
Van Orsdel denies the allegations and says he intends to file counterclaims against his former business partners.
Meanwhile, all of the partners have now been sued for defaulting on a $30 million loan on two buildings in the development. That lawsuit, filed by Midwest Independent Bank, contends that the partners defaulted on the loan late last year and owe $26.4 million.
The legal problems of West Glen Town Center mounted Tuesday as a bank filed for foreclosure on a portion of the West Des Moines development, citing the owners’ default on a $30 million loan.
Lawyers for Midwest Independent Bank of Jefferson City, Mo., filed the request in Polk County District Court asking that Phase II parcels of the development be sold at a sheriff’s sale and that the proceeds be used to pay the remaining $26.4 million on the loan. The loan was originally taken out in 2007 from First Bank.
In addition, the lawsuit asks that the five partners in West Glen Town Center LLC – Gary Kirke, William Van Orsdel, Terry Moss, Robert Pulver and Robert Horner – be required to share in paying any remaining amount owed on the loan after the sale.
Lawyers for the bank also have asked for a hearing to allow the appointment of a receiver, who would manage the buildings during the legal proceeding and keep them operating as they are now.
The lawsuit highlights the financial problems now bedeviling the owners of the eight-year-old development, which attempted an urbanized neighborhood approach in a suburban setting. The $110 million project has succeeded in attracting customers to restaurants and bars, but has struggled to develop office and retail tenants.
Jamie Buelt, a spokeswoman for the development, said the owners knew a lawsuit might be filed. Buelt said the foreclosure could affect the ownership of the Promenade and Keystone buildings on the north side of the development.
Promenade is an office complex with one tenant, Regus Business Center. Keystone, the apartment complex, is 95 percent leased and has one retail store, Artis furniture, on the ground floor, Buelt said.
“This was not unexpected,” Buelt said. “Like most real estate projects, there is an economic struggle going on. The investors have been working with all the lenders involved in West Glen to reduce and refinance the debt to better reflect the realities of today’s economy.”
Court documents have disclosed that Kirke is the majority owner of the partnership with 51.95 percent ownership, followed by Van Orsdel, with 34.73 percent. Moss has 5.55 percent; Pulver has 4.44 percent, and Horner has 3.33 percent.
Midwest Independent received assignment of the loan from First Bank late last month, the lawsuit says. Midwest Independent is classified as a financial institution offering a variety of financial services to community banks.
The lawsuit was filed a day after Kirke and three of his West Glen partners accused Van Orsdel, another partner and Kirke’s longtime business partner, of engaging in fraudulent activities while he managed the development from 2004 to 2009.
In that lawsuit, Kirke and partners allege that Van Orsdel used company employees and resources for other Van Orsdel projects. In addition, the lawsuit claims Van Orsdel took more than $600,000 in unauthorized compensation from the company.
Van Orsdel denied the allegations Monday. He also alluded to the development’s financial problems and accused Kirke of mismanagement.
“West Glen’s future is at a critical junction because of the actions and inactions of its management under Mr. Kirke’s direction,” Van Orsdel said in his statement.