Sand City lofts on the auction block
Foreclosure, lawsuits and liens hit Design Center Monterey Peninsula.
Thursday, April 9, 2009
The Design Center Monterey Peninsula was supposed to be Sand City’s mixed-use showcase for designer home products and high-end condos and lofts. Now, faced with foreclosure and mounting lawsuits, the Design Center is another example of a local real estate venture in financial freefall.
On April 13, the four-story building at 600 Ortiz Ave. is scheduled to be on the auction block. The project’s developer, Design Center LLC, owes $23.6 million to First National Bank of Central California. The developer and the bank have been battling in court since last December.
First National Bank alleged that the Design Center didn’t pay off the $21.9 million principal by March 2008, and asked the court to put a receiver in charge of the troubled development. On March 13, Judge Robert O’Farrell denied First National’s motion for a receiver but demanded that any surplus cash from the rentals go to the bank.
First National isn’t taking the developer’s word for it, however; the bank is set to foreclose on the property.
Patrick Corrigan, a Monterey mortgage broker, and Al Saroyan of Saroyan Masterbuilder are the Design Center’s principals. Neither Corrigan nor Saroyan returned the Weekly’s calls. The project’s owners have also allegedly been avoiding numerous subcontractors who still haven’t been paid, although the building was completed in February 2008.
Cal-Air Inc., Scudder Roofing Co., Ramirez Plumbing Inc., Don Chapin Company and Lombardo Construction Inc. have filed lawsuits against Design Center, seeking nearly $1.4 million. In addition, several mechanic’s liens are on record for the project.
Albert Rodriguez, owner of A & R Prehung Doors Inc. in Hollister, says payment was slow from the get-go. “We had to really ask for our money and then all of a sudden they stopped paying,” Rodriguez says, adding that the Design Center owes his family-owned company more than $50,000. “It really puts a hardship on our business.”
Jonathan Simmons, owner of Marina-based Cornerstone Builders, is in the same boat, trying to collect about $25,000. Simmons says he hasn’t sued because it would be like throwing good money at bad money.
The project has 31 condos and apartments on the two top floors with the bottom two stories intended for construction and design businesses. But the construction industry has taken a huge hit from the collapse of the real estate market, and the first floor of the Design Center remains vacant.
In a January court declaration, Saroyan said “our marketing plans have been adversely affected by the dramatic downturn in the local and national economies.”
At that time, Saroyan said that the residential portion of the project was about 51 percent occupied, adding that he has been trying to find a buyer for the entire project.
But that seems all the more unlikely given the state of the economy. Plus, expensive condos, which were starting at $625,000, aren’t an easy sell in Sand City. “Who wants to live in Sand City anyways, much less right in the middle of all that industrial park?” Simmons asks.