It’s time for another waiting game on Cannery Row, where development has transformed the old stretch of stinky fish-processing plants into tourist attractions, with one notable exception: the rubble pile between Chart House and El Torito.
It’s a complex, almost lunatic story involving loans, bankruptcies, lawsuits and even a Ponzi scheme. And amid all the complexity, it’s not even clear who actually owns the valuable plot, called Cannery Row Marketplace.
It started last year, when lenders on the undeveloped parcel announced a foreclosure sale. A new developer, AquaLegacy Development LLC, bought the lot at an auction, promptly sued the California Coastal Commission, then filed for bankruptcy protection.
“The LLC is in serious financial condition and is unable to continue without debt relief,” AquaLegacy owner Michael Brown wrote in a statement accompanying the bankruptcy filing.
Brown registered AquaLegacy as a limited liability corporation with the California Secretary of State on June 28, 2013, just two weeks before buying the property at a foreclosure sale for $1.9 million. The Coastal Commission suit was filed in November.
But then, lender Medallion Silver LLC filed another notice of a foreclosure sale – this time against AquaLegacy – on Jan. 29. AquaLegacy filed for Chapter 11 on Jan. 26 in U.S. bankruptcy court.
In the bankruptcy filing, Brown’s attorney, San Francisco-based Paul Manasian, says AquaLegacy plans to proceed with the development anyway and it’s not actually a dire financial situation that prompted Chapter 11, but a sketchy bank loan through Medallion – and the Chapter 11 might be Brown’s only ticket out of Medallion foreclosing.
“Debtor intends to use the Chapter 11 process to allow financing and development of the property,” Manasian wrote. “Medallion refused to further postpone the foreclosure sale and the debtor was forced to file a Chapter 11 petition.”
The total debt on the property, which is valued at $17.5 million, is $8 million. Medallion is servicing that loan, which was originally executed when Cannery Row Marketplace LLC bought the property in 1999. The payee was Geneva Real Estate Investments, run by Carl Miller.
Miller, formerly of Orinda, was sentenced to over 12 years in state prison last fall in connection with a $1.9 million Ponzi scheme. Manasian raises concerns that Medallion’s loan might still somehow include money from Miller, and Medallion hasn’t provided proof that Brown actually bought the place.
Besides the property, other debts total about $150,000. The largest creditors are attorneys: Salinas-based L+G, which represents AquaLegacy in the civil case, claims it’s owed $15,000.
The Marketplace project, renamed Ocean View Plaza after Monterey City Council vetoed the developer’s first plan, calls for 51 condos, 377 parking spaces, its own desalination plant, a park and over 100,000 square feet of retail, on 3.5 acres.
The Coastal Commission has filed a motion to dismiss the lawsuit; a judge is scheduled to hear arguments on that motion on March 21. The next bankruptcy hearing is June 5 in San Jose.