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Foreclosure strikes shopping center project
| Friday, Jun 6 2008 6:14 PM
Last Updated: Monday, Jun 9 2008 7:57 AM
Bakersfield’s foreclosure crisis has struck at least one commercial project, V Heritage Plaza, a partially built shopping center at 2303 S. Union Ave., north of White Lane.
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V Heritage Plaza on South Union Avenue sits vacant and incomplete on Friday.
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The brainchild of William Lee, the San Jose-based developer behind Union Avenue’s Little Saigon Plaza shopping center, V Heritage Plaza was celebrated at its 2005 groundbreaking for its potential to brighten a blighted area. Offices, a health care facility and stores were slated for the southeast complex, the project’s Web site shows.
On Wednesday the property was foreclosed on by lender Marc Lantzman, president of a San Diego-based private mortgage fund, according to county records and the lender’s foreclosure servicing company.
Lee owed more than $1.6 million to Lantzman, and construction companies were seeking more than $2 million in alleged back payments for work on the site, records show. Several of the so-called “mechanics liens” recording the debt were filed against Platinum Dragon Empire Inc., the company Lee formed for the commercial venture.
On Friday Lee said he was trying to secure a new construction loan when the property was repossessed.
“Now with the economy, the real estate problems, it’s more difficult for me to (close) the loan,” Lee said.
Lantzman Mortgage Fund LLC executive vice president Justin Lantzman said it’s too early to comment on what might become of V Heritage Plaza.
It’s also hard to tell what will happen to the local construction companies that say they’re owed money.
Their liens were likely wiped away by the foreclosure, said Bob Joyce, a civil litigation attorney with LeBeau-Thelen LLP.
Subcontractors could still pursue a legal claim against the general contractor, and the general contractor could file suit against the land’s former owner, Joyce said.
But those types of suits can be tough if a developer has truly run out of cash.
“Once the property’s gone by virtue of the foreclosure, it significantly increases the likelihood that the subcontractor is going to get stiffed,” Joyce said.
Bakersfield Glass & Window Inc. owner Michael Rogers has been “fighting tooth and nail” to collect more than $64,000 for storefront work his company did at V Heritage Plaza between May and August. He was hired by a general contractor, Superior Construction.
Superior Construction did not return a message seeking comment Friday. But it appears the company lost out on V Heritage Plaza too. In March, the contractor filed a mechanics lien against the property for $1.4 million.
Rogers, who has been in business for 31 years, was disturbed to hear a lender had foreclosed on the property. He paid for all the materials and labor that went into the job.
“It just scares the heck out of me,” he said.
Lee’s other Bakersfield project, Little Saigon Plaza, came to fruition with the help of the city, which razed an old hotel on the site, community and economic development director Donna Kunz said.
But Little Saigon has struggled to keep tenants that fit its narrow theme of Asian-centered businesses, Kunz said. Lee proposed a similar focus on Asian immigrant groups for V Heritage Plaza, but never sought city aid. He had limited development experience, Kunz said.
“Right now, this isn’t the time for newbies to be playing around in the market,” she said. “They really need experience and good financial backing.”
Most commercial developers have deep pockets that ward off the foreclosures plaguing so many homeowners, said Cecil Zimmerman, a commercial and residential real estate agent with Watson Touchstone Real Estate.
Many commercial developers seem to be in a “holding pattern,” Zimmerman said. But he suspects someone will decide to finish building V Heritage Plaza.
But Bakersfield has a hefty supply of retail centers these days, said Craig Hummel, a commercial real estate agent with Keller Williams Realty.
“There were so many of them built, I just don’t know where they’re going to get all the people to fill them,” Hummel said.