The federal bankruptcy court will auction off the 77-acre Summit property Wednesday in a transaction that could draw millions more for the Spokane River land than previously expected, benefiting creditors of Metropolitan Mortgage and Securities Co.
In addition, Marshall Chesrown, developer of the exclusive Club at Black Rock, a 650-acre gated community and golf course on Lake Coeur d’Alene, has submitted a bid, said Metropolitan’s attorney, Barry Davidson.
Other bidders are Kingfisher Land Holdings LLC, whose principals are Jim Frank and Jerry Dicker, and Seawest Investment Associates, whose principal is Kirkland developer Matt Aatai. Seawest initially submitted the winning bid for the property accepted by Metropolitan.
The property overlooks the north bank of the river, stretching west from Monroe Street.
“I fully expect it will go for a price that will yield unexpected dividends to Metropolitan’s creditors,” Davidson said. “The property is clearly attracting a price that is greater than what was expected.”
And that, Davidson said, could not only pay off what’s owed on the property; it could add up to additional funds for creditors. Davidson said Metropolitan expects that the bankruptcy court will set a minimum bid of about $12.35 million, which would cover Seawest’s offer. The company’s offer was designed to increase as debt accumulated on the property, Davidson said.
All three bidders also are offering net proceeds to Metropolitan of at least $50,000 and to indemnify the company from any environmental contamination found on the formal railroad yard, Davidson said. Chesrown also proposes reimbursing Seawest up to $30,000 for due diligence completed on the property, Davidson said.
Those proposals become a starting point for the auction, which Davidson expects to last 90 minutes. Davidson said previous experience with land auctions leads him to believe the bids will increase in at least $50,000 increments.
Prior to its bankruptcy, Metropolitan was planning to develop the property into an urban village with housing, commercial property and office space. The company was working with Seattle firm Nitze-Stagen and Co., but after Metropolitan filed for bankruptcy, the deal fell through. Nitze-Stagen joined the list of creditors in an attempt to recover money already spent on planning.
The Summit property then was marketed for months by Colliers International in Seattle. In early October, Metropolitan accepted Seawest’s bid, which was scheduled to close in January. On Nov. 1, Frank’s company, Kingfisher, filed court documents saying that it had acquired the note to the property from former lender Western United Life Assurance.
Kingfisher objected to the sale to Seawest and requested the title to the property in lieu of foreclosure. Metropolitan went to court to object to Kingfisher’s actions, saying Seawest’s offer still held the best deal for creditors. The bankruptcy court decided instead to auction the property.
“The judge’s instructions were: ‘Bring your checkbooks,’ ” said Metropolitan CEO Maggie Lyons, who is overseeing the sale of the company’s assets. “We are hopeful that it will translate to some net proceeds to the estate.”
About $580 million in debt is held by 18,000 Metropolitan creditors, many of them elderly residents of the Inland Northwest. The bankruptcy is the largest in Spokane’s history.
When asked what the property was likely to sell for, Frank said, via e-mail: “No one knows for sure, but a lot more than any of us thought a few weeks ago. Maybe as high as $14 million to $15 million.”
Chesrown and Aatai did not return a call to each seeking comment.
Frank said he didn’t anticipate any partnerships forming among current or potential bidders who could still step forward.
But he added: “This is like the last week of ‘Survivor.’ Anything could happen.”
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