Bankers have filed a $14.6 million foreclosure action against one of developer Marshall Chesrown’s ambitious and upscale projects overlooking Lake Coeur d’Alene.
The complaint filed by American Bank, based in Bozeman, Mont., centers on Black Rock North, a 1,100-acre tract that Chesrown and his investment companies envisioned as an extension of the original Black Rock luxury golf club at Rockford Bay.
Though construction crews built the second golf course, the demand for luxury homes to pay for the project has collapsed. No homes or lots have been sold and the Black Rock North Development group has defaulted. The plans included 206 homes and 325 condo units overlooking the lake.
The development company hasn’t made a payment this year and efforts to reach a loan restructuring agreement with American Bank have so far failed, said Chesrown’s lawyer, Barry Davidson, a Spokane attorney specializing in bankruptcy, receiverships and business restructurings.
Davidson emphasized that Black Rock North is separate from the adjoining Club at Black Rock, the area’s first exclusive waterfront golf retreat.
Davidson declined to answer whether he was representing Chesrown in other matters. He said, however, that Chesrown is not contemplating filing for bankruptcy protection from lenders and a collection of 11 construction and property development companies that have placed liens totaling about $3.57 million against Black Rock North Development.
Messages left seeking comment from Chesrown were returned by Davidson.
Besides Chesrown, other Black Rock North business partners include Lake View AG, a company from the tiny European country of Liechtenstein. Two other investors made $5 million loans to the development, including Chicago resident Robert Levin, acting as trustee for the Roland M. Casati Trust, and Ryker Young, of Ft. Gibson, Okla.
The foreclosure action is the latest sign of trouble with North Idaho’s high-end real estate market.
“The sale of secondary properties and homes is very, very slow,” Davidson said. “Black Rock North was a project that is well-conceived, but like many other high-end projects, the national recession has severely affected it.”
Chesrown also controls the company developing Kendall Yards, a downtown Spokane housing and retail project that is modest in comparison to Black Rock. That plan calls for transforming 78 acres along the north bank of the Spokane River into a residential and commercial neighborhood.
American Bank’s foreclosure, filed April 1 in Kootenai County 1st District Court, asked that the Black Rock North property be sold at a sheriff’s auction to repay the $14.6 million loan, along with about $400,000 in accrued interest, late charges, and legal fees.
The bank’s foreclosure action stated that Chesrown agreed to a guaranty for the mortgage, a promise made in February 2007 that he would be responsible for debts or defaults.
The foreclosure also asserts the bank’s position that it must be repaid first, leaving construction and services companies, along with the Casati Trust and Young, in a diminished position to collect money owed.
The bank has hired local attorneys Nancy Isserlis and Elizabeth Tellessen to press its foreclosure.
The liens include Idaho Roofing Specialists, $15,059; Thorco Inc., $116,765; Consolidated Supply Co., $6,335; Interstate Concrete and Asphalt Co., $133,776, and $79,063; Concrete Finishing Inc., $219,190; The Turf Corp., $6,553, and $95,584; Wadsworth Golf Construction Co. of the Southwest, $2.34 million; Polin & Young Construction Inc., $224,417; Taylor Engineering Inc., $148,433; Precision Irrigation Inc., $187,844; and Spokane Wilbert Precast, $3,837.