The owner of the Santa Maria Town Center mall has defaulted on a multimillion-dollar loan, and is trying to work things out with its lender after the bank filed a notice of default.
Town Center Street Scape LP, the mall owner, owes $29 million on a $32 million loan from First Citizens Bank & Trust, according to a filing in Santa Barbara County Superior Court by the Raleigh, N.C.-based bank.
On Wednesday, a deal between the parties kept the downtown mall from going into receivership, said Greg Kozak of Town Center Street Scape.
Mall ownership will stay in place throughout the legal process or until a resolution has been reached, Kozak said Friday.
“[Mall ownership is] certainly doing our best to try to structure a deal to restructure the financing,” Kozak said.
No payment on the loan had been received since May 28, according to the bank in the notice filed last month in Santa Maria. Since the default, mall ownership has diverted and kept for its own use about $500,000 in rent income from the mall, according to the filing.
Under the loan, the bank has the contractual right to obtain possession of collateral pledged by the mall, including rental income, upon default, according to the document.
The situation with the bank changes on a day-to-day basis, Kozak said, and much of the matter is under control of the Federal Deposit Insurance Corp. (FDIC), the government agency that insures deposits in banks and thrifts.
Peter Csato, the Los Angeles-based attorney for First Citizens Bank & Trust, couldn’t be reached for comment.
Tenants and shoppers at the mall likely won’t feel any effects of the legal actions, Kozak said.
The mall’s life has not been a smooth one since it opened in 1976 after the demolition of the city’s historic downtown, as both city officials and private owners have struggled to attract and retain retailers and shoppers.
Since taking over the shopping center in June 2009, Kozak has seen several businesses leave.
MotionZ laser-tag closed its doors in March after more than five years, and Gottschalks, which was one of the mall’s anchor stores, closed in summer 2009.
In July 2008, Steve and Barry’s University Sportswear, which came to the mall in November 2006, closed after the national company declared bankruptcy.
However, Kozak said the mall “has turned the corner” and he is banking on a financial reversal in the coming months.
In March, the mall unveiled a new movie-theater plan that shed a large retail component originally planned for the project.
The art-deco and Spanish Mission-style 14-screen theater complex would include stadium-style seating and a two-story lobby.
About $19 million in financing is need for the development, Kozak said.
In 2005, the mall proposed the theater project and a retail expansion. That project was approved in December 2005 and was amended in April 2008.
Since then, mall ownership has changed hands, and the renovation project has been revised several times.
Also, numerous construction liens have been filed against the mall by various contractors looking to recoup what they are owed for work at the mall, according to county records. Construction financing was from a former lender, Kozak said, and the mall has been paying for the work “from our own pockets.”
Kozak said there is “no intention of not paying people” on behalf of the mall.
“That’s not what we are,” he said.