Sky West Investments Inc., developer of the mixed-use Minden Gateway Center, is seeking protection for the project under Chapter 11 of the federal bankruptcy court while it reorganizes.
The company estimates the value of its real estate holding 13 acres at the north edge of Minden at $10 million.
Diane Keith of Las Vegas owns 45 percent of the development, with the remainder owned by companies affiliated with Jeffrey Lowden of Reno.
Major creditors include California National Bank of Los Angeles, the primary lender on the property. It had begun foreclosure action before the bankruptcy petition was filed.
The development also owes a number of construction companies including Sierra West Concrete ($225,000), Action Construction ($212,000) and Advanced Asphalt ($163,190), it said in its bankruptcy filing. A meeting of the creditors is scheduled for June 8. The company is represented by attorney Alan R. Smith of Reno.
"Creditors haven't been paid. We feel so bad about this," says Keith.
"We feel bad for Minden, which will be left with a big hole in the ground for a long time."
Minden Gateway Center, situated in the nook where Highways 395 and 88 converge, is across the street from Douglas High School, home to 1,500 students. It's a block down from a new medical campus. And it's in a high-profile location in a county whose residents chalk up the highest per capita income in the state.
The site, says Diane Keith, was chosen for "location, location, location."
However, she says, the recession stopped sales of pads for stand-alone buildings in the center.
"The bank didn't want any land loans. This was an approved retail subdivision," she says.
That was particularly troublesome for a project planned to include free-standing pharmacy, grocery and hotel restaurant pads as more than half of its 190,824 square feet of developed space.
In-line space for retail shops was planned to total about 71,000 square feet.
When the developers were planning the project, they expected to have at least half the pad space under contract for sale by the time they closed on the land.
Construction was projected for completion by mid-2008, and the developer expected to nail down permanent financing and keep the property in its own portfolio sometime this year.
Sky West secured financing to buy the land and start construction in the summer of 2007, just as the economy began to buckle.
"We were current on payments," says Keith. "In fact, we had not borrowed all the money available. We still had enough to complete the infrastructure through paving."
Then, the bank asked for extra collateral "cash and even our homes," Keith says. It also decreed a shorter time frame for payment and raised interest rates.
"After the bank stopped everything stopped," Keith says. The bankruptcy filing, she adds, will allow the development to buy time.
Meanwhile, Lowden is looking for additional partners to fund completion of the project.
"Chapter 11 has delayed the sale of the property. It's such a great project, we're just sick about this," says
Keith. "I think we'll find some interested parties. We've got three months."
The cornerstone of the development, an 81-room Holiday Inn Express Hotel and Suites, is scheduled for a summer opening. It's owned by the Jessie Singh family.
Meanwhile, the developers are still in negotiation with other potential tenants, including the CVS pharmacy chain.
"And as the hotel is completed, it should be easier to get tenants," says Keith. "It's still location, location, location."
Before taking on the Minden project, Lowden had developed more than $150 million of commercial and residential properties in locations ranging from Beverly Hills, and Bel Air in California to Boise, Idaho, and
northern Nevada.
