Commercial Real Estate and Indiana Banks and Fifth Third Bank and Fishers and Regional/National Banks and Hamilton County and Old National and Project Funding and Development/Redevelopment

Bank buys part of property targeted for Fishers water park

December 24, 2009

A high-profile piece of land in Fishers that is part of a proposed hotel and water park project has been bought by the bank that foreclosed upon it.

Evansville-based Old National Bank purchased the parcel for $5.9 million during a sheriff’s sale on Dec. 17 that drew no other bidders. The bank used its debt in the property to acquire it—a legal maneuver known as a “credit bid.”

A spokeswoman for Old National said the bank plans to maintain ownership “until we have a buyer that meets our price requirements.”

The bank’s purchase of the land provides the latest twist in a more than 2-year-old saga that leaves the hotel and water park’s future even cloudier.

Paradise Bay was to have been constructed on the former Britton Golf Course site at State Road 37 and East 131st Street.

The $80 million project, led by Indianapolis-based Puller Group, includes plans for a 16-acre water park and 244-room Wyndham Hotel within Fishers Marketplace, a mix of shops, restaurants and offices.

Old National foreclosed in August on the south half of the 104-acre site, which was owned by Indianapolis developer Skjodt Thomas & Associates.

Complicating matters is the fact Puller Group, which owns the other half, is also facing foreclosure on its parcel. Fifth Third Bank filed a complaint in July against Puller and H20 Resorts II LLC, an entity formed to develop the hotel and water park, and is seeking to collect nearly $8.6 million owed on the balance of the loan.

The foreclosure proceedings are pending in Hamilton Superior Court.

Puller Group CEO Kenneth Puller has said the adjoining property now owned by Old National is important to the water park project because of unfinished infrastructure involving a sewer system that Skjodt Thomas was expected to install.

Skjodt Thomas, which purchased the former golf course property and sold 57 acres to Puller Group, had planned to develop its parcel under the Britton Park Development LLC name, with the infrastructure serving both sides. Work stopped in the summer of 2008, after Britton Park failed to repay a $12.3 million loan it received from Old National, according to a lawsuit filed in 2008 by the lender.

Skjodt Thomas co-owner Paul Skjodt is the owner of the Indiana Ice and the son-in-law of former Indiana Pacers co-owner Melvin Simon, who died in September.

Old National received an $11.8 million judgment against Britton Park upon foreclosing on the property. If the bank sells the land for $5.9 million, the amount listed in the credit bid, the bank could pursue Britton Park for the difference. The credit bid likely is based on appraisals of the property, bankruptcy experts said.

The bank’s mortgage on the property constitutes a lien, which gives it the right to take possession and sell it to pay off the debt, using a credit bid to protect its interests. 

Wendy Brewer, a lawyer at Indianapolis-based Barnes & Thornburg LLP who is  representing Old National, said the bank is unlikely to recoup the entire amount of the loan.

“We’d have another $5.9 million in remaining judgment we could try to collect on,” she said, “but there’s nothing to chase Britton for.”

Instead, Old National will attempt to recover as much as it can by getting the best offer available, Brewer said.

Interest in the property remains high, Fishers attorney Doug Church said, noting the town has fielded inquiries about zoning issues and the availability of economic development incentives.

“It’s a great location,” he said. “That’s never changed.”

Banks’ reluctance to lend money as a result of the credit crunch could make an immediate sale more difficult.
 

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