A Marion County judge has appointed a receiver to take control of three properties involved in a long-delayed redevelopment proposal for College Avenue between 49th and 50th streets in Indianapolis.
The $19 million mixed-use proposal, already hobbled by an unsuccessful quest for government grants and a weak lending environment, faces an even more uncertain future after the ruling by Marion Superior Court Judge Patrick L. McCarty.
The judge appointed Jeffrey A. Adams of locally based Cohen Garelick & Glazier as receiver, setting aside pleas for more time from developer Leif Hinterberger, who has spent six years and most of his life savings trying to turn the blighted block into apartments and retail space.
Hinterberger already lost control of three duplexes on the northern half of the block needed for the project, dubbed The Uptown. The run-down retail buildings now under receivership represent the southern half.
The mortgage holder on those buildings, an entity controlled by real estate investor Bryan Chandler, initially filed to foreclose on the $500,000 note in December 2010, after it matured the previous February. Chandler's company, Strategic Mortgage Funding, bought the note from Indiana Business Bank in November 2010.
Hinterberger, who owns locally based Carreau Design Corp., said Chandler approached him after buying the note at a discount and offered to help try to get the project off the ground.
Hinterberger called the appointment of a receiver "irrelevant" and said he's still working with city officials, neighbors and lenders on a plan to "clean up the block comprehensively."
"The lender is trying to take over and steal the ground," Hinterberger said. "We've given every opportunity for them to step to the plate and do the right thing."
Chandler declined to discuss the properties.
Court records suggest Strategic Mortgage Funding wasn't in a big rush to wrest control of the properties from Hinterberger. The company did not ask for a receiver until March, more than a year after the note matured without payment.
The outstanding balance on the mortgage is about $561,000, which includes principal, interest, unpaid property taxes and legal bills, court records show. The properties listed as collateral are 4902 and 4918 N. College Ave., and 654 E. 49th St. The buildings have a combined assessed value of about $170,000.
The buildings on College Avenue are vacant and considered beyond repair. But Hinterberger has moved two tenants into the 49th Street building: Lamp Gallery and a retro boutique called Reclamation. He said neither is paying rent after agreeing instead to invest in fixing up their space.
The arrangement apparently did not impress the mortgage holder.
Even if Hinterberger pays back the note and regains control of the buildings, he likely would have to scale back his vision for The Uptown. He reached agreement with a lender last year to allow short sales of three duplexes he had bought and planned to raze for the project.
The plans for The Uptown most recently called for 46 apartment units over first-floor retail, with parking behind the building. The total project would have been about 65,000 square feet, down from an earlier proposal for 180,000 square feet.
Hinterberger on Wednesday would not say whether he still envisions a project of similar dimensions.
"We're really getting close to being able to create a win-win," he said Wednesday, echoing a pitch he made to frustrated neighbors back in 2010. "Our whole neighborhood and city will lose if we can't get rid of what's at 49th and College."
Hinterberger last year said his company had spent a total of $3.8 million to acquire properties and develop plans for The Uptown, on top of the $1.2 million it paid to renovate the historic building at the southwest corner of 49th Street and College Avenue into the Uptown Business Center.