University Heights misses bond payment; foreclosure lawsuit settled

By Caroline Salls

Pittsburgh, Dec. 2 – University Heights Ohio – Public Parking Garage Project will not make the Dec. 1 interest payment on its series 2001A and series 2001B Cleveland-Cuyahoga County Port Authority senior and subordinate special assessment/tax increment revenue bonds because there are not enough funds in the bond fund and reserve fund, according to a notice from trustee UMB Bank NA.

The trustee said it also reached an agreement with parcel owners that resolves claims and causes of action arising from foreclosure litigation.

As previously reported, a receiver was appointed for tax increment financing (TIF) agreement parcels on March 25, 2015 by the Cuyahoga County, Ohio, Common Pleas Court.

The trustee and the City of University Heights, Ohio, filed a complaint for breach of contract and foreclosure against University Heights Holding 4 LLC (UHH4) and University Square Parking, LLC, which are the owners of parcel numbers 721-01-001 and 721-01-003.

In addition, the trustee and the city filed a joint motion for appointment of a receiver for the TIF parcels to account for unpaid service payments and special assessments and ensure that rents and management fees collected on the TIF parcels are properly applied to the service payments and special assessments.

On March 25, Visconsi Realty Advisors, Inc. and its president, Bradley A. Goldberg, were appointed as receiver to take charge of and manage the TIF parcels.

UMB Bank said it also filed an amended complaint on Feb. 23, 2015 that added counts for avoidance of fraudulent transfers against the original defendants and University Heights, LLC, which is the owner of parcel 721-01-147 and the former owner of parcel number 721-01-064/065.

In the amended complaint, the trustee asserts that UHH4 transferred parcels to University Heights, LLC for no consideration “and with the intent to hinder, delay, or defraud UHH4’s creditors.”

Also in the amended complaint, the trustee claims that UHH4 and University Square Parking collected rents and fees related to the TIF parcels and fraudulently transferred them rather than apply them to payment of service payments and special assessments.

The defendants filed a motion to dismiss the amended complaint on March 27, 2015, and the trustee and the city opposed that motion.

Settlement terms

Under the proposed settlement:

• The defendants will execute deeds transferring fee simple title to TIF parcels 721-01-001 and 721-01-147 to a special purpose entity formed by the trustee to hold the properties and deliver to the trustee any and all documents necessary to assign the leases and contract rights associated with those parcels;

• Defendant University Heights Holding 4 will transfer its majority membership interest in University Square Parking, LLC, which owns TIF parcel 721-01-003, to the trustee’s designee;

• The defendants will direct the tenants of TIF parcels 721-01-001 and 721-01-147 to transmit all rents, charges, reimbursements or other payments or amounts that accrue or become due or payable on or after Dec. 31 to the trustee’s designee;

• Upon the satisfaction of conditions, and in consideration of the transfer of the TIF parcels, the trustee will make a settlement payment to the defendants as reimbursement for previous expenditures; and

• The trustee and the defendants will release each other from all claims and causes of action relating to the foreclosure action.

UMB said the settlement will not release, waive or discharge any unpaid property taxes, service payments or special assessment associated with or assessed against TIF parcels 721- 01-001, 721-01-003 and 721-01-147, or any liens or encumbrances related to those parcels.

A hearing is scheduled for Dec. 11.

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