Reese files bankruptcy

The paperwork that stopped the sale of the Maitland Town Center reached the court 58 minutes before the property auction was scheduled to begin.

The developer, Bob Reese, was on the verge of a restructuring deal with lenders, but one of the lenders — presumably Mercantile Bank — wouldn't grant him a 30-day extension, a Monday press release from Reese's development company said.

That is, ultimately, what led to the Chapter 11 filing on Friday. In the release, the developers assured citizens that the two public parts of the downtown — the new fire station and the new city hall — wouldn't be affected by the bankruptcy

They also said anyone else coming into the mix would likely result in piecemeal development of the 1.4 million square-foot downtown, which, according to the developer, is expected to bring in 7,000 permanent jobs.

"In the current economy, the filing of Chapter 11 under federal bankruptcy code is enabling Brossier Company (the developer) to move forward by restructuring its debt," the release states. "... The Brossier Company is willing to work with any developer that has the city of Maitland's best interest at hand to develop the connected, walkable master plan that was approved in 2007 with so much input from the community."

The properties are frozen

So what will actually happen with the property? Well, there's two scenarios, said Verl Emrick, the city's CRA director.

In scenario one, Reese comes out of the bankruptcy able to satisfy the bank and everything is "bright and rosy," he said. If he can't, though, the bank would end up owning the old Winn Dixie parcel and the Royal Plaza, and the city would then have to deal with a new developer.

The curveball, though, is what would happen to the property north of Horatio Avenue, which is owned by seven property owners, including the city.

"All of which come down to a point of saying these are things we're prepared to address at an appropriate time," Emrick said. "Right now, the only thing we can do is be proactive and ready to address either scenario. In whatever way it presents itself."

Emrick also said that downtowns and projects this large take an inordinate amount of time to evolve themselves, and since the city isn't revitalizing its downtown as much as building it from scratch, tempers can run high.

"These types of things, with projects of this significance and size, is not an atypical scenario," Emrick said about the foreclosure and the bankruptcy. "There's a little more angst associated with it in this scenario."

City sits tight

Now the city plays the waiting game, said Maitland City Commissioner Phil Bonus. Because the city is still entangled with developer Bob Reese in a developer's agreement, the city can't do anything with their property until the Ch. 11 bankruptcy proceedings are finished, that is, unless they pay a law firm in New York City — where Reese's management company is — to represent them in the case, and ask the court to release them of their obligations. That would be at a cost about four times as expensive as a local attorney would, Bonus said.

"We can't do anything now. We can't entertain any other offers; we can't proceed with any land-use planning that might impede the bankruptcy process. We're stymied," Bonus said.

"What will happen is more delay while other people control our destiny. We'll continue to miss financial opportunities as the market rebounds."

Maitland Mayor Doug Kinson, though, takes the opposite view: He thinks Bonus and his group are playing Chicken Little.

"The sky is falling; the sky is falling," Kinson said. "It's really not a doomsday scenario. The people who think this is the worst thing that can happen to the city of Maitland aren't picking up the phone and talking to the right people. Our exposure in this is very minimal."

Kinson said that anyone who is truly interested in the Maitland Town Center project — and not just interested in scooping it up from the bank and parceling it out — will wait for the end result of the bankruptcy. Real estate transactions take more than 30 or 60 days to assemble.

He said that if someone was scared off from the deal because part of the property is now in bankruptcy, they weren't really interested in the first place.

"This accusation that the city is going to be hurt because there's a long list of people knocking on the door is completely baseless," Kinson said.

Bonus blames Kinson, Councilman Jeff Flowers and Councilwoman Linda Frosch for the city's current situation. The three consistently voted to keep the developer's agreement intact on three occasions.

That was even as Bonus and others warned the developer was going down the bankruptcy path. Bonus said, repeatedly and publicly, that Reese would file for bankruptcy at the last moment, prevent the sale and leave the city stuck in legal limbo for the new downtown.

"It's hard to fathom why the city, with its own land and its own agenda of citizen needs, would leave itself open to the financial whims and woes of one developer when it didn't have to be this way," Bonus said. "He (Reese) could be bankrupt and we could be merrily along our way planning our future on the property we own. We could be moving forward."

Bob Reese and his attorney did not return phone calls seeking comment before press deadline Tuesday. They did send the press release.