Although Ken McGee, the Town Center's general manager, says it's business as usual at the mall, the legal actions are likely to delay the planned beginning of the Town Center's renovation, a major piece of Sunnyvale's Urban Design Plan.

The bank has brought in James H. Baron and Gregory Sterling, who specialize in receivership, to collect rents and pay bills while the legal matters are worked out. They have posted "huge" bonds, according to McGee.

"This is not a bankruptcy," McGee said. "The foreclosure means the banks want a neutral party to be the owner for a time."

Meanwhile, the city is set to begin its own foreclosure proceedings, according to Mary Bradley, the city's director of finance, because Sunnyvale LLC failed to make the first community facilities district payment. The city had created a community facilities district to fund the building of the $12.3 million parking structure on the corner of Iowa and Sunnyvale Avenues. The garage was completed in October 2001, and the first twice-a-year assessment payment was due on June 30, but to date, owners of the mall have made no payment.

Liens have not been placed on Macy's, Target and JCPenney, all of whom own their property, and do not lease from American Mall Properties, according to Robert Paternoster, Sunnyvale director of community development.

Bradley said any new buyer will have to catch the mall up with its assessment taxes.

"If the current owners are unable to make the payments, and the property goes on the market, that's not necessarily a bad thing," Bradley said. "We hope whoever buys the Town Center will have the financial and business ability to run it."

Bradley said the reinstatement period for the property would begin on Aug. 28. American Mall Properties then has until Sept. 11 to repay San Diego National Bank. If they fail to make these payments, the bank will hold a sale on the property of Sept. 18, and it will be sold to the highest bidder.

Meanwhile, construction on the Town Center, previously hoped to be completed in 2004, has come to a halt. According to Paternoster, construction halted nine months ago because of the mall's financial problems. As a result, construction is at least nine months behind schedule.

Furthermore, Paternoster said it would be conservatively three to six months before any new owner can purchase the property and make the proper financial arrangements.

"We're losing at least a year," Paternoster said. "And that's unfortunate."

However, some people involved with the city's downtown see a brighter side to the construction delays.

"The stalls mean all the massive construction won't happen at once," said Joe Antuzzi, chairman of the Downtown Stakeholder's Association and owner of Il Postale restaurant. "So the Town Center construction, the Mozart construction and the Caltrans construction won't happen at the same time."

According to Paternoster, whatever happens, because all prospective buyers of the Town Center agree with the downtown redevelopment plans, the city will not have to scrap the proposed layout changes for the mall. So the downtown redevelopment will eventually move forward, maybe just later than the city anticipates.