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The city is beginning foreclosure proceedings against Sunnyvale, LLC, the holding company of American Mall Properties, for failing to make payments on the community facilities district bonds. The city will be moving forward "with all due speed," according to Mary Bradley, director of finance for the city.
The Sunnyvale City Council voted unanimously at its Aug. 27 meeting to retain the services of Sherman and Feller, an Oakland firm that specializes in foreclosure. American Mall Properties, which owns the vast majority of the Town Center Mall in downtown Sunnyvale, owes the city close to $700,000 in unpaid taxes. On June 30 the developers missed the first of two biannual payments on the bonds, which were issued for the newly constructed parking structure on the corner of Sunnyvale and Iowa avenues.
"The bond documents are very specific," Bradley said. "We need to move forward within 120 days of the first missed payment."
The Town Center Mall itself entered a reinstatement period on Aug. 28 after Sunnyvale, LLC failed to make payments to San Diego National Bank, the primary bondholder for the property. It has until Sept. 11 to make the payments; if that doesn't occur, the property will be put up for bid on Sept. 18.
According to city attorney Valerie Armento, there is a possibility the receivers of Town Center Mall, James H. Baron and Gregory Sterling, will step in and make the payments to the city. Bradley added that there's a chance Sunnyvale, LLC itself will pay the money to keep the taxes current.
According to Jerry Schutte of American Mall Properties, they are waiting for the city of Sunnyvale to make an accounting of the balance owed to them.
"The money is sitting in an account," Schutte said. "Once they demonstrate the account of the balance, they will be paid the taxes."
However, city officials seem to believe that Sunnyvale, LLC will not pay San Diego National Bank during the reinstatement period, and the Town Center Mall will go up for bid.
Armento says she's "hopeful" that both issues will be resolved by Sept. 18, but neither she nor Bradley say they are "optimistic."
During the Aug. 27 council meeting, several council members discussed the possibility of the city purchasing Town Center Mall. However, this scenario is unlikely. Both Armento and Bradley said the city doesn't have the resources, much less the cash, to buy the mall.
"The city doesn't want to end up owning the Town Center," said Robert Paternoster, director of community development.
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