Uptown 240 heads to bankruptcy sale, but there is still hope for those who put down deposits on the stalled development
Would-be Dillon residents who put a collective $6.25 million in deposits on Uptown 240 units hope to recover whatever money they can through a bankruptcy sale
Uptown 240 will sell its stalled condominium project in Dillon’s town core later this month at a bankruptcy sale, bringing a close to an almost four-year saga with the local restaurateurs turned unsuccessful developers.
Uptown 240 President Danilo Ottoborgo appeared alongside the company’s bankruptcy lawyer, Keri Riley, to tell Dillon Town Council on Tuesday, Sept. 5., that after years of promising to complete the 80-unit project, the plan now is to sell it to a new developer.
“I’m here as an officer of the court to tell the town council that it will not be Uptown 240 that is developing this property,” Riley said. “They are moving full-steam ahead, full-court press into the sale.”
With a bid deadline for the bankruptcy sale set for Sept. 12, the Dillon Town Council — at the urging of lawyers and would-be residents who sunk money into the Uptown 240 units — voted unanimously Tuesday to reinstate the project’s expired development permit for the next buyer.
Just two weeks earlier, the council voted not to renew the expired permit, throwing a wrench into the bankruptcy proceedings. But, the development permit is central to the property’s value at the upcoming bankruptcy sale — and to getting those who put deposits down on units repaid, at least in part, Hilco Real Estate Senior Vice President Steve Madura said Tuesday.
“Individuals that put 20% deposits down are left hanging in the balance,” Madura said. “The best road to getting those individuals paid back, in some portion, is reinstating the development agreement, then for the buyer to go forth to the county to get their building permits to move forward to make this something you can be proud of.”
The goal of the bankruptcy sale, Riley explained, is to maximize the value for creditors by selling the property for as much as possible. The sales price has to cover what is due to secured creditors, about $14 million, as well as about $200,000 in administrative expenses, before unsecured creditors — like those who put a deposit on a unit — see any of their money returned, she said.
“It’s Uptown’s sincere desire to ensure there is a maximum return to unsecured creditors,” Riley said, “and it’s only with the extension of the development permit and the assistance of council that we can ensure people are gaining as much money back as we can possibly clinch.”
Denver resident Angie Ward — who the U.S. Bankruptcy Court appointed as chair of the committee of unsecured creditors — told the Dillon Town Council she was among those who put a deposit down on an Uptown 240 condominium unit.
The committee, Ward said, represents 41 “hopeful, yet extremely frustrated and concerned” individuals who put down anywhere from $100,000 to nearly $600,000 — a collective $6.25 million — to purchase units or invest in Uptown 240, as well as other unsecured creditors.
Boulder resident Matt Follett, another member of the committee, told the council he and his wife fell in love with Colorado before moving to Wisconsin for 18 years for a job. The plan had always been to move back to Colorado, and the couple moved into a rental in Boulder while waiting for Uptown 240 to be completed.
But years later, the condominium complex is still nothing more than a cement foundation with views of the Dillon Reservoir.
“There are broken dreams here. It’s been a rough road,” Follett said. “… But at the end of the day, now we’re just trying to get our money back.”
The Ottoborgos demolished their family restaurant at 240 Lake Dillon Drive in 2018 to make way for the planned condominium project, which broke ground the following year. But, during the pandemic, the company’s original financiers backed out.
Even in bankruptcy, Uptown 240 continued to pursue plans to refinance and complete the project itself, while also hiring Hilco to pursue a parallel, but mutually exclusive, track to sell the property at a bankruptcy sale.
Only last week did Uptown 240 abandon hope of completing the project itself, Riley said.
Over the past three months, Hilco has spent $20,000 advertising the bankrupt property “far and wide,” including in the Wall Street Journal and other print and digital media, Madura said. But the council’s Aug. 15 vote not to extend the development permit is “chilling the bidding,” he added.
“We have had interest from developers that are qualified, sophisticated, have done thousands of units, of multi-family units, and would make something that I think the citizens and visitors could be very proud of,” Madura said. “However, these developers, these buyers, these potentially interested parties have been halted in their tracks because they are unsure where the city stands on this development as a whole.”
Without the development permit in place, Madura said, the property will not attract as many bidders, which will result in a lower sale price for the property.
Gabrielle Palmer, a lawyer representing the committee of unsecured creditors, noted that there is no further chance for Uptown 240 to sell the property or pay the unsecured debtors after the Sept. 12 date.
Early in the bankruptcy case, Palmer said, Uptown’s primary secured lender, JGJP Dillon, filed a motion for relief from stay, “basically asking the court for permission to foreclose on the property.”
But Uptown 240 reached a settlement, agreeing to pay JGJP Dillon about $9.25 million by Oct. 18, Palmer said. If Uptown 240 does not pay JGJP Dillon by then, it will get relief from stay and foreclose on the property, she noted.
“We’re here today advocating to try to encourage you to reissue or reinstate the permits,” Palmer said. “All the committee of unsecured creditors knows right now is that if JGJP Dillon gets its hands on this property, (unsecured creditors) are not going to see a dime.”
JGJP Dillon is owned by developer Jake Porritt, who has separately proposed a major redevelopment of downtown Dillon with an indoor amphitheater and a four- or five-star, luxury hotel as the centerpiece of town.
During public comment Tuesday before the Uptown 240 discussion, two local residents raised concerns about Porritt’s proposed development.
“If this gets foreclosed on then the developer I am against would have control of the property and the developer I would think the majority of this town is opposed to having in our community would have control of that property,” council member Kyle Hendricks said, noting a redevelopment of the town core that included a high-end hotel. “So for that reason, I do not want to see it foreclosed on.”
JGJP Dillon could also get relief from stay if Uptown 240 does not meet a minimum sales price somewhere around $12 million, Riley noted in response to questions from Mayor Carolyn Skowyra, who recounted the town’s history with the project.
“We sent you a notice that the development permit was expiring, and we heard crickets,” Skowyra told Uptown 240. “And then it expired. And now there is a sudden rush that we need the development permit extended?”
Even as the Ottoborgo family has made promises that haven’t been kept, the town council has been “gracious,” Skowyra added.
But Madura noted that while there is history between the Ottoborgos and the town council, the focus now is getting unsecured creditors as much money back as possible.
“While I know that promises have been made and promises have not been kept, I think it is important to note that hindsight can often be dimmed but developers more experienced than the current debtors, with more financial capital, could not weather a storm like we had in 2020,” Madura said.
The Uptown 240 group has been extremely cooperative with the sale process, Madura added, even going as far as to get additional reports to affirm the structural integrity of the existing concrete.
“Many in (Uptown 240’s) situation would walk away, would throw their hands up and say, ‘It’s bankruptcy. Good luck. Here are the keys,'” Madura said. “They have not done that. I have been extremely impressed with that.”
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