The Dillon Town Council is scheduled to consider, on Tuesday, Aug. 15, a resolution to extend the development permit for Uptown 240, the condominium project that has filed for bankruptcy and has been stalled since 2019.

Uptown 240 President Danilo Ottoborgo told the Town Council in May that the company had been “surprised” to learn that the building permit — and with it the rights to construct the planned 80-unit luxury condo complex — expired at the end of April.

But, according to Dillon Town Attorney Nick Cotton-Baez, those rights are crucial to the property’s value — and to securing repayment for creditors that include the town and would-be residents who put deposits down on units.

“If the development permit is not extended during the bankruptcy proceeding, the project value may plummet, thus significantly diminishing sums available for the repayment creditors,” Cotton-Baez wrote in a memorandum to the council.

Recommending the council grant the extension of the development permit, Cotton-Baez noted that construction of Uptown 240 has been paused due to the developer’s inability to obtain the financing necessary to fund it.

Since the original financiers behind Uptown 240 backed out during the pandemic, little progress has been made beyond pouring a foundation. Construction was supposed to resume in November 2020 and again in February 2021 but never did. Then this past February, Uptown 240 filed for bankruptcy the day before a scheduled foreclosure auction.

Through Chapter 11 bankruptcy proceedings, Uptown 240 has proposed two paths forward: refinancing and completing the project themselves or selling the property at a bankruptcy sale scheduled for next month.

Both those options are intended to maximize returns for creditors, Cotton-Baez wrote, but the expiration of the development permit may affect Uptown 240’s ability to refinance or sell the property.

“The matter of the development permit expiration has become a critical issue of the bankruptcy proceeding, as the development permit and property entitlements are primary drivers of the project’s value, and thus crucial to the intent of maximizing returns to creditors,” Cotton-Baez said.

The town of Dillon is a creditor, Cotton-Baez noted, as are those who paid deposits on the unbuilt units, many of whom are Dillon residents.

Dillon Town Manager Nathan Johnson did not return a phone request for comment or emailed questions Monday about how much money the town has put into Uptown 240.

Approving an extension of the development permit is also necessary to minimize further delays to the project, Cotton-Baez noted. If the development permit is not extended, Uptown 240’s inability to refinance or sell the project may result in the court lifting the stay on the foreclosure proceeding, which could further delay the project, he said.

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Any resolution to extend the development permit, though, would condition the effectiveness of the extension upon either the sale of the property or confirmation of Uptown 240’s plan of reorganization and closing on a construction loan, Cotton-Baez said. The resolution could also impose additional requirements that, if not met, would allow the town to revoke the development permission extension, he said.

Cotton-Baez said back in May that any ordinance to extend the development permit could become subject to a potential referendum should 10% of the Dillon voters petition to overturn the ordinance. If such a petition was filed, the Town Council could either withdraw the ordinance or allow Dillon voters to vote on whether to overturn the ordinance, he said.

Additional review and hearings on Uptown 240 will not be necessary if the development permit is extended, Cotton-Baez said, but the project will still be required to comply with all requirements of town and city building codes.