‘Why should we trust you?’: Dillon officials remain skeptical as Uptown 240 claims it could emerge from bankruptcy, complete project in 18 months
The president of Uptown 240, the stalled condominium project in Dillon’s town core, told the Dillon Town Council on Tuesday, May 16, that the company could emerge successfully from bankruptcy proceedings and complete the project within 18 months.
But while peppering Uptown 240 President Danilo Ottoborgo with questions about the development that has sat partially constructed since 2019, some Town Council members expressed skepticism.
“Why should we trust you?” Mayor Carolyn Skowyra asked, noting that just last fall Ottoborgo had come before the council promising regular updates but failed to follow through.
Uptown 240’s original financiers backed out during the pandemic, and little progress has been made beyond pouring a foundation since crews broke ground on the 80-unit complex in June 2019.
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.
“There have been several expectations that this will get funded that have fallen through,” Council member Dana Christiansen said Tuesday. “What’s changed now?”
Ottoborgo said Uptown 240 is working with an exit financier through the Chapter 11 bankruptcy process to repay debts and resume construction, this time with additional oversight from the courts.
Uptown 240 plans to move forward in two phases, Ottoborgo said. The first phase will involve an initial loan from the exit financier to pay off all the debts the company owns, he said. The second step will be completing construction.
The company must submit its reorganization plan to the bankruptcy court by May 23, Ottoborgo said. He expects a confirmation hearing to be scheduled within the 30 to 45 days from the submission of the plan.
Keri Riley, the bankruptcy attorney representing Uptown 240, said the hope is to expedite the approval of the reorganization plan as much as possible. The project “lives or dies” by the financing coming through by that May 23 date, Riley said.
“Just to chime in with respect to building some of that trust — that is, we have heard from creditors as well,” Riley said. “That is something we are very cognizant about and that we’re very aware of as we’re working through this process.”
The Chapter 11 bankruptcy process allows for additional levels of oversight to be built into the process, Riley said, so that it is transparent for the creditors and the town.
“It’s not just a business going about its normal operation,” Riley said. “Now there is somebody to look over its shoulder, make sure that what it’s proposing in terms of that business plan is feasible going forward.”
Yet, even as Uptown 240 representatives forged ahead with plans to come out of bankruptcy and complete the project, the company apparently was unaware that the building permit, and with it their vested rights in the project, expired at the end of April.
“That was a surprise to the Uptown 240 team,” Ottoborgo said. “We were not aware of the permit’s expiration.”
Ottoborgo said Uptown 240’s general contractor had access to the software tracking permit-related dates and that a copy of the letter notifying the company of the permit’s expiration went to a P.O. Box in Dillon that used to be associated with his parents.
But maintaining those vested rights and having the development agreement in place is critical for Uptown 240, or anyone else who takes over the project, he said.
Developer Jake Porritt, the managing member of the Porritt Group, which purchased Uptown 240’s debt last year, was also at the meeting. Last month the Porritt Group asked the U.S. Bankruptcy Court to let it foreclose on the project.
In an interview Tuesday, Porritt said he was “just observing,” the Town Council discussion about Uptown 240. Citing ongoing litigation, he declined to comment on Uptown 240’s proposed 18 month timeline to complete construction.
Town Attorney Nick Cotton-Baez told the Town Council that there is a scenario where the Council could pass an ordinance approving a development agreement extending Uptown 240’s vested rights in the project.
However, that ordinance could become subject to a potential referendum should 10% of the Dillon voters petition to overturn the ordinance, Cotton-Baez said. 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.
Skowyra asked whether approving a development agreement with an extension of the vested rights would improve the chances of people who are owed money getting paid back.
“In terms of ensuring that people get paid back, having that development agreement is going to allow construction to restart faster,” Riley responded, noting that faster construction could result in some people getting repaid sooner.
Town Council members also raised concerns that the Uptown 240 project does not comply with town codes that have been updated since the project was originally approved and that the existing foundation will have to be redone.
Ottoborgo said that the project plans exceeded sustainability codes in place at the time it was approved, so he doesn’t expect difficulty meeting existing sustainability codes or other building codes that have been updated since the project was approved.
Uptown 240 has an engineering team that will assess whether any parts of the existing foundation need to be redone, Ottoborgo said, and the team has budgeted for any necessary work to redo existing construction. The company does not have plans to tear out all of the existing structure, he said.
“Whatever the engineer says to get the building back up to a structural stand, that’s what we’ll do,” Ottoborgo said.
The Town Council went on to receive legal advice about Uptown 240 from Cotton-Baez during an executive session later Tuesday evening. Dillon Town Manager Nathan Johnson said Wednesday no decisions were made during the executive session.
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