INDIAN RIVER COUNTY — The future of a premiere green housing development near Winter Beach, in arrears for nearly $2.85 million, is uncertain now after the developer’s lender purchased the property for $1,000 at a foreclosure auction Wednesday morning.
West Palm Beach attorney John Hart, of Carlton Fields, said after the auction that the $1,000 bid was an attempt for the lender – PNC Bank – to acquire the asset, maximize the bank’s recovery and reduce the collateral.
The 39-acre, 90-home project was expected to break ground last year, but instead found itself in a $2.85 million foreclosure. Mandala Development Group officers David Ederer and Richard Bialosky were in attendance of the foreclosure auction but declined to bid on the property. They also declined to comment on the foreclosure. Also named in the foreclosure suit was fellow officer Donald Proctor.
Ederer said that the reason for not commenting is because Mandala Development Group is continuing to work with PNC Bank and are in ongoing discussions.
In general, however, Ederer said he expects the residential development market to turn around in the next three or five years.
The Mandala Club was a planned community to be built with “non-toxic, health-promoting construction protocols” and “environmental sensitivity.”
Mandala Development Group originally took out a loan from Harbor Financial Savings Bank (which later was rolled into National City Bank) for $700,000 in June 2003 for the property. The company went back to the bank a couple years later to get another $3.14 million.
Mandala Development drew down all but $1 million on the line of credit from the bank, according to Ederer.
Ederer said the company had not missed a single payment to the bank on the loan between the time the loan was issued and the bank called it into default.
Since Sept. 9, 2009, the development firm had been accruing interest of nearly $1,100 daily. The company owes $2.2 million on the principal of the loan and another $642,000 in interest.
Circuit Court Judge Paul Kanarek ruled on Nov. 13, 2009, that Mandala Development owed PNC Bank nearly $2.85 million and set a courthouse auction for the property.
Banks, in general, have been calling up loans on residential developments and similar projects due to the decline in market conditions. In so doing, they have tried to minimize their exposure.
Mandala Club had been hailed as a unique community that would combine “age-old principles of Maharishi Vedic Architecture, non-toxic and health-promoting construction protocols, environmental sensitivity, and an emphasis on planning techniques that promote a sense of community,” the development’s Web site states.
The developers had expected to break ground on the community’s infrastructure last year with the first homes being available in mid to late 2010.