LOCAL Point Ruston parcels including Waterfront Market, garage site set for foreclosure sale
BY DEBBIE COCKRELL APRIL 04, 2024 5:00 AM
The Point Ruston Public Parking garage and Public Market (background) were the focus of a foreclosure decree issued March 29, 2024. They are shown on Tuesday, Oct. 10, 2023. TONY OVERMAN toverman@theolympian.com
An investment-lender group for the Point Ruston development on Friday won a more-than $91 million judgment in its multi-year debt collection case involving financing at the site. The Waterfront Market at Ruston and the development’s parking garage site will cover a large portion of AURC III’s debt. AURC III represents a group of foreign investors through the American United EB-5 Regional Center of Portland, Oregon. The 132 investors each put forward $500,000, which AURC used to issue its $66 million loan to the site. The parcels tied to the AURC loan are now headed for a sheriff’s sale as a result of Friday’s ruling. The original $66 million loan was made to Point Ruston Phase II LLC, but the main development entity representing the site, Point Ruston LLC, guaranteed the loan. AURC III, the lender, received a partial summary judgment last year against Point Ruston Phase II LLC. Last fall, a court order gave the investment group a wider net to cast for repayment, naming Point Ruston LLC in the order “jointly and severally with Point Ruston Phase II, LLC to the full amount of liability.” AURC III attorney Russell Knight said Friday that the judgment against the development’s main business entity, Point Ruston LLC, was significant because it owns multiple components of the site, “which will be used to collect the judgment.” The financial breakdown of what was owed to AURC III was established in the trial’s first phase in February. Friday’s judgment in the trial’s second phase set the terms for foreclosure to collect on the judgment. Attorney Jack Krona, representing the LLCs in the case, did not respond to a request for comment after the judgment. Krona wrote in a January pretrial brief that “Point Ruston LLC reserves all of its defenses that were disposed of by summary judgment for appeal.” Krona, on behalf of the LLCs, filed objections before the hearing against fees included in the award as well as the form of the foreclosure decree. Pierce County Superior Court Judge Shelly Speir-Moss entered the $91,701,080.89 judgment against Point Ruston LLC and Point Ruston Phase II, LLC. The foreclosure decree also issued Friday orders that parcels tied to the AURC debt, including the Waterfront Market at Ruston and the parking garage property, with a portion still undeveloped, be sold by the Pierce County Sheriff. The foreclosure sale is expected in May, with AURC likely to make its own credit bid to be applied to the judgment. The foreclosure decree contains a one-year statutory redemption period, which allows entities foreclosed on to attempt to reclaim the sites within that time frame. The parking garage/market area has been the center of contention in other lawsuits, including an earlier foreclosure action. The site was initially foreclosed on in 2020 by Serpanok Construction, which obtained the building and a portion of the garage site (not the entire parcel) in its own credit bid to help satisfy a mechanic’s lien over nonpayment for work at the site. In March, Serpanok dropped its ownership challenge in AURC’s case, and gave AURC the deed of its portion of the site in lieu of foreclosure. Krona in a March 26 court filing wrote that Point Ruston LLC objected to parts of the decree of foreclosure and parts of the findings of fact conclusions of law, stating it “does not believe it is appropriate to authorize a deficiency judgment after there has been a deed in lieu of foreclosure in the subject collateral.” Meanwhile, the family behind the construction company is not completely out of the picture at Point Ruston. The News Tribune reported March 20 that the owners of Owens Meats’ at the market sold the business to the Kunitsa family, the same family behind Serpanok. The rebranded store is now High Steaks Meat and Deli. Point Ruston has faced a multitude of lawsuits against the various LLCs tied to its parcels in its development as investors and subcontractors alike have sought to collect on payments. Knight said after the court action that Friday’s judgment was the largest ever entered against the development. The amount includes the loan principal and more than $25 million in interest, penalties and attorney’s fees. “This judgment follows series of other judgments entered against Point Ruston over the past four years, including the $11.5 million judgment entered in 2021 in favor of AURC, bringing the total in judgments obtained by my client to over $100 million,” Knight said. AURC and Point Ruston entered arbitration after loan interest payments to the investment group stopped in 2020, according to court records. An arbitration award came in October 2021 in favor of AURC. AURC returned to court in November 2022 contending that while the arbitration award was paid, “interest continued to accrue on the promissory note, and defendants failed to pay interest due,” the complaint filed in Pierce County Superior Court stated. OTHER ACTION AND CHANGES AHEAD Another investment entity who’s seeking to collect on multiple millions of dollars of debt is lender TerraCotta Credit REIT of El Segundo, California. TerraCotta is pursuing its own foreclosure on multiple Point Ruston parcels to satisfy debt repayment totaling more than $82 million. Meanwhile, the Point Ruston Owners Association has been tied to site properties as an overall site management entity through the development’s creation, with Loren Cohen (son of the late Point Ruston developer Michael Cohen) as sole director. The owners association is awaiting decisions on its own receivership as AURC’s foreclosure process moves forward. An order staying claims against the owners association issued March 4 noted that claims by AURC and Serpanok against the owners association “shall proceed later.” “PROA receivership issues are a more complicated beginning of a story,” Knight told The News Tribune. “The judgment and the foreclosure is the end of a separate story.” Whether the association’s receivership will come under its own general receivership filing or through a separate motion initiated by five condo association groups seeking a custodial receiver is still to be determined in court. Regardless, on-site parking management at the garage is set to be overhauled following the foreclosure sale, Knight noted, as a result of new ownership of the parcels. As to what’s next in terms of development, Knight told The News Tribune that AURC is “looking at all of their options,” including working with a development partner. “The options include completing the development surrounding the market and the garage,” he said. “And the development surrounding the market and the garage includes two separate residential buildings that can be built, essentially, half on top of the garage and half next to the garage,” he said. Previous News Tribune reporting contributed to this report. DEBBIE COCKRELL 253-597-8364 Debbie Cockrell has been with The News Tribune since 2009. She reports on business and development, local and regional issues. Take Us With You Real-time updates and all local stories you want right in the palm of your hand. 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