After decades of false starts, the Mission Gateway project is now facing foreclosure
The Mission City Council in January approved a new redevelopment agreement for the project on the site of the former Mission Center Mall, which has yet to materialize after 17 years. Now a New York bank is suing to foreclose its mortgage on the property.
Mission Mayor Sollie Flora says the city is keeping a close eye on the situation after a New York bank sued to foreclose its mortgage on the Mission Gateway property.
The civil suit was filed Tuesday, April 18, in Johnson County District Court by Metropolitan Commercial Bank.
The suit names as a defendant Aryeh Realty, which owns the long-troubled development at the confluence of Johnson Drive, Roe Avenue and Shawnee Mission Parkway on the site of the former Mission Center Mall.
“The City learned earlier this week that Metropolitan Commercial Bank filed an action to foreclose its mortgage on the Gateway Project property which is owned by Aryeh Realty, LLC,” Flora said in a statement emailed Monday evening.
“The City is not a party to the action,” she said,” but we are closely monitoring the litigation and will take appropriate action if and when it is necessary to protect the interests of the City in relationship to the Gateway Project.”
The Mission city council in January approved a new redevelopment agreement for the long-stalled project, but the developer has yet to receive any incentives as part of that agreement to date, according to Flora.
“The foreclosure action does not negate any current or future taxes or special assessments due to the City. The City will continue to assess its rights under the redevelopment agreement,” she said.
A $26 million loan
Metropolitan Commercial Bank’s lawsuit claims Aryeh has defaulted on payments on a loan agreement originally entered into in April 2019.
The original loan amount was for $20 million.
That amount was later increased to $26 million in February 2020 at Aryeh’s request, according to the lawsuit.
The suit also names as a defendant Allen Gross, the CEO of a New York-based investment and asset management firm, for his role as Aryeh’s guarantor in the loan deal.
Gross’s company GFI Gateway, identified as Aryeh’s “managing member,” is also named as a defendant.
Twenty other entities, mostly general contractors based in Kansas and Missouri that may be owed money on the Mission Gateway project, are also named as defendants.
The suit alleges that Aryeh failed to pay off its loan for Mission Gateway when it matured on July 1, 2020, four months after the company asked to increase its loan amount.
In September 2020, Met Bank entered into a forebearance agreement with Aryeh, through Gross and GFI, which set out terms for Aryeh to repay the loan in exchange for the bank holding off on foreclosing on the mortgage.
At Aryeh’s request, that forebearance agreement deadline was extended four separate times over the next two years, the lawsuit says.
Met Bank claims Aryeh finally defaulted on its obligations beginning with a missed payment for deferred interest of more than $340,000 that was due November 1, 2022.
Aryeh went on to miss monthly interest payments in January and February of this year of more than $346,000 each month.
The developer also failed to make a principal reduction payment of $500,000 that was due in January, as well.
As of the end of March, Met Bank claims Aryeh still owes the bank $24 million from its original amended loan agreement, plus more than $1 million in interest.
According to its loan agreement, Aryeh will owe payments now at a continuing rate of 24% interest, plus late fees and more than $12,000 in appraisal costs.
What the bank is seeking
Met Bank wants Aryeh, GFI and Gross to pay back the $24 million owed from the amended loan agreement, plus any attorneys’ fees and costs incurred through bringing the lawsuit.
The bank is also seeking to have the Mission Gateway property sold at auction and the proceeds of that sale to go towards paying off Aryeh’s debts, as well as any taxes, interest payments or legal fees.
Any remaining funds, the suit says, should be distributed to various contractors who may be owed money for the project.
This story was originally published on the Shawnee Mission Post.