Loan Default Could Delay Outlet Mall

The developer of a proposed factory outlet center in Camarillo has defaulted on $17.3 million in loans against the mall site, putting another obstacle in the way of Camarillo city officials who are racing Oxnard to get Ventura County’s first outlet mall.

Koll Leonard used the site, south of the Ventura Freeway between Carmen Drive and Las Posas Road, as collateral on a $17.3-million Bank of America construction loan, according to county property records and Koll Leonard officials.

The company, a partnership of the Leonard family of Camarillo and the Koll Co. of Los Angeles, took out the loan to put in roads, sewers and other improvements on the property.

The developer has so far avoided foreclosure. “We’re in active negotiations with Bank of America to restructure the loan,” said Koll Leonard spokesman Jeffrey A. Dritley.

But Camarillo officials said they are worried that the loan problems will hamper Koll Leonard’s efforts to develop the proposed 60- to 80-store outlet mall on 23 acres of the 92-acre site.

“It concerns us,” Assistant City Manager Larry Davis said. “It’s another item that has to be resolved” before construction could begin.

Camarillo wants to get the Koll Leonard mall built before another proposed factory outlet center goes up in neighboring Oxnard.

Developer Carl M. Buck Co. of Los Angeles plans to build the 90-store Oxnard mall on 27 acres south of the Ventura Freeway between Rice and Rose avenues, only about five miles from the proposed site for the Koll Leonard center.

Although officials from both cities are hungry for the sales tax revenues that would be generated by the malls, market studies have shown that the area could support only one such shopping center, city officials said.

Oxnard appears to be ahead in the outlet-mall race, with the Buck Co. planning to begin construction next month and open the first 45-store phase in July, said Buck Co. spokesman Keith Kennon.

Kennon said his company has already lined up the $18 million in construction financing needed for the first phase and has commitments from retail outlet operators who want to lease space at the mall.

In Camarillo, Koll Leonard is still awaiting final approval on its mall proposal. It expects the OK at the City Council’s Jan. 13 meeting.

The company hopes to begin construction on the mall’s first phase of 30 to 40 stores in March and open the center in November, but Dritley denied that this schedule would put their project behind the one in Oxnard.

He said he doubts that the Oxnard developer has garnered enough leasing commitments to get the construction financing it claims to have.

“I’d be very surprised if they started building in January,” Dritley said.

Koll Leonard has verbal commitments from 40 to 50 retail outlet operators to lease at the mall, Dritley said.

But there are a limited number of factory outlet operators and most of them presumably would not want stores in both the Oxnard and Camarillo malls, he said.

Dritley conceded that, even with its leasing commitments, Koll Leonard will not be able to break ground until it resolves the default on the mall site.

The developer took out the Bank of America construction loan in the late 1980s, intending to turn the site into a commercial-industrial park.

But, by the time the improvements were completed, the recession had begun and Koll Leonard found only two companies to buy lots on the property.

After Koll Leonard got behind on its monthly loan payments, Bank of America notified it July 14 that the bank would foreclose on the property unless either the full balance of $17,353,316 was paid within five days or another repayment plan was approved.

Bank of America officials would not comment on the loan arrangement, but Dritley said the income from the retail outlet mall could help repay the Bank of America loan.

Koll Leonard is also looking for other ways to generate income from the property, including negotiating with Edwards Cinema to buy 10.3 acres next to the mall site for a 12-screen theater.

Dritley said his company will push to build its outlet mall, regardless of whether the Oxnard factory outlet center is completed first.

“We would like to be the only one there, but I don’t control that developer’s destiny,” he said.