by Nick Welsh
One of the key lending institutions keeping alive developer Bill Levy’s dream of building 62 Ritz-Carlton time-share condos on the lower two blocks of State Street has filed legal documents alleging that Levy has defaulted on his loan. Mountain Funding, which specializes in providing high-interest, short-term loans for potentially lucrative real estate deals, filed a notice of default on July 25, claiming that Levy was behind on his payments and owed $35 million. That’s $10 million more than Levy initially borrowed from the North Carolina-based lender a year ago. Mountain Funding officials declined to comment; Levy and his partner Roy Millender did not return phone calls seeking explanation.
City officials expressed concern but not surprise. Levy has consistently experienced serious difficulty in securing funding for the single biggest private redevelopment project in recent city history. But the deadline for Levy, Ritz-Carlton, or Mountain Funding to commence construction is December 12. Beyond that date, all city permits for the controversial project are dead. No extensions are possible. Real estate insiders who’ve been watching Levy’s progress with keen interest suggest that Levy is playing a game of high-stakes chicken with his lender over control of the project and what his final cut might be. Because of escalating construction costs, they contend, the tab for financing and building the time-shares is quickly approaching the $250 million Ritz-Carlton has committed. Once that’s been expended, they suggest, there might not be much left over for Levy, his partners, or his many investors. A lengthy default dispute just before the project permits expire might provide Levy just the sort of leverage he needs to negotiate more advantageous terms. Or he could make good on the default by paying what’s owed within 11 days.