Attempting to stave off foreclosure on a 184-acre tract of parkland it purchased for $3 million in 1995, the Santa Monica Mountains Conservancy recently offered the promissory note holders a convoluted deal tied to a proposed parks initiative for the November ballot, in return for the note holders delaying the foreclosure. But the note holders rejected the deal, and a public auction is set for June 25.
“We’re going to do this, we’re going to foreclose,” said Harry Dempster, one of nine note holders who sold a parcel of land slated for development to the conservancy’s purchasing arm.
That sister agency, the Mountains Recreation and Conservation Authority, made a $1 million down payment on the entire tract off Piuma Road in January 1995 and issued a promissory note for $2 million, which became due in January of this year.
Rather than pay the balance, the conservancy reappraised the property for $1,800,000 and then said it would pay only the $800,000 difference, plus interest, under the later appraisal.
Dempster and the other note holders balked at the new terms set by the state agency and moved to foreclose on the property.
Facing both the loss of the $1 million down payment and the parkland, the conservancy offered to prepay the interest on the note through August, while backers of a parks initiative try to qualify the proposition for the November ballot. If the initiative makes it on the ballot, then the conservancy would continue to pay interest though the middle of November. If the measure succeeds, the conservancy promiss to prepay interest through summer 1999. During such time, the conservancy would retain the right, but not the obligation, to purchase the property for a total of $2 million, $1 million less than the originally negotiated purchase price. In return, the note holders would delay foreclosure proceedings.
Dempster said he discussed the offer with the other note holders and quickly conveyed their rejection of the offer. “The conservancy’s attorney made a verbal offer, and I responded verbally with a ‘No.’ “
A public auction is scheduled for June 25 at 11 a.m., outside the L.A. County Courthouse in Norwalk.
The attorney for the conservancy did not return calls seeking comment.