The Ellman Cos.' default on a $7 million loan for a Glendale project has no bearing on its plans for Los Arcos Town Center in south Scottsdale, a company executive said.
Bob Kaufman, senior vice president for the Phoenix-based firm, said that when the company first purchased land surrounding the future Phoenix Coyotes arena in Glendale it obtained a land loan with intent to replace it with a larger loan.
That $7 million loan from Pacific Coast, a Seattle company, will be replaced with another loan, he said. However, Kaufman would not disclose the name of the new lender.
Pacific Coast did not return calls seeking comment.
"It's taken longer than we had hoped to get that completed, but it's been processed and it's been approved,'' Kaufman said. "It's unfortunate, but, everything's under control.''
News of Ellman's shortfall across the Valley caused concern for Scottsdale City Councilmen David Ortega and Bob Littlefield, who have opposed the developer’s plans for the former Los Arcos Mall site at Scottsdale and McDowell roads.
"The two projects are two totally separate projects and have nothing to do with one another,'' Kaufman said.
Ortega asked City Manager Jan Dolan to obtain a copy of Glendale's agreement with Ellman, which she said she would do. Councilman Wayne Ecton said he's not concerned about Ellman's default on a loan in Glendale.
"He's given us every indication with the city's deal that he's got on the table right now that he has the backing to get the money because they know where the money is going to come from. It's going to come from our sales tax, so that really doesn't become an issue with our situation,'' Ecton said.
Littlefield and Ortega aren't so sure.
"It's totally predictable . . . Anytime a politician hooks himself up with Ellman I think he will get burned, but that's my personal opinion,'' Littlefield said. "It should be a red flag.''
"I have huge doubts . . . Does he have the financial capability to do it?'' Littlefield said about the Los Arcos Town Center slated to open in fall 2004. "We should look into it. If we're going to be in bed with Ellman we ought to know.''
Ellman took out a $7 million loan for the Glendale project, tentatively dubbed Westgate, which will boast 6 million square feet of mixed-use development including retail, office, entertainment, hotel and apartment uses, surrounding the new Coyotes arena.
Glendale is not involved in Ellman's "personal dealings" and the land that the arena will be built on is owned by the city, said Julie Frisoni, a Glendale spokeswoman.
According to Ellman's development agreement with Glendale, Frisoni said, the surrounding mixed-use project must develop a portion of that land six months after the arena opens and complete the entire tract in 10 years. If Ellman misses target dates in the agreement he could face financial penalties.
Dolan said she doesn't have any facts about the Glendale agreement or Ellman's loan in default. She also stressed Scottsdale does not have any upfront risk.
"If he doesn't build it. He doesn't get any money out of it,'' Dolan said. "It's like any developer. He has the money to build it or not.''
Ortega has publicly complained that the city does not have any information about Ellman's financial standing, but Dolan said that will be taken care of once an agreement is approved.
"Before we finalize a development agreement, we'll want some assurances of their financing capacity to build their project. But, again we're not at financial risk if he doesn't build this project. We don't have any money at stake,'' Dolan added.
Kaufman said the company does not have financial troubles.
"We have a lot of business on the books right now. It's good business. All of our business is moving forward. We have financing in place for all of our business and . . . there are no problems,'' Kaufman said.