Update: West Tech foreclosure note sale

(Plain Press, February 2007) Ward 18 Councilman Jay Westbrook cited a soft rental market as the reason for the Beachwood-based Orlean Company default on the $14,254,813 balance of a federal Housing and Urban Development Department (HUD) insured mortgage on the West Tech loft apartment complex at W. 93rd and Willard.

The West Tech project passed the screening process for the Federal Housing Administration HUD insurance in December of 2000. At that time the approval allowed Cuyahoga County to go forward with the sale of $11 million in bonds for the project, and the City of Cleveland Neighborhood Development Fund to go forward with a $2 million low-interest loan for the project. At that time the project owner was Sommerville Development of Mission Diego, California, acting under a limited partnership called Wtech. When Wtech was deemed unable to complete the project, it was turned over to the current owner, the Orlean Company of Beachwood, Ohio.

Westbrook said the Orlean Company was only able to rent about 50% of the 189 loft apartment units at West Tech. Westbrook blamed a soft rental market for the default. “It was nothing the owners did wrong,” he said. Westbrook said rents in the complex were $650 for a one-bedroom apartment, $950 for a two-bedroom apartment and $1100 for a three-bedroom apartment. The facility also contained some Section 8 subsidized units. Westbrook said the Orlean Company lost $4-5 million on the project.

Doug Shelby of the Cleveland HUD office said the West Tech apartments’ mortgage balance would be sold in a note sale. A date has not yet been determined as to when the sale will occur. Shelby said that what happens to the property will depend on what is in the business agreement between the purchaser of the note and the new owner. Shelby said most likely the purchaser of the note would be a financial institution. He said the purchaser of the note could establish a relationship and terms with a new owner or with the current owner, he said. Whether the all units remain rental units or begin to be sold as condos could also change under that agreement, he said.

Asked about an early requirement that a developer not develop housing on the West Tech field until 95% of the units in the West Tech building were rented, Westbrook said that the developers, HUD and the city didn’t want that to happen. The projects were separated and Rysar took on the construction of new housing on the site of the former West Tech field.

A recent report from Cudell Improvement indicates that construction of twenty market single-family homes is now complete. The single-family homes are priced from $170,000 to $200,000 depending on the options chosen by buyers. Construction of 26 townhomes fronting on Tuck’s Track is now under way. The Cudell Improvement report indicates that the townhomes will fetch a higher price than the single-family homes.

The West Tech Alumni office, currently housed in a small room in the West Tech facility, would like the new owners to donate a larger room for the group’s use. Chris Rafalke, President of the West Tech Alumni Association, also suggested that an empty balcony in the auditorium could be used as exhibition space for West Tech memorabilia. The West Tech Alumni Association (WTAA) will hold its next meeting on Sunday, February 11th at 2 p.m. at the Brooklyn Branch of the Cuyahoga County Library at 4480 Ridge Road. WTAA’s main mission is to provide scholarships. For more information about the WTAA, check out their website at www.westtech.org.

 

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