Developer of downtown Arlington center in battle over foreclosure

Posted Saturday, Jun. 30, 2012  comments  Print Reprints

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ARLINGTON -- The developer of downtown Arlington's Center Street Station, which includes Babe's Chicken Dinner House and the renovated Arlington Music Hall, has taken its Dallas-based lender to court to prevent it from foreclosing on the popular project.

A state district judge in Tarrant County late Wednesday signed a temporary restraining order that stops Southwest Securities FSB from accelerating payment on the developer's $5.1 million note or posting the property, at the southwest corner of Center and Division streets, for foreclosure. A hearing is scheduled for July 11.

Developer Burk Collins said Friday that Southwest Securities was "trying to turn a good loan into a bad loan. I'm not in default. I'm not going to take it lying down."

He insists the development is thriving, noting that the popular Austin chain, Torchy's Tacos, has leased a 3,500-square-foot space to be built next to Babe's to the north.

And three more eateries have also expressed interest in Center Street Station. Torchy's project will start when the city resolves some parking details, he added.

Bank spokesman Ben Brooks declined to comment on the lawsuit.

According to the suit, Southwest Securities sent Collins a default notice in May and said it planned to call the note June 29.

In early 2011, Southwest Securities was ordered by federal regulators to review loans over $500,000 and to stop making real estate loans after admitting it had "engaged in unsafe or unsound banking practices," the suit says.

As a result, late last year, loan officer John Donnally told Collins that the bank was requiring borrowers to reduce principal, shorten payout periods and to pay higher interest rates, the suit says.

Collins said he refused to do so because his payments "were current."

The bank now says Collins is in default because the loan is not in compliance with the debt service coverage ratio, or the amount of cash available to pay the monthly mortgage, the suit says. Collins said he has 20 percent above what's needed.

"They say we're $54 short," Collins said.

Southwest Securities, not to be confused with Fort Worth-based Southwest Bank, this month foreclosed on the Vandergriff Town Center, a two-story office and retail building nearby at Mesquite and Division streets.

Center Street Station is an office, residential and retail project on 2.7 acres also bounded by Front and Pecan streets. The historic Arlington Theatre, built in the 1950s, is on the site.

The late country western singer Johnnie High for many years operated the building as the Arlington Music Hall, featuring Johnnie High's Country Music Revue.

Collins, a North Texas developer for more than 40 years, was a neighbor of High. Five years ago, he bought a 75 percent interest in the property and High's business, the suit says.

A year later, Collins announced plans to renovate the theater and add the restaurant.

Southwest Securities, which has an Arlington branch near the theater on Abram Street, had been a sponsor of Johnnie High's Music Revue. Its loan officer, Wayne Smith, approached Collins about financing the project "because it wanted to support the revitalization of downtown Arlington," the suit says.

In May 2008, the bank agreed to a $6.3 million loan, but later reneged on its commitment and reduced the loan to $5.1 million, the suit says. Collins said he put $2 million of his own money into the project to get the loan.

Babe's Chicken opened in 2010 and is drawing about 450,000 diners a year, the suit says.

The Mellow Mushroom, a pizzeria adjacent to the theater on the south, is not a part of the lawsuit.

Sandra Baker, 817-390-7727

Twitter: @SandraBakerFWST

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Mesquite and Division streets, Arlington, TX
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