FORT WORTH -- A state district judge in Tarrant County ruled Tuesday that Dallas-based Southwest Securities FSB cannot foreclose on the popular downtown Arlington Center Street Station development, which includes Babe's Chicken Dinner House and the renovated Arlington Music Hall.
After hearing testimony in July and August, 17th District Court Judge Melody Wilkinson issued an injunction saying that Center Street Station and its developer, Burk Collins, "will probably prevail in their claim" that they are not in default under the debt service coverage ratio provision of the loan documents.She set a Dec. 3 trial date.She ordered Southwest Securities FSB "to desist and refrain" from taking steps to accelerate Center Street Station's loan or to foreclose on the property.Collins filed suit in July after Southwest Securities attempted to accelerate payment on the developer's $5.1 million note, saying he was in default because the project was not generating enough revenue to cover the note payment. Collins testified that he never missed a loan payment and vowed to stand up to the bank.Collins's attorney, Frank Hill, said they are pleased with the ruling."As always, we stand ready, willing and able to resolve things peacefully" with the bank, Hill said.The debt service coverage ratio is the amount of cash available to pay the monthly mortgage.The testimony centered on the wording of that provision in the loan documents and whether the bank could calculate the provision based on "net cash available," even though loan documents do not stipulate that.Hill argued that the bank tried to manipulate the wording to throw the project into default because it is under pressure from federal regulators to get rid of bad loans.It was just one of several attempts by the bank to manipulate the document wording to force a default on Center Street Station, he said."The bank was under a cease-and-desist order," Hill said in court. "We're asking the court to stop this bank from harassing us."The provision "does not say net cash available. It says cash available," court filings said.The provision "does not require the borrower to make a profit during the four-year life of the loan. Rather, it only required cash available to equal 115 percent of the monthly loan payment, which it does."The bank argued that debt service ratio coverage is always calculated and based on net, rather than gross figures, and is done so on a trailing basis, not forward-looking, as Collins's attorneys had argued.Center Street Station is at the southwest corner of Center and Division streets.The historic Arlington Theatre, built in the 1950s, is on the site. Collins bought the property five years ago from the late country-western singer Johnnie High, who for many years operated the building as the Arlington Music Hall, featuring Johnnie High's Country Music Revue.Collins renovated the theater and brought in Babe's restaurant.The project, which received $1.2 million in tax increment finance funding from the city of Arlington, is considered vital to the progress of restoring downtown Arlington.Sandra Baker, 817-390-7727Twitter: @SandraBakerFWSTHave more to add? News tip? Tell us
