The city of Des Moines has joined Bankers Trust Co. in asking a Polk County District Court judge to quickly set a hearing on the financial institution’s request to sell a downtown parking garage to Des Moines, the city said in a statement issued on Monday.
According to court papers filed late last week, Des Moines has offered to buy the parking garage for about $40.6 million. The City Council will vote on the purchase at its Jan. 25 meeting if the judge allows the proposed sale to move forward, Bankers Trust said in its court filings.
Bankers Trust in September filed a foreclosure petition in Polk County court alleging that the garage developers — 5th and Walnut Parking Garage LLC and Justin Mandelbaum and Sean Mandelbaum — were in default on a construction loan that was due to be paid off on Aug. 31.
The parking garage is part of a $200 million multipiece downtown development planned by the Mandelbaums. In addition to the 751-stall parking garage, the development called the Fifth was to include a 40-story tower with luxury apartments and a hotel, and a five-story commercial building with a multiscreen movie theater and restaurant.
Des Moines’ City Manager Scott Sanders said in a statement released today that Mandelbaum Properties “has been in default under its development agreement with the city since Nov. 1, 2019. The city served notices of default … in June 2020.”
“We do not comment on pending litigation,” Sanders said in the statement, adding that Des Moines had joined Bankers Trust in asking for a quick hearing on the request to sell the property to Des Moines.
In the statement, Sanders did not respond to questions about which fund the city would use to pay for the garage or whether the city planned to sell or retain the parking structure.
The Des Moines council in September 2017 approved a development agreement between the city and the Mandelbaum group. The agreement, which was updated twice, required construction of the parking garage to be completed by Aug. 16, 2020, and construction of one of the two other buildings to have started by late 2019. Neither requirement was met.
In September, the Mandelbaums filed a counterclaim against the city of Des Moines, claiming the city reneged on its development agreement and seeking $101 million in damages.
Court papers: Des Moines offers to buy parking garage property in foreclosure
Developers of the Fifth seek $101 million in counterclaim against city
Bankers Trust files foreclosure petition on parking garage