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Woodinville Wine Village Emerges

Court clears way for Washington state residential-commercial development

by Peter Mitham
Woodinville Wine Village
King County Superior Court in Washington cleared the way for Woodinville Village Partners LLC, which acquired the note for Woodinville Village from Union Bank, to begin proceedings to acquire the property.
Woodinville, Wash.—The way is now clear for a new owner to assume title to a troubled development site slated for a wine village in the heart of Woodinville, Wash.

King County Superior Court dismissed claims by the town of Woodinville against Woodinville Village Partners LLC, the entity that acquired the note (formerly held by Union Bank) for the property owned by Woodinville Village Associates LLC.

The city had claimed that its interests in the property—approximately $1.4 million for road work—ranked higher in priority to those of the Union Bank. A summary judgment May 31 decided, based on case law, that it wasn’t so.

“The city’s priority of lien was not in priority to our lien, the first deed of trust lien, so they granted us relief from the city’s lawsuit,” Walter Scott, a vice president of development and a minority partner in Woodinville Village Partners, explained to Wines & Vines. We “hope this resolves the legal issues with regards to the property.”

A decision regarding the municipality’s claims means Woodinville Village Partners is now free to pursue a foreclosure action on the property to satisfy obligations owing to it under a note acquired from Union Bank in March. Based in Bellevue, Woodinville Village Partners is backed by local real estate expertise associated with Legacy Corp., an established real estate investor that owns a string of commercial properties including dozens of thrift stores and discount outlets across the U.S. and Canada.

Union Bank acquired the debt as part of its takeover of the original lender, Frontier Bank, in 2010. The note represents amounts outstanding when Frontier Bank called loans to the project’s original developer as real estate financing around the world unraveled in the wake of Lehman Bros. fall 2008 collapse. The development in Woodinville sank under $24 million in loans, interest, taxes and assorted charges; creditors included the bank, Woodinville and others.

Several previous efforts to foreclose on the property were stymied by Woodinville’s claim of priority over other creditors. With the priority of the debt now held by Woodinville Village Partners established, foreclosure proceedings can proceed with greater certainty.

Scott said the foreclosure action aims to give his company title to a premier development site, and allow it to proceed with fulfilling the original vision for the project as an anchor of Woodinville’s bustling wine scene.

“Woodinville city council and staff, and prior developers, had great foresight and had a great idea,” Scott said. “We believe in their idea and we intend to effect or develop based on those original ideas.”

MJR Development Inc. originally envisioned Woodinville Wine Village as an “interactive village community” on 24 acres adjacent to the Sammamish River. A total of 260 residences, a restaurant and culinary amphitheatre, luxury hotel and shops were planned, and wineries including Brian Carter Cellars, DeLille Cellars, DiStefano Winery and Washington Wine & Beverage Co. all planned to locate to the village.

All continue to operate from space elsewhere in Woodinville. Brian Carter Cellars operates from leased premises adjacent to the village site; winemaker Brian Carter told Wines & Vines last year that whatever happens with the property, there is no indication of when the village itself will materialize.

The end of the legal woes brings some clarity to the path forward, but Scott said a timeline for development of the property hasn’t been set. Brian Carter and the other wineries that once saw themselves as part of the village’s future will have a chance to locate in the development, but Scott couldn’t pin down when that might be.

“The project will be built in several phases so it does not oversupply the community,” he said, noting that nothing will happen until foreclosure proceedings give it title to the property.

And that won’t happen until the timing is right for development.

“We can foreclose any time we want,” he said. “We just probably won’t foreclose until we’re ready to develop.”

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