Levy Accused Of Defaulting

by Nick Welsh

One of the key lending institutions keeping alive developer Bill
Levy’s dream of building 62 Ritz-Carlton time-share condos on the
lower two blocks of State Street has filed legal documents alleging
that Levy has defaulted on his loan. Mountain Funding, which
specializes in providing high-interest, short-term loans for
potentially lucrative real estate deals, filed a notice of default
on July 25, claiming that Levy was behind on his payments and owed
$35 million. That’s $10 million more than Levy initially borrowed
from the North Carolina-based lender a year ago. Mountain Funding
officials declined to comment; Levy and his partner Roy Millender
did not return phone calls seeking explanation.

City officials expressed concern but not surprise. Levy has
consistently experienced serious difficulty in securing funding for
the single biggest private redevelopment project in recent city
history. But the deadline for Levy, Ritz-Carlton, or Mountain
Funding to commence construction is December 12. Beyond that date,
all city permits for the controversial project are dead. No
extensions are possible. Real estate insiders who’ve been watching
Levy’s progress with keen interest suggest that Levy is playing a
game of high-stakes chicken with his lender over control of the
project and what his final cut might be. Because of escalating
construction costs, they contend, the tab for financing and
building the time-shares is quickly approaching the $250 million
Ritz-Carlton has committed. Once that’s been expended, they
suggest, there might not be much left over for Levy, his partners,
or his many investors. A lengthy default dispute just before the
project permits expire might provide Levy just the sort of leverage
he needs to negotiate more advantageous terms. Or he could make
good on the default by paying what’s owed within 11 days.