The condominium portion of the Ivy Hotel + Residence has been put under the control of a court-appointed receiver, about a month after the same receiver was named to oversee the hotel at the upscale property in downtown Minneapolis.
Turnstone Holding LLC will serve as the receiver for the 92-unit condo building in addition to the 136-room hotel, according to documents filed Monday in Hennepin County Court. The two properties were built in a $88 million project that also included renovating the historic Ivy Tower at 11th Street and 2nd Avenue S.
In a suit filed last month, Dougherty Funding, the lender, claimed that the developers are in default on $69 million in loans for the project. In court documents seeking receivership, Dougherty said utilities and Internet providers recently threatened to cut off services at the property if their bills were not paid. Dougherty has not begun foreclosure proceedings, according to Steven Meyer, attorney for the lender.
Dougherty's suit came shortly after the developers, Jeff Laux and Gary Benson, and Bremer Bank sued the lender, claiming it has improperly held onto about $1.4 million in "excess proceeds" from condo sales. Bremer provided $3.5 million in financing for the project, the suit said. A spokeswoman for Bremer declined to comment on the suit.
Chip Johnson, a principal at Turnstone, said being the receiver for both the hotel and condo buildings makes sense because the two properties share common areas and amenities.
The receivership does not include the Ivy Spa Club, a 17,000-square-foot facility that leases space in the hotel and has separate ownership.
Laux and Benson developed the hotel and condominium project after acquiring the Ivy Tower near the Minneapolis Convention Center in 2000. The tower and a new 19-story building are the hotel portion of the development. A new 26-story building houses the condo units.
The project has struggled from the start. Completed behind schedule, the hotel opened early last year as the economic downturn hit the travel industry. Likewise the condos, most at prices of more than $1 million, came onto the market well after condo sales went into a tailspin. The developers are still in mediation to settle a contract dispute with Bloomington-based Bor-Son Construction, the property's general contractor.
