Bank sues Rottman Group over Atascadero projects
October 31, 2011
A Central Coast bank filed a lawsuit earlier this month against the Rottman Group for defaulting on a $6.2 million debt related to the Atascadero Annex project. [PacificCoastBusinessTimes]
On Oct. 18, Montecito Bank & Trust filed a lawsuit in Santa Barbara Superior Court alleging the Rottman Group is in default for $6.2 million in interest, fees, a line of credit and several loans taken on the Atascadero projects.
In 2006, the Rottman Group and Wal-Mart submitted a joint application to build retail complexes at the corner of El Camino Real and Del Rio Road where Wal-Mart is slated to build a 125,000 square-foot store.
Compass Real Estate, an arm of the Rottman Group, is planning to build a 116,000 square-foot retail center known as the Annex. In addition, the group is also slated to construct a work-force housing development, according to the group’s website.
The principles of Compass Real Estate are Steven Rottman, Maury Froman, and Keith Mathias.
Nevertheless, the Rottman Group and Wal-Mart are at an impasse over who will pay the $3 million to $4.5 million needed to build a freeway interchange required by the project’s environmental review.
In Oct. 2007, Wal-Mart agreed to pay for an environmental review and any improvements the EIR determined were necessary. Now, both developers are asking Atascadero to pay a portion of the required traffic mitigation costs.
This summer, both developers said they wanted a portion of the funding for the interchange to be taken from traffic impact fees the developers owe the city. City officials are expected to come to a decision over funding before the end of the year.
In its lawsuit, Montecito Bank & Trust contends the Rottman Group deceived them by using some of the same assets to secure loans for the Atascadero projects the group used as collateral for a $15.3 million loan from City National Bank, for a project called Oak Canyon Ranch in Calaveras County.
The lawsuit also alleges City National Bank foreclosed on the property further diminishing the Rottman Group’s creditworthiness.