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Published: Sunday, 6/29/2014 - Updated: 2 months ago

Ex-developer Dillin works to sort out tangled finances in Texas as he keeps tabs on Levis Commons

BY JON CHAVEZ
BLADE BUSINESS WRITER
Nearly 10 years ago, Larry Dillin was a highly sought-after developer as his project, Levis Commons in Perrysburg, shown in 2011, was an immediate success. Nearly 10 years ago, Larry Dillin was a highly sought-after developer as his project, Levis Commons in Perrysburg, shown in 2011, was an immediate success.
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Nearly 10 years ago, developer Larry Dillin was the toast of northwest Ohio.

His Levis Commons shopping-living-entertainment complex opened in Perrysburg and was an immediate success and Mr. Dillin, head of his fast-growing Dillin Corp. development company, became a highly sought visionary for a variety of projects in the Toledo area.

But that was then.

Late last month in Austin, where the 58-year-old developer now resides, Mr. Dillin filed for Chapter 7 personal bankruptcy protection.

In his petition, filed May 27 in the U.S. Bankruptcy Court’s Western District of Texas, the former Perrysburg resident cited assets of $1.18 million. Liabilities totaled more than $139 million.

Of those liabilities, about $111.7 million are secured claims from loans, initiated by Mr. Dillin or companies he established, that mostly are not in default.

A $56 million loan, for example, for the Town Center section of Levis Commons is being paid from rents from nearly 70 tenants in that primary section for retail.

An additional $27 million in unsecured debt has been paid or a deal to resolve it has been negotiated. It includes a $21 million loan to build the Hilton Garden Inn hotel that has been paid, but the lender, Huntington National Bank, has not provided a release on the loan because it has another lien against Mr. Dillin for a different property.

“Out of all the commercial loans I put together for Levis Commons, there was a total of about $214 million borrowed,” Mr. Dillin said last week while reflecting on his efforts to bring the complex to fruition.

“Out of that $214 million, at least $201 million has been fully repaid, was never in trouble, or there was a settlement negotiated for it,” Mr. Dillin said.

The only large outstanding debt, he said, is $12.4 million — part of the secured claims — borrowed from Huntington bank to construct the Orleans Building, which is situated across from the Hilton Garden Inn hotel that anchored Levis Common’s 2007 second phase.

The loan for the Orleans Building, which has six tenants, has been a bear-trap for Mr. Dillin and became the impetus for bankruptcy.

Mr. Dillin currently has no job or income in Austin, has curtailed potential work opportunities, and even shut down a fledgling business before it could get going, all in order to embrace bankruptcy.

The entire process could take three or four months if there are no ensuing complications, predicted Gordon Barry, a Toledo bankruptcy attorney.

“I did not have a lot of options … and I didn’t want to undermine any business relationships,” Mr. Dillin said of his Chapter 7 filing.

Because of his reputation as the man behind Levis Commons, Mr. Dillin still gets approached for consulting and development opportunities.

Larry Dillin, at far right with a shovel, is still sought after in his new community in Austin. He became involved in a project in nearby  New Braunfels, Texas, after a friend became ill. But, he said, his financial situation limits his involvement. Larry Dillin, at far right with a shovel, is still sought after in his new community in Austin. He became involved in a project in nearby New Braunfels, Texas, after a friend became ill. But, he said, his financial situation limits his involvement.
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Groups in Austin and surrounding Texas communities have asked Mr. Dillin to help develop mixed-used retail and living complexes or senior living communities — a fast-growing segment in Texas.

But Mr. Dillin said he has needed to tell those callers that he’s unavailable because of his bankruptcy.

“I’m delighted that I still get phone calls, but I don’t want anyone else to get tangled up in the mess I’m involved with,” he said.

Fewer links

Before 2012, Mr. Dillin still had several financial ties to Levis Commons, including a 16 percent stake in the Town Center’s retail phase, a nearly 6 percent ownership in the complex’s apartment and condo phase, and a small stake in the Hilton Garden Inn property.

But the Town Center and the apartment/​condos stakes, along with vacant land that Mr. Dillin owned but signed over to Fifth Third Bank in exchange for forgiveness of unpaid loans, are gone. His hotel partner now owns 100 percent of the lodging property.

The only ties Mr. Dillin has to the complex, located at State Rt. 25 and I-475/​U.S. 23, are an unpaid seat on Levis Commons’ architectural review committee and his financial obligation to the Orleans Building loan, which remains in legal limbo.

Though his name will remain forever attached to Levis Commons, Mr. Dillin’s personal financial troubles appear to have had little effect on the success of the complex.

“His personal bankruptcy doesn’t mean anything to me. It has made no difference in the ownership or management of the center,” said Charlene Scott, the Town Center’s general manager and an executive with Hill Partners Inc., which is a one-third owner and manager of the retail section of the complex.

Ms. Scott says Mr. Dillin’s bankruptcy and his financial glitch with the Orleans Building property have delayed development of some remaining undeveloped properties on the 400 total acres that make up Levis Commons.

“It’s tied up in litigation. But once that gets resolved … there’s going to be bidders galore for all that land,” Ms. Scott said. “But what is here now is successful enough that it’s bringing people in and we’re thriving.”

New tenants

One of the Town Center’s staple tenants, Bar Louie, recently completed a 1,400-square-foot addition. The retail section welcomed apparel retailer White House/​Black Market in May and will add Flip Side, which is a burger-shake-craft beer restaurant, this summer.

“Larry had a good idea. It is still a good idea, a viable idea,” Ms. Scott said. “But when banks battle each other it delays things.”

Delayed, yes, but dampened interest in Levis Commons?

Definitely not.

Germano Bressan, a commercial real estate agent with Signature Associates’ Toledo office, which is marketing land at Levis Commons, said one of the last large pieces of land at Levis Commons, a 9.75-acre parcel controlled by Fifth Third, was sold Friday.

The new owners, a hotel development group, plan to build a Holiday Inn Express on the property.

“Out of sight, out of mind. I don’t think people even connect Levis with Larry. He’s been gone long enough, almost five years,” Mr. Bressan said.

“People still talk about [Mr. Dillin’s situation]. He overextended himself,” Mr. Bressan said. “But the only thing it has done is it dramatically reduced the prices of the land. When the banks took them back they reduced the price of the properties he had, and the buyers benefited from this.”

No stigma

Mr. Bressan said Mr. Dillin’s financial woes have not attached any stigma to Levis Commons. In fact, three other offers came in for the land on which the hotel will be built.

Additionally, demand for land in and around Levis Commons hasn’t lessened, Mr. Bressan said, citing Costco, which is trying to develop a store on the north side of I-475/​U.S. 23 within sight of Levis Commons.

Brian McMahon, president of Danberry National Ltd., a commercial real estate firm, said people in the commercial real estate industry understand that what happened to Mr. Dillin wasn’t entirely his fault.

“Larry was dealing with the challenges of a shrinking retail market and the competition of General Growth [developer of the Shops at Fallen Timbers mall] and a much more challenged economy. What I think came out of that was Larry was holding a substantial inventory of vacant land and buildings and his situation was the net result of the cost of carrying all that debt,” Mr. McMahon said.

“This wasn’t green farmland either. It was fully improved land at Levis with big taxes and big assessments,” Mr. McMahon said. “You just don’t have the reserves to sustain that, and you’re going to end up having to deal with the banks.

That’s one of the dynamics that brought Larry down,” he said.

Mr. McMahon said he thinks it is too early to tell if Mr. Dillin’s bankruptcy and his near-disassociation with Levis Commons will affect the complex.

The immediate result, Mr. McMahon said, is that it has left the banks — Fifth Third, Huntington, and TriStates Capital of Pittsburgh — in de facto control of nearly everything but the Town Center.

“In the past, Larry was the captain of the ship. He was at the tiller, so to speak,” Mr. McMahon said. “I don’t know who’s going to fill that role. I don’t know who’s going to be in charge going forward.

“The area is coming back, but who’s going to develop the land around it? Who are the developers, because there aren’t a lot of local developers left,” he said.

Mr. McMahon said it may be up to the political leadership of Perrysburg to shepherd Levis Commons.

Staying involved

Brody Walters, Perrysburg’s zoning and planning administrator, said the city is concerned about the future of Levis Commons, which is why it asked Mr. Dillin to remain on the architectural review committee.

The committee reviews all changes to the complex, from sign or awning changes to plans to develop land.

“I explained to Larry that the vision and participation he had in Levis Commons was phenomenal. I told him I’d like him to stay on the committee,” Mr. Walters said. “His heart is in the right place.”

Mr. Walters said there was some concern after learning of Mr. Dillin’s bankruptcy filing that he could legally lose his status as Levis Commons’ “master developer.”

But that designation doesn’t seem to be in jeopardy, the zoning administrator said.

And though Mr. Dillin could be bitter about how his association with Levis Commons has gone, Mr. Dillin said he still very much wants the complex to succeed.

“It would be easy to be angered and walk away. But from what I can tell, he’s as invested as he once was,” Mr. Walters said.

Mr. Dillin said he “is very thankful” Perrysburg still wants him to help oversee Levis Commons.

“I feel very good about what I accomplished there. I feel good about that, and no one can take that away from me,” he said.

The future

His big regret is the Orleans Building problem.

The 61,500 square-foot building, plus an accompanying 8.95 acres has been tangled in court since 2010. It remains under the control of Steve Skutch of the Skutch Co. Ltd., a court-ordered receiver.

Huntington obtained a judgment against Mr. Dillin for the defaulted loan, but it has never taken possession of the property.

The court ordered the property to be sold at auction last September, but no one made the minimum $3.6 million bid on it.

Because Huntington will not take possession of the Orleans Building, Mr. Dillin said he saw no way out but Chapter 7.

“I tried everything I know how to do. I was at the point where I went to my attorneys and said, ‘I can’t do any more, it’s time to file,’ ” Mr. Dillin said.

Once the bankruptcy proceeding is completed, Mr. Dillin said he’ll see what the future holds.

“I don’t have the opportunity to own anything again. But I have lots of energy and ideas, and some day I’d like to be able to retire,” he said.

There are possibilities in Austin, a place he landed in 2012 after helping complete a development project at an airport in nearby New Braunfels, Texas, at the request of a friend who became ill.

“I didn’t want to go through this, but I have gone through this,” Mr. Dillin said. “And I’m going to start over, and it’ll be good.”

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.



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