Court grants county green light to go after Pacificland assets
EL CENTRO — Less than two weeks after the county initiated legal action against Pacificland International Development Inc., following the developer’s default on a $2 million loan, a Superior Court judge has granted the county a temporary order that allows it to begin the process to take possession of assets used as a collateral for that loan.
On May 11 the county filed a legal complaint against Pacificland International Development Inc. and its Chief Executive James Lo after the developer failed to make the first payment to the county on a $2 million loan which came out of the Community Benefit Program.
The deadline to make the first payment was April 1.
In its original filing, the county asked Imperial County Superior Court to take action to allow the county to take possession of the collateral, which is still being operated by Pacificland International Development.
“By operating the businesses on the property and diverting all of the property’s income and revenues without repaying Plaintiff’s (County) loans, Pacificland is depleting and depreciating Plaintiff’s interest in the property,” the county’s lead attorneys in the lawsuit Eric Pezold and Lyndsey Torp from Costa Mesa-based Snell and Wilmer Law Offices wrote in the opening complaint.
“Moreover, Pacificland has failed to pay property taxes in the amount of $252,700 and failed to pay contractors for improvements in the property of approximately $354,000, which has resulted in approximately $607,000 of liens being placed on the property.”
On May 24, Judge Jeffrey Jones granted the county’s request to appoint a receiver to take possession and control of the real and personal property owned by Pacificland in Imperial Center in Heber. The property consists of an Arco gas station, convenience store, event center, retail store and four restaurants.
In his order, Judge Jones appointed Los Angeles-based court receiver Kevin Singer to oversee the process in which he will acquire record books, contracts, banking records and other documentation pertaining assets.
The court also granted a temporary restraining order to “relinquish and turn over immediately posses- sion to the Receiver, all assets of the Defendants comprising the Receivership Estate, both real and personal property, tangible and intangible property including but not limited to electronic files and records.”
Judge Jones also ordered Lo to appear before the court on June 22.
The court decision was made despite opposition from the attorney representing Pacificland and Lo, Ping Shen.
In his opposition filing to the request made by the county, Shen asked to court to deny the appointment of a receiver because his client as of May 21 had already secured a $2.5 million loan, which is enough to pay back the county the $2 million it loaned to Lo, in addition to interest and late fees. He said the default on the loan with the county was a result of the developer temporary shortage of cash.
Shen told the court Lo has invested more than $80 million in the property and is expected to sell the land to a new investor for an excess of $100 million.
“The net value of Defendant (Lo) is far more than the loans, liens against the defendant, there is no imminent risk to any creditors,” Shen wrote on the filed opposition to the county’s application for appointment of a receiver. “It will cause irreparable harm to the Defendant (Lo) if any receiver is appointed and harm the Defendant’s ability to repay all the loan in the future.”
The acquisition of the loan by Pacificland wasn’t enough to sway the judge and it remains unclear whether Lo will repay the money owed the county. A source told the Imperial Valley Press the receiver is already working with the developer to take possession of the pertinent assets.
In the initial lawsuit the county filed on May 11, the county was not only seeking to get the $2.2 million associated with the Community Benefit loan but also to accelerate payment of the remaining balance of a previous infrastructure loan of $2 million.
The infrastructure loan was part of an agreement signed in 2009. In it, the County agreed to act as the fiscal agent for the construction of the infrastructure improvements needed to complete the first phase of Imperial Center. Pacificland had agreed to make reimbursement payments to the county as more developers began to build in the area taking advantage of the infrastructure that was put in place at the site.
The total amount for which the county seeks relief is just under $4.3 million.
The $2 million loan for Pacificland International was unanimously approved by the Board of Supervisors on April 4, 2017. Lo asked the board in November to extend the payment deadline to April 1, but the failure to make that payment resulted in the filing of the complaint on May 11.