Court Says Lender Must Lend To Big Destiny USA Project
Banks in New York state may have some new worries about lending to projects they think are having difficulties. A state appeals court has ordered Citigroup Global Markets Realty Corp. to resume funding on the $330-million Destiny USA project, near Syracuse. The court said the developer is entitled to a preliminary injunction in its breach-of contract suit against the bank because the project is “unique.”
The $155-million Citigroup loan is one of three funding sources for the first phase of the project, which involves construction of an 800,000-sq-ft shopping center/tourist destination and related facilities. The other funding sources are Destiny Holdings LLC and proceeds from bonds issued by the City of Syracuse Industrial Development Agency. Under the funding agreement reached in early 2007, Citigroup was to act as agent for all funding sources and review advance requests. It could deny an advance if it determined a “deficiency” existed, as defined in the contract. It determined there were deficiencies with respect to tenant improvement costs amounting to $15 million and declared the loan in default even though the project was 90% completed.