The Sanctuary, "a private, gated, master-planned residential community located on 67 wooded acres" in Houston, Texas, is far beyond the means of most of the people who are reading these words, but it was the pride and joy of its developer, David Wallace of the Wallace-Bajjali firm.
In a news release dated November 3, 2008, Wallace said, "“Demand for lots is already extraordinary,This project boasts a fantastic location, an exceptional master plan, easy access to major highways and convenient shopping, as well as close proximity to Houston Intercontinental Airport.”
From the description of the homes, it was no wonder there was great interest:
The Sanctuary will offer residents 24-hour guarded/gated access to an estate lot community that consists of 144 over-sized heavily wooded home sites, seven amenity parks with architectural design provided by Texas Four Architects, pedestrian walkways and trails, privacy fencing and strict deed restrictions and architectural guidelines.
And today, more than five years later, the homes in The Sanctuary are being filled.
The project was done by Wallace-Bajjali through one of its subsidiary companies, WB Sanctuary Development Partners LP. Slightly more than two years after David Wallace touted his development (and his developing abilities) in that news release, on December 6, 2010, citing more than $12 million worth of debt, WB Sanctuary Partners LP filed for bankruptcy.
The following year, D. R. Horton, a construction firm, bought the development out of bankruptcy court. David Wallace and his partner, Costa Bajjali, are on to other projects, including the development of the tornado-stricken area of Joplin.
The WB Sanctuary Development Partners LP bankruptcy is one of at least three that have been filed by companies owned by Joplin's master developers.
Though City Manager Mark Rohr told the Joplin Globe that he and the City Council were fully aware of the SEC investigation, nothing in the three paragraphs in which the Globe has addressed Wallace-Bajjali’s problems mentions anything about the bankruptcies that have surrounded the firm.
The following passage is taken from the November 28, 2013, Turner Report:
Though the Wallace-Bajjali firm was not the name on the filing, Joplin’s master developers filed for bankruptcy January 1, 2013, and are more than $6 million in debt, according to documents filed in the U. S. Bankruptcy Court for the Southern District of Texas.
River Square Center Partners, the company that filed for bankruptcy, shares the same address and the bankruptcy petition was signed by Costa Bajjali. The River Square Center complex, which is operated by Wallace-Bajjali Development Partners, filed for Chapter 11 bankruptcy after defaulting on a $6,527,321.10 debt to Wells Fargo Bank, according to the court documents. The events leading to the bankruptcy were described in court documents:
The Debtor is the owner of a three-story 92,874-square-foot former warehouse building located at 215 2nd Street & 217 Mary Avenue in Waco, Texas, that has been converted to retail, restaurant, and office space and is currently considered a focal point for night life in downtown Waco.
The project is 93.0% leased to 17 tenants and has adequate cash flow to service principal, interest, taxes, and insurance on an on-going basis. The building was purchased by the Debtor in 2007 and renovated shortly thereafter.
Despite what appeared to be a good faith transaction, the seller of the Property used his relationships with existing tenants to lure them into another building nearby that offered below market rates due to redevelopment incentives provided by the City of Waco. This resulted in tenant rollover of of over 50% within a 24-month period and lowered overall rents generally – the majority of re-tenanting income fell into 2010 and 2011.
Since the Debtor did not have adequate funds to cover the unexpected releasing costs, the principals covered the majority of these costs out-of-pocket. By late 2011, however, the cumulative effect of the drain caused the Debtor to be late on a couple of payments which resulted in the assessment of default interest and late fees.
Even though the Debtor subsequently made payments in full and on time, LNR Partners (as special servicer for the Lender) applied the payments to default interest and late fees which left the loan constantly in default and subject to ever increasing late charges. In late 2012, significant negotiations with the special servicer of the Secured Debt were had in order to resolve the outstanding defaults.
The Debtor believed that a financial agreement had been reached, however the special servicer instead posted the Property for foreclosure for December 2012. In order to preserve the value of the Property, the Debtor transferred approximately $290,000.00 toward payment of the Debt. The December foreclosure was passed with this payment, however the Property was once again posted for a January 2013 foreclosure. The Debtor did not have the funds to again meet the financial demands of the special servicer and this Chapter 11 was filed in an attempt to preserve the equity in the Property and to address all the Debtor’s financial obligations.
And from the July 11, 2013, Turner Report:
The Texas company handling the $800 million development project was involved in yet another bankruptcy, according to documents filed in U. S. Bankruptcy Court for the Southern District of Texas.
The bankruptcy was not filed by Wallace-Bajjali Development Partners, but did list Wallace-Bajjali as a co-debtor. The Chapter 11 bankruptcy was filed Sept. 7, 2010, by SWB Waco SH LP and as in the Jan. 1, 2013 bankruptcy mentioned in the earlier Turner Report post, was filed to keep a bank from foreclosing on a part of the Wallace-Bajjali firm's Waco development project.
From the bankruptcy court documents:
The bankruptcy was filed to keep Sterling Bank from foreclosing on the property when SWB Waco SH LP could not make payments on a loan. Court documents indicate the company owed Sterling Bank $18 million and combined with other debtors listed, the debt was far in excess of $20 million.
The companies involved in the Waco development project and the two bankruptcies are both located in Sugar Land, Texas, a Houston suburb. Wallace-Bajjali co-partner David Wallace (pictured) was once the mayor of that community.
In the 2010 bankruptcy filing, the city, county, and school district were among the creditors listed, the city of Waco for $117,684, McLennan County for $66,323, and Waco ISD for $204,517.
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The bankruptcy was not filed by Wallace-Bajjali Development Partners, but did list Wallace-Bajjali as a co-debtor. The Chapter 11 bankruptcy was filed Sept. 7, 2010, by SWB Waco SH LP and as in the Jan. 1, 2013 bankruptcy mentioned in the earlier Turner Report post, was filed to keep a bank from foreclosing on a part of the Wallace-Bajjali firm's Waco development project.
From the bankruptcy court documents:
The debtor owns a recently constructed 375-bed apartment complex, part of a redevelopment project of the downtown Waco area and serves primarily as an off-campus student housing facility at Baylor University.
The bankruptcy was filed to keep Sterling Bank from foreclosing on the property when SWB Waco SH LP could not make payments on a loan. Court documents indicate the company owed Sterling Bank $18 million and combined with other debtors listed, the debt was far in excess of $20 million.
The companies involved in the Waco development project and the two bankruptcies are both located in Sugar Land, Texas, a Houston suburb. Wallace-Bajjali co-partner David Wallace (pictured) was once the mayor of that community.
In the 2010 bankruptcy filing, the city, county, and school district were among the creditors listed, the city of Waco for $117,684, McLennan County for $66,323, and Waco ISD for $204,517.
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The Turner Report does not cover the world, but it often runs circles around the Globe. Consider taking a voluntary subscription and help Joplin's alternative news source grow.
5 comments:
I fail to see a problem here. The City of Joplin wanted pie in the sky and this guy was very willing to sell it to them. It is a good con and he will do well personally on the buyout.sedeomb
Joplin lost 15 million on a derivative investing scheme a few years ago but how could anything go wrong this time with the 3 wise monkeys monitoring the project? The globe sees no evil, the chief hears no evil, and the city manager cant speak because his attorney wont let him.
Maybe when they find a new city manager they will get one that has been fired 3 times because failure seems to be a qualification for hiring here
You have no idea of the skills possessed by David Wallace in the ability to separate people from their money, file BK to get out of his commitments and take the money to the bank. He recently decided banging one of his employees was a better gig than being married, so he got divorced. There is no limit to this guy, Joplin and Amarillo are screwed.
This is how David Wallace makes his money
1. Uses his magic powers of feeding idiots bullshit until they sign on the dotted line.
2. Stringing them along until they demand their money back, then either paying them with a different group of idiots money or filing bankruptcy
3. When not stealing others money, he spends his time getting caught banging his employees and getting divorced.
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