More than half the condominiums in the Kimball House Square development on South Limestone will be sold in a foreclosure auction to attempt to raise $4 million owed by developer JTM Holdings to Bank of the Bluegrass.
Of 36 condominiums in the project, 19 that were never sold will be auctioned on site at 11 a.m. Jan. 17, along with 15 garages.
Kimball House Square, just north of the University of Kentucky campus, was one of the first major condominium projects in downtown Lexington, interpreted by many as a signal of developing interest in downtown living.
The $12.5 million makeover, announced in 2005, took five old attached Victorian houses on South Limestone that made up the Kimball House, which over the years was used as residences, a boardinghouse, a sorority house and a hotel.
As a condition for approval in the historic area, the city's Board of Architectural Review insisted that the 130-year-old houses be separated and the original portions of each remain intact. A new structure was built in the rear. Three houses on South Upper Street were also made part of the project that was started in 2006.
The 19 condos to be sold were valued by two court-appointed appraisers at $100,000 to $239,000; the garages were appraised at $20,000 each, for a total appraisal value of $3.516 million.
The sale will be conducted by Fayette County Master Commissioner James Frazier III in partnership with auctioneer Jim Halfhill of Halfhill Auction Group.
When first marketed, the 36 condos, ranging in size from 600 square feet to 1,500 square feet, were priced from $150,000 to $300,000.
In 2007, a series of liens was filed by D.S. Baesler Consulting and Construction for as much as $196,074 each. Liens by other contractors followed over the next few years.
JTM Holdings LLC is owned by Marcum King. Officers listed on the Secretary of State Web site for the company are W. Jefferson Cooper III, Todd Darland and William J. Cooper Jr.
King could not be reached for comment.
The 19 condos to be sold are all rented, Frazier said. The other 17 condos were previously sold and are not part of the foreclosure auction.
Three of those owners have contacted Frazier saying they thought they had also bought the garages they have been parking in, but which are listed to be auctioned.
"Their contracts each list a garage, that's true. But there was no legal description or legal document to give them ownership," Frazier said, adding he had no choice but to sell the garages.
The condos and garages will be sold two ways.
First, each will be sold individually. "That is to establish the highest and best price," Frazier said. "We will then sell all the units as a whole, and the highest cumulative bid will be the winning bid."
Bank of the Bluegrass, the primary lender, is the only bank that went to court to try to recover its money. The judge awarded a judgment of $4 million to the bank, which will receive the money from the auction.
Frazier said numerous other claims are pending against JTM Holdings. "When you take all the mechanics' liens, claims by other banks and subordinate lenders, the amount owed is roughly around $7 million," he said. "But those claims have not been adjudicated yet, so those entities can't get their money until they get a judgment in court."
To try and get the most money for each unit, the master commissioner has partnered with auctioneer Halfhill, who has advertised the sale on his Web site. Halfhill will conduct the auction.
State law was changed in 2011 to permit a master commissioner to utilize an auctioneer when the parties involved are receptive, Frazier said.
"In this instance, there are so many lenders involved that the banks got together and agreed to use an auctioneer, hoping to get a higher and better price for the units," he said.
Once the condos and garages are sold, all liens against them are lifted and owners get clear and free title.
Beverly Fortune: (859) 231-3251. Twitter: @BFortune2010