Western Kentucky bank files suit to foreclose Versailles Center

Weeds grew in front of the former site of a flea market and antique center at Versailles Center. A Western Kentucky bank has filed suit to foreclose on the property. This photo was taken on Thursday, July 5, 2012. Photo by Greg Kocher | Staff
Weeds grew in front of the former site of a flea market and antique center at Versailles Center. A Western Kentucky bank has filed suit to foreclose on the property. This photo was taken on Thursday, July 5, 2012. Photo by Greg Kocher | Staff Lexington Herald-Leader

VERSAILLES — The same Western Kentucky bank that filed suit to foreclose on the Turfland Mall property in Lexington also has filed suit seeking foreclosure on Versailles Center.

The lawsuit was filed by Heritage Bank of Hopkinsville and names Rubloff Versailles LLC and Rubloff employees Gerald Weber Jr., Ronald Swen son and Robert Brownson. The three employees were also named in the Turfland Mall suit filed June 8, the same day that the Woodford suit was filed.

The suit alleges that Rubloff owes $6.9 million in unpaid principal, accrued interest, late fees and reimbursement for delinquent property taxes. (The bank says it paid $30,709 in delinquent state and county taxes and $1,817 in delinquent city taxes.) The $6.9 million is accumulating interest at the rate of $1,109 a day, according to the lawsuit.

Rubloff representatives could not be reached for comment Thursday.

"They're just horrible business people," Versailles Mayor Fred Siegelman said. "They haven't returned my calls in over six months."

Versailles Center, north of U.S. 60 and the U.S. 60 Bypass, was once home to Versailles Flea and Antique Mall, Radio Shack, Sweet Potatoes restaurant, Slone's Market, Rite Aid Drugs, Rivard Fine Jewelry and other retailers.

Over the last decade, as stores left the center, the property became a source of embarrassment to city officials. There are no stores there now, and weeds choked the stretch of the center that once included Sweet Potatoes.

Over the last dozen years, there were plans to turn the strip mall into a development with multistory, mixed-use buildings that would offer both shopping and residential spaces. There also were plans to expand the center to the east with other stores.

That proposed expansion spurred Woodford County and Versailles to look for new ways to preserve its downtown and agricultural heritage. Local officials settled on a "new urban code" of regulations that focused on pedestrians, not cars, and that set new design standards for shopping centers and subdivisions.

But the Versailles Center property continued to languish, and in 2006 Versailles City Council voted to designate the property as "blighted." The city even sought to rezone the property from commercial to agricultural uses, but dropped that effort when Rubloff and its mortgage lender at the time sued.

By 2008, things were looking up again as the city approved a rezoning that opened the door for a Lowe's home-improvement store, plus a gas station, restaurants, pharmacy, bank and other retail stores. But by December 2008, in the wake of the tanking economy, Lowe's decided not to move forward with a new store in Versailles.

The roller coaster was on the upswing again in early 2010, when plans were announced for a new $29 million development called The Paddocks of Woodford that included a motel, office space and mixed-use space for retail stores and restaurants.

Rubloff sought $9.7 million in tax-increment financing to pay for sewer and water line expansions, utility line relocations, internal roads, sidewalks and detention basins.

Under the arrangement, the money would be repaid with new tax money generated by the development. The state granted preliminary approval in October 2010.

But city officials said Rubloff did not follow through, and hopes for renewal of the center were dashed once again.

Today, Versailles Center is listed among the city's blighted properties. The city council approved a "blighted properties tax" in November that is 14 times higher than the normal rate of 5.4 cents per $100 of assessed property. The tax is designed to goad property owners to make improvements or else face a higher tax bill.

The suit also seeks to void a 2001 "restrictive covenant agreement" between Rubloff and Kmart Corp., which has a store on the south side of U.S. 60 in Versailles. Kmart was initially the anchor store in Versailles Center, but the retail store moved to a new location down the road. Under the restrictive covenant, Rubloff agreed that a Wal-Mart, Sam's Club or any other store affiliated with Wal-Mart Corp. would not locate in the Versailles Center property.

That portion of the suit appears to be moot because Kmart released Rubloff from that restriction in a document signed in March and filed June 29 in the Woodford County Clerk's Office.

In the Turfland Mall suit filed in Fayette County, Heritage Bank says Rubloff owes $15.1 million in unpaid principal, accrued interest and late fees.

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