Construction king Catalfumo defaults on Ocean Mall mortgage
Beleaguered construction mogul Dan Catalfumo is fending off a fresh set of real estate woes: The company he heads defaulted on its mortgage at Ocean Mall,
Riviera Beach’s economic crown jewel. Catalfumo’s company, which rents Ocean Mall from the city, also missed its annual lease payment to Riviera Beach.
And the city doesn’t just want its estimated $20,000 in lease money. There’s talk of dumping the highly contentious six-year-old lease and taking the property back.
“The lease the city got into with Catalfumo is a very bad lease which did not favor the city,”
said Riviera Beach City Council member Dawn Pardo.
“This is a great opportunity to get the lease back and do it right this time.”
Catalfumo did not respond to requests for comment.
The mortgage and lease payment default are the latest in a series of multimillion-dollar setbacks for the builder, whose commercial construction empire is buckling under the weight of a string of lawsuits.
In total, Catalfumo has been hit with lender suits seeking $100 million-plus in the past 2 1/2 years, several of them naming the builder personally.
It’s a sharp fall from grace for Catalfumo, easily the best-known - and most controversial - builder in Palm Beach County. The Port of Palm Beach and the West Palm Beach waterfront bear the Catalfumo imprint; so do several other landmark buildings. But along the way, he has left a trail of high-profile lawsuits against everyone from ex-fiancees to spurned business partners. As construction business has declined, his business interests have turned to specialty scooters and a boneless chicken wing operation.
Most recently, BankAtlantic won a $40.9 million judgment against Catalfumo companies. Prior to that, Seacoast National Bank secured a $32.6 million judgment against a Catalfumo company and foreclosed on its prime property at PGA Boulevard and Interstate 95.
The Ocean Mall mortgage default comes after Catalfumo borrowed millions to construct the ocean-side complex, which called for a hotel, retail outlets and community beach space. Lender Branch Banking & Trust last year transferred $11 million left on the loan to another company, GSF Trust. GSF contends it is owed a total $11.3 million for the defaulted loan.
Piling on to the legal troubles is Palm Beach County Property Appraiser Gary Nikolits, who is suing Catalfumo’s company over the taxable value of the Ocean Mall property. Nikolits insists it’s worth about $4 million. If he prevails, that presents Catalfumo’s company with a tax bill of an estimated $87,000.
Lease money owed the city is modest by comparison. But the April due date came and went without payment.
“It is just disappointing,” said Mayor Thomas Masters. “Very disappointing.”
At this point, there appears to be little appetite for renegotiating the amount owed.
“We have not discussed making any type of adjustment” to the payment, city spokesman William Jiles said. “That is not even being considered.”
Catalfumo did make previous annual lease payments, the most recent being roughly $14,000.
But the payment to the city is 4 percent of the net rent from retailers and restaurants at Ocean Mall, and here, too, there is trouble: A recent survey of businesses at the mall found roughly seven tenants, including a busy bar, restaurant and a surf shop. Pardo said she heard from would-be tenants that they had had trouble getting in touch with Catalfumo in recent months to negotiate new leases.
The Catalfumo family’s own retail venture, a specialty scooter concern, is gone from the mall. Cardboard boxes now litter the empty space. The scooters remain for sale online at the Catalfumo Construction web site.
Vacancies and mortgage defaults aren’t the only problems. Catalfumo, said Jiles, “not only defaulted on making the lease payment for this year, he also did not build the hotel which was to have been built by now. The old structure the 7-Eleven is in was supposed to be demolished and that didn’t happen.”
Ocean Mall redevelopment was already a lightning rod for criticism. Angry residents signed petitions in 2006 to repeal a city council vote giving Catalfumo’s group the go-ahead on their ambitious plan: a 99-year lease and a privately financed 28-story hotel and condo complex, as well as retail space.
A residents’ group sued the council after it refused to allow a citywide vote on hotel height and length of the lease. The city council sued the residents’ group, and Catalfumo hired a private detective firm to investigate the project’s opponents.
Eventually, both measures went on a ballot, and voters ushered in plans for no more than a 50-year lease and a height limit of five stories. Further, the entire episode energized voters, and in subsequent elections, several council members were ousted.
Even moving the existing Ocean Mall tenants has proved to be challenging - and expensive. Restaurateur Solomon Kedmi last year won a $1 million judgment against Catalfumo’s company for wrongful eviction from his Ocean Mall location. Kedmi says he was essentially forced by the builder to close his eatery of more than 30 years.
“We don’t know yet” how the mortgage default and its fallout will affect collecting on the judgment, Kedmi said.
As for the rents due the city, “The lender… has assured the city that as soon as it gets the rent information from Catalfumo, that they will be making a payment to the city to cover the annual rent due,” said the city’s attorney, Pamala Ryan.
The issue will be brought before the city council June 20. That’s when city staffers are expected to have pulled together possible actions the council can take. For now, “we are just weighing all our options,” Jiles said.