The City of Evansville has filed foreclosure notice against a prominent developer's property on Main Street. According to records obtained by Eyewitness News, the City loaned $460,000 to The Kunkel Group for its Meridian Plaza project. Nearly eight years later, the loans have yet to be paid off, according to court records.
In the foreclosure notice filed in Vanderburgh County Circuit Court Wednesday afternoon, the City argues the Kunkel Group was deceitful in its practices and delinquent in its payments. The City demands to be paid back what is owed and for the foreclosure of the property, according to court records.
Located at 300 Main St., Meridian Plaza features a series of condos and commercial space. In 2006, the City issued two loans to The Kunkel Group. The first loan, considered a 'Housing Project Loan,' was for $350,000. The second loan, considered an 'Exterior Improvement Loan,' was for $150,000. The principal balance of the loans were both subject to interest, according to the development agreement. Since the Kunkel Group did not pay off the Housing Project Loan within two years of the developer agreement, it was converted to a five-year term loan, according to court records. In June 2009, Kunkel delivered a promissory note for the principal amount. However, Kunkel failed to re-pay the promissory note, according to the notice.
The notice also stated Kunkel ran into trouble with the second loan.
"Kunkel Group has failed to make regular payments on the Exterior Improvement Loan and as of December 20, 2013, all principal and accrued interest under the [loan] was due and payable," the notice stated.
The loans were issued in December 2006 and went toward the mortgage that Kunkel's submitted to the City in June 2007.
Nearly eight years later, Kunkel still owes nearly $530,000 on the loans after interest, according to court records. That's more than the original loan amount. The City's allegations do not just pertain to the loans.
In the notice, the City stated the Kunkel Group and owner Ben Kunkel, breached the contract, made false representations, concealed material facts and engaged in fraud.
After receiving the loans in December 2006, the Kunkel delivered to the City a copy of the mortgage. However, the City alleges The Kunkel Group was not the owner of the property at the time the mortgage was signed. According to court records, the City alleges the Kunkel Group transferred ownership of the Meridian Plaza property to another company owned by Ben Kunkel, Meridian Plaza of Evansville, Inc. In the notice, the City claims the Kunkel Group falsely claimed to have owned the property causing the City to approve the mortgage.
Clay Havill, an attorney who filed the notice on the behalf of the City, said he can't comment on active litigation. However, he did release a statement.
"A prior administration made loans to the Kunkel Group and those loans are in default. We owe it to the tax payers to collect what is owed," Havill stated.
The Kunkel Group did not respond to our calls for comment.
Copyright 2016 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.