Note:  Two days ago I posted info about the Spokane Journal of Business article about Riverstone, but the links will only let people with subscriptions connect to the article.  This morning we received permission from the Journal to copy and post the article in its entirety. Click on “more”, below, to read the whole thing:

The Regal Cinemas complex is one of three buildings that Riverstone developers have surrendered. —Staff photo by Mike McLean

October 06, 2011
Lender takes part of Riverstone
Trustee sale is scheduled for December; $14 million owed
By Mike McLean
Of the Journal of Business

Riverstone developers have surrendered to a Seattle-based lender their interest in a major portion of the initial phase of retail buildings in the big North Idaho development, including the structure housing the cinema complex and the multitenant buildings that flank it.

The lender, Washington Capital Management, has scheduled a trustee sale to clear the title to the property, which has an outstanding loan balance of $14 million plus daily interest of $3,600 since Aug. 1, says Coeur d’Alene attorney John Magnuson, who represents MIF Riverstone LLC.

MIF Riverstone, which has assumed the loan, is a separate legal entity managed by Washington Capital Management, Magnuson says.

Meantime, John Stone, the man behind the 160-acre mixed-use project along the Spokane River northwest of downtown Coeur d’Alene, says Riverstone is rising out of tough economic times and has four active projects under development. The most recent of those is a $1 million-plus, 6,000-square-foot building that will house Riverstone Holdings LLC and Spokane-based technology company Pacinian Corp., Stone says.

The trustee sale is scheduled for 10 a.m. Dec. 20 at the First American Title Co. office, at 1866 N. Lakewood Drive, which is located in the office-park area at the southwest portion of Riverstone.

A legal notice about the sale lists the property’s address as 2416 N. Old Mill Loop, which is the address for the Regal Cinemas Riverstone Stadium 14 theater complex in the Village at Riverstone, the retail heart of the development.

Magnuson says the sale will include two retail buildings adjacent to the theater complex, which the developer, Riverstone Center LLC, one of Riverstone’s development companies, turned over in lieu of foreclosure.

One structure near the northwest corner of the complex houses an Azteca Southwest Grill and an Essential Home Furnishings. A Cold Stone Creamery outlet, a San Francisco Sourdough restaurant, The Mill Public House restaurant and pub, and a Starbucks Corp. outlet occupy the other structure.

Magnuson says the planned sale is no reflection on the tenants, who all are financially stable.

“All tenants are working cooperatively,” he says. “The borrower apparently had (performance-related) problems with other properties, but not with this one.”

Magnuson says MIF Riverstone likely will end up with the property and a clear title that will free it from any subordinate liens and obligations tied to the borrower, including a judgment of more than $600,000 for attorney fees awarded to representatives of Barnes & Noble Inc.

Riverstone developers sued New York-based Barnes & Noble unsuccessfully for breach of contract when the bookseller opted out of a lease agreement in late 2008, just as the developer completed construction of a $9 million building shell with 28,000 square feet of ground-floor space for the retailer.

U.S. District Court Judge Edward Shea dismissed the suit and awarded attorney fees to Barnes & Noble. Riverstone has appealed the judgment to the 9th U.S. Circuit Court of Appeals.

The building that was the subject of the suit, prominently located at the northwest corner of Main Street and Beebe Boulevard in the Village at Riverstone, remains vacant.

Riverstone’s woes continued with the collapse of the residential condominium market. The company turned over to lenders more than half of the 133 condominium units it developed in the Village at Riverstone, which sold most of them at bargain prices in 2010. A banner at Riverstone now says the condos are sold out.

Less than half of the 210,000 square feet of retail space in the Village at Riverstone is occupied. Stone says he’s heartened, though, by ongoing construction in the overall development.

“We have 40 acres left to develop, and I’m encouraged by activity and interest,” he says. “Four projects are under way in these difficult times. I feel good about it.”

In one project, Advanced Dermatology & Skin Surgery PLLC, of Spokane Valley, is constructing a $1.2 million, 8,000-square-foot medical office building, which it will own, at 1700 W. Riverside Drive. Yost, Mooney & Pugh Contractors Inc., of Spokane, is the contractor on the project, which is expected to be completed this fall.

Adjacent to that project, Riverstone Holdings is constructing its office building just southeast of the 6-acre pool and fountain in the Riverstone Park section of the development. Stone, who stepped down last year from Spokane-based SRM Development LLC, formed Riverstone Holdings to concentrate solely on development activities there. Riverstone Center LLC ceased operating in Idaho in July, he says.

Pacinian, which develops technology that makes touch screens on electronic devices simulate the feel of input devices with buttons and keys, will occupy 4,000 square feet in  that building, which is expected to be completed before the end of the year, Stone says.

In the northwest section of Riverstone, Baker Construction and Development Inc., of Spokane, recently started work on a $1.5 million, 10,000-square-foot office building that it will own and that the FBI plans to lease, Stone says.

Construction also is well under way on the $7 million, 50-unit Riverstone West Apartments project, which Whitewater Creek Inc., of Hayden, is developing on the west edge of Riverstone, Stone says. The project is funded in part through federal tax credits, and rents are expected to range from $360 to $640.

Separately, Pinkerton Retirement Specialists LLC has bought land on John Loop, an interior road just northwest of the pond in Riverstone Park, where it has tentative plans to build a 10,000-square-foot, $4 million office building.