The developer of The Outpost, a mixed-use project once touted as a model for the development of a pedestrian-oriented district along Poway Road, insists the project will move forward to a successful completion despite filing for Chapter 11 bankruptcy in September.
Poway Property LP, the owner-developer of the project, filed for Chapter 11 bankruptcy protection on Sept. 13, listing debts of $22.9 million owed to 11 creditors, and liabilities to a 12th creditor undetermined, according to the bankruptcy filing. The largest amount, $21 million, is owed to UC Poway Post Holder, LLC.
The developer listed assets of $50,000 or less, according to the bankruptcy filing.
While the numbers may look daunting, an attorney for the developer, David Speckman of San Diego, said the developer is determined the project will move forward to completion.
“The project is going to be completed. The project is going to be back on track here shortly,” Speckman said Friday.
Currently, all work at the site, a 1.58-acre parcel at Poway Road about a block west of Community Road, has ceased, Speckman said. The developer plans to bring a new general contractor on board once work resumes.
The project is being developed by Poway Property LP and its general partner, Canadian-based Capexco. Trent Claughton, the company’s president and CEO, spoke at an August 2018 ground-breaking ceremony for The Outpost project, calling it a “milestone” that would help establish a walkable downtown district for the city.
To get the project back on track, the developer has proposed significant changes, Speckman said. Most notably, the developer wants to expand the residential portion of the mixed-use project.
The original plan approved by the city calls for 53 residential units, a food hall, a fitness center and two stories of underground parking. Under that plan, Speckman said residential would have accounted for 60 percent of the total 100,000 square feet, and commercial uses would have occupied 40 percent.
While Speckman could not provide a specific number of residential units called for in the new proposed plan, he said residential would now account for 82 percent of the square footage, with commercial making up 18 percent. It was not immediately clear whether the specific commercial uses would be changed or scaled back under the revised project. Total square footage would remain the same.
The developer hopes to bring the revised plan to the Poway City Council in November, Speckman said. “We believe the city would welcome” the new plan, he said.
“The owner-developer is committed to seeing the project completed,” Speckman said. Once the city signs off on the revised plan, he said, “Then it’s anticipated they’ll be able to arrange new financing to complete the project.”
Poway Mayor Steve Vaus, who also spoke at the 2018 ground-breaking ceremony, predicting the project will be “remembered for generations to come,” referred a request for comment to Rene Carmichael, a city spokeswoman.
Carmichael said the bankruptcy filing “is a concern,” and that city officials are monitoring the site during the construction hiatus for any potential health and safety issues. However, the city’s ability to intervene is limited because The Outpost is a private development.
Carmichael also said the proposed changes to the project are not far enough along in the city’s review process to be brought forward to the City Council for consideration at a meeting in November.
According to Speckman, the underground parking and foundation of the project are 80 percent completed, while the overall project is about 25 percent completed.
The project, the first of its kind to be approved under an update to the Poway Road Specific Plan, has suffered some setbacks since construction began. In 2019, the developer announced completion would be delayed by one year due to complications in removing a larger-than-anticipated amount of groundwater during excavation.
In July of this year, a sub-contractor on the project, PERI Formwork Systems Inc. filed a lawsuit against Poway Property LP, Capexco and the general contractor on the project, K.D Stahl Construction Group Inc., alleging it had not been paid for concrete formwork and shoring materials it had provided for the project.
Under Chapter 11 bankruptcy, a company can reorganize and restructure its debts while continuing its business operations.
Speckman said such reorganization is sometimes used by a company to “catch its breath,” so it can safeguard its project and pay its creditors in an orderly fashion.
In this case, he said, the developer needed a pause to create a plan to pay its debts, gain city approval of the proposed changes, secure new financing and finish the project.
“We’re making good progress on that goal,” he said.