The city of Des Moines will likely purchase a newly constructed downtown parking garage at the center of two court proceedings after the structure’s developers declined to oppose the proposed sale, papers filed in Polk County District Court indicate.

In September, Bankers Trust Co. filed a foreclosure petition in Polk County court alleging the project’s developers – 5th and Walnut Parking Garage LLC and Justin Mandelbaum and Sean Mandelbaum – were in default of a construction loan that was due to be paid off on Aug. 31. 

The city of Des Moines, which had a development agreement with the garage developers, recently offered Bankers Trust about $40.6 million for the garage. Both the bank and city asked the court to quickly set a hearing on the proposed sale so that the Des Moines City Council could vote on the purchase at its Jan. 25 meeting. 

The developers, in court papers filed by their attorney Todd Lantz, wrote that they did not “have a legal basis to object to the proposed transaction.” The developers also wrote that they expected the foreclosure case to be dismissed and their liability in the project “extinguished.”

The developers also wrote that their response should not affect their counterclaims against the city.

In September, the Mandelbaums filed a counterclaim against the city alleging Des Moines reneged on its development agreement with them. The lawsuit seeks $101 million in damages.

The city asked the court to dismiss the counterclaim. Earlier this month, the court denied the city’s request. 

The parking garage was part of a $200 million multipiece downtown development planned by the Mandelbaums. The development also was to include a 40-story tower with luxury apartments and a hotel, and a five-story commercial building with a multiscreen movie theater and restaurant.

The Des Moines council in 2015 selected Mandelbaum Properties as the preferred developer of the then-city-owned land located east of Fifth Avenue between Walnut Street and Court Avenue. 5th and Walnut Parking Garage, managed by the Mandelbaums, purchased the property in 2018.

A hearing on the proposed sale of the parking to the city has not yet been set.

Related articles:
Des Moines offers to buy parking garage property in foreclosure
Developers of the Fifth seek $101 million in counterclaim against city
Bankers Trust files foreclosure petition on parking garage