The Bank of Smithtown has begun foreclosure proceedings against the owners of the Bowl 58 bowling center on Main Road in Riverhead, saying owners Joe Albanese and Robert Bunt have defaulted on more than $6 million in loans.
In addition, the state Supreme Court has appointed a receiver to oversee and manage the property. This action bars Bowl 58's owners from being on the site or doing any further work there. No work has been done at the site in months.
The Bowl 58 project calls for a 28-lane bowling center with a lounge, restaurant, arcade and party rooms. It would be the only bowling center of its size in Riverhead or Southold towns.
In addition to the owners, the foreclosure action lists as defendants 23 companies that have filed mechanic's liens against Bowl 58, claiming they are owed money for work they did on the still unfinished project. Listing those who have filed liens as co-defendants is common in foreclosures.
If the bank is successful in its foreclosure proceeding, a referee will be appointed to sell the property at auction. If that occurs, the companies that filed mechanic's liens would be paid only if the sale nets more than what the bank is owed. The lawsuit cites $6.3 million as being owed. Bowl 58's owners reportedly borrowed $7.5 million for the land and the construction.
Because there are so many defendants, and because the foreclosure is being contested, resolution of the case is not expected until mid-2011, sources say, unless the property owners are able to pay off the debt before then. Bowl 58's owners also face at least three lawsuits from companies that allege they have not been paid for work they did on the project.
One lawsuit was filed jointly by West RAC Contracting Corp., Markim Erection Co., Palatial Development Corp., Rosner Construction LLC and Above All Store Fronts, all of which worked on the project. Among the defendants named are Route 58 LLC, the entity that purchased the property; its principals, Mr. Albanese and Mr. Bunt; and Bank of Smithtown.
In addition to claiming that contractors were not paid for their work on the project, the joint lawsuit alleges "diversion of trust funds," meaning that money borrowed for the Bowl 58 project was used for other purposes.
Two other companies, Delfino Insulation and Diamond Security, have each filed separate lawsuits against Bowl 58 in the past year, according to court records, which list the foreclosure and three lawsuits against Route 58 LLC.
Reached by phone, Mr. Bunt, a Manhattan real estate investor, pinned all the blame on his partner, Mr. Albanese, saying he had no development experience, went way over budget on the project and cannot get anyone to work with him because he's fired several contractors from the job.
"Joe is the reason it's not open," Mr. Bunt said. "Nobody wants to work with him. He has no money. I have plenty of money. I could finish that project in 90 days if Joe would just let me buy him out, but he won't."
Mr. Bunt said he and Mr. Albanese are each 50 percent owners of Route 58 LLC.
Mr. Albanese could not be reached for comment this week.
Two weeks ago, he told the News-Review: "We're putting together a new team of investors. It's a tough economy out there."
Financial problems have stalled construction several times but Mr. Albanese has been able to convince Riverhead Town officials to help the project along.
The town Planning Board had agreed to let Bowl 58 open before completing all of the landscaping and parking lot work required by the site plan, and the Town Board allowed Bowl 58 to delay payment of a $48,000 water district bill by posting a letter of credit.
The town Industrial Development Agency also granted Bowl 58 a seven-year partial property tax abatement earlier this year.