Firm heading up Red Berry development has history of bankruptcy

SAN ANTONIO -- The Red Berry Mansion has a storied history, and a $150 million project is expected to breathe new life into it and the city's east side. But as the I-Team uncovered, one of the developers hired for the project has a history of debt.

Wallace Bajjali Development Partners is one of three development firms which the city has chosen to build 300,000 square feet of business space and nearly 700-apartment homes.

"We look forward to bringing in private-sector capital into San Antonio, to do these types of developments, create jobs and grow the economy," said CEO David Wallace.

But in some instances, the developer ended up in court:

Of 18-projects Wallace Bajjali includes on its website, the I-Team discovered nearly $40 million dollars in debt and bankruptcies. The most recent involves a downtown Joplin, Missouri project.

Wallace Bajjali Developers, working under the name SWB River Square, filed Chapter 11 bankruptcy when it couldn't pay back $6.5 million in loans.

Three years earlier, Wallace Bajjali Developers was working under the name WB Sanctuary Development Partners on a Houston residential project. That partnership filed for bankruptcy in December, 2010, owing $12 million .

That filing came just 3-months after another Wallace Bajjali partnership filed for bankruptcy: SWB Waco owed $20 million in debt for a project to develop downtown Waco.

Wallace told the I-Team much of the debt problems stemmed from the downturn in the real-estate industry that struck after 2008. And Wallace said his firm used bankruptcies to preserve its investments and help re-pay creditors.

"I have bought companies, basically to put them through a chapter proceeding to basically save jobs and create value," said Wallace.

The City of San Antonio, much like its neighbors Houston and Waco, is required to analyze or "vet" prospective candidates for multi-million dollar projects.

Wallace Bajjali said it provided all of its bankruptcy history to San Antonio officials, who, in turn, said they considered it all.

City officials said they are satisfied the company will complete its Red Berry estate project, .and that the developer's incentives are tied directly to its success.

"This is going to be a performance based contract," said Lori Houston with the San Antonio Center City Development Office. "They've got to build what they've committed to develop before they get any incentives. The tax rebates are on projects that they've built. As soon as they build the commercial development, then they're rebated those taxes," Houston added.

"We think it's going to be an anchor project, a catalytic project that's going to allow people to view the east side in a new way," said Mayor Ivy Taylor.

Taylor said the city will continue to seek citizen input in future public hearings. Phase one of the project is expected to begin next year and be completed by 2017.


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