Burien Town Square is facing foreclosure by October 29 if developer Urban Partners does not come up with $3.5 million by September 1.

Urban Partners has spent the better part of a year trying to renegotiate their $38.5 loan after Corus Bank of Chicago, the original loan lender, failed last year. Urban Partners still owes $34.8 million on that loan.

On July 26 the current loan holder filed a legal notice to foreclose on the project. The loan matures September 1, after that the only way to avoid foreclosure will be to repay the loan in full, plus interest.

The foreclosure notice covers 118 of the 124 condos in the project. Only six condos were occupied before Corus Bank failed. Paul Keller, principal with Urban Partners, said in an earlier interview with the Times/News that sales are effectively on hold until the loan is renegotiated to allow them to sell the condos for the current lower market value.

Burien Economic Development Manager Dick Loman earlier said Keller was hopeful to have the loan renegotiated in the next couple of weeks. But on Aug. 13, Loman said city officials did not know what the situation was beyond the foreclosure notice because Keller has not returned their calls.

"Despite the negotiations between Urban Partners and the FDIC it appears the FDIC plans to push them to the end of the plank," Loman said.

Burien is in an awkward position and is very frustrated with the situation, Loman said.

"Unhappily, we are sitting on the sidelines."

However, the notice of foreclosure could indicate one way or another the condos will begin moving again soon.

"What we think it is going to mean to us is this long term paralysis with these condominiums is going to be over, one way or the other," Loman said.

If the FDIC acquires the project through foreclosure Loman said they would not want to let the condos sit. He said the current market value has dropped about 30 percent, and whoever owns it will have to lower the price.

Loman said it is very unfortunate Urban Partners got caught in this. He said it is a very unusual situation, which had been a result of market values dropping and the failure of Corus Bank.

"It has been difficult for everybody," Loman said.

The remaining undeveloped property owned by Urban Partners has been up for sale for the last several months.

Urban Partners was unavailable for comment on the latest disclosures.