EFFINGHAM — The City of Effingham’s yearslong legal battle with Village Square Mall owners reached a resolution last month when an order of judgment for foreclosure and sale of the mall was granted in Effingham County Circuit Court.
While the ruling does authorize the city to proceed with foreclosure, Effingham City Attorney Tracy Willenborg noted it is subject to the property owner’s right to redeem.
The mall’s owners, Durga Property Holdings, have three months from the date of the order, which was entered July 30, or on another date ordered by the court, to redeem the property. Durga also has 30 days from that date to appeal the ruling.
In order to redeem the mall, Durga must pay the city $1.19 million, plus further amounts that may be due, before the redemption period expires. If they don’t, the order states the mall shall be sold to the highest bidder for cash at a public auction conducted by the Effingham County Sheriff in order to satisfy the amounts owed to the city.
The city has placed four liens on the property dating back to 2020 for expenses it incurred for repair work performed on the mall related to dangerous and unsafe conditions. The city moved to foreclose on each lien that, including interest, attorneys’ fees and expenses, total $1.19 million.
The city has been involved in court cases surrounding the property since April 2018. Prior to that, the city had been in informal talks with former property owners, Kohan Retail Investment Group, in an effort to bring the property into compliance with the city’s code.
Durga bought the mall in 2020 and on Aug. 7, entered into an agreement with the city declaring the mall dangerous and unsafe. The agreement set a schedule of work to be performed by Durga to address the conditions. If Durga failed to comply, the city would be authorized to perform the work. Later that year, the court found Durga “substantially failed” to comply with the agreement, allowing the city to proceed with the work. Durga’s appeal of the order was unsuccessful.
That work included extensive roof repair, reconstruction, and cleanup of the former JC Penney section and demolition of a portion of the former Rural King area. The city has avoided pursuing any action to raze the rest of the mall or close it.
“It (The Village Square Mall) could have been closed,” said Willenborg said during a City Council meeting in 2022. “The city did not request that for many reasons. The most important was they didn’t want to see that impact to the small business owners.”
Willenborg said this week she could not comment further on the ruling at this time. Durga’s attorney has not responded to messages seeking comment about the case.