Bank foreclosing on Extell site.

Barclays has begun foreclosure proceedings on a development parcel owned by Extell Development Company on the far West Side.

The London-based bank filed suit against Extell over the weekend, claiming that the real estate firm has defaulted on a $28.8 million mortgage Barclays loaned the company in 2005.

The lawsuit names Extell's chief executive, Gary Barnett, as a personal guarantor on the debt, meaning he is responsible for paying portions of the mortgage if proceeds from a foreclosure sale aren't sufficient to recoup the loan amount.

The guarantee could put Barnett on the hook for millions, especially since it would appear difficult to sell the land for the amount he paid. Real estate prices have dropped dramatically during the economic downturn, but perhaps no property type has fallen in the city more precipitously than land, whose value is typically tied to the economic prospects of the real estate that can be built on it.

According to the suit, Barnett borrowed the money to consolidate under a single, senior mortgage the debt from a collection of smaller parcels he had amassed to create the development site.

According to written reports, Barnett had planned to raise a soaring mixed-use skyscraper on the site, which is located at 350-366 Tenth Avenue between 30th and 31st Streets, during a period when the area appeared to be an important new frontier of Manhattan development.

Barnett's parcel sits across the street from the West Side rail yards, a site envisioned as a westward expansion of midtown with millions of square feet of new commercial and residential space planned.

Perhaps sensing the opportunity to develop an adjacent property and be at the forefront of an emerging area, Barnett paid handsomely to amass a parcel on the relatively small block-front large enough to raise what he planned would be a soaring 600,000 s/f tower. Included in the project were even plans to construct a costly sky bridge over Tenth Avenue linking the property to the High Line.

Barnett was reported to have spent $23 million to buy up a property known as the Stuart Dean building in 2005, a low-rise structure he later demolished to clear the bulk of the site. Barnett later paid the Port Authority over $17 million for a 7,300 s/f section of land to expand the parcel in 2007.

But a growing glut of vacant commercial space in Manhattan, along with a sputtering residential real estate market, have made new development nearly impossible to finance and have cast the far West Side's planned transformation into a thriving new district in uncertainty.

It's unclear even whether the West Side rail yards, one of the city's marquee development projects under Mayor Michael Bloomberg, can proceed in the near future.

Barclay's complaint, which was filed in State Supreme Court last Friday, states that Barnett failed to make an $84,021.38 interest payment for the loan that was due on June 9 and that there was no longer enough funds in an interest reserve to cover the missed amount.

Barclays says that it is owed close to $30 million after factoring in interest on the loan, which is now accruing at a higher rate because the mortgage is in default. In July alone, the bank said that $205,527.84 in interest at this default rate had been added to the mortgage balance, along with $14,477.46 in late fees

The bank notes that: "Barnett is liable for the full payment of all accrued and unpaid interest, including payment of any deficiency between the amount finally adjudged to be due and owing on the consolidated mortgage and the amount realized from the foreclosure sale or sales of the mortgaged property, up to the amount of the guaranteed interest payments, for which a deficiency judgment is being sought by this action against Barnett."

Barnett did not responds to request for comment.