Developers associated with Magnolia Green in Chesterfield County have filed a $350 million lawsuit against their financial backer, iStar Financial Inc. The suit alleges that the financial firm demanded a $24 million payment on the grounds that the project was about to go into default.

The suit, filed against in New York District Court, contends that iStar has illegally threatened to seize control and ownership of the 2,000-acre mixed-use development, reports Wesley P. Hester with the Times-Dispatch.

Magnolia Green Development LLC alleges that the move to declare its $86 million loan in default stems from iStar's own financial problems. The public traded company recently attributed a 79 percent tumble in second quarter profits a sharp rise in loan-loss provisions.

Steve Valdeviso, operations management for Magnolia Green, described the project as "one of the most successful residential developments in all of Virginia.”

The project in dispute touches affects 3,500 homes on 1,898 acres with a large commercial and office component. Many of the homes have already been built or are nearly completed. Some homeowners are living in the development.