The transformation of a downtown Augusta department store into condos and business space is at a standstill, with its developer claiming the $9 million project is being "held hostage" by a federal agency.
The White's Building at 936 Broad St., the site of the former J.B. White department store, is 90 percent redeveloped and could be completed in less than three months, said Sherwin Loudermilk, the president of Horizon Group Investments in Atlanta.
Horizon Group had a development loan through the Duluth, Ga., bank Haven Trust, which was seized by the Federal Deposit Insurance Corp. on Dec. 12. That bank's deposits were taken over by Winston Salem, N.C.-based Branch Banking & Trust. The loans, however, remain under the control of the FDIC.
That means the developer is unable to access the money to pay off contractors. He said he is unable to sell condo units or rent out commercial space.
"About two months ago, we found three lending institutions that were ready to purchase our loan at a much higher price than the FDIC indicated they could obtain on the open market, but they refused to entertain the offer," Mr. Loudermilk said.
FDIC spokesman David Barr said it could take three to five years to get through the case-by-case analysis of all the loans held by Haven Trust. He said he could not speak to the individual case but did say it was a policy that the FDIC not sell the loans to the borrower.
"They can go elsewhere and obtain financing if their project is viable, if it is not under water," Mr. Barr said.
Mr. Loudermilk said the development company would be unable to obtain a second loan to finish the project as long as the FDIC is in possession of the first.
"Since the FDIC took over, we now have multiple lawsuits pending from unpaid contractors and construction liens on the building," Mr. Loudermilk said. "The FDIC is now telling us that due to the current turmoil of the project -- that they caused -- they are considering sending our project in foreclosure and leaving us and our suppliers with nothing."
Todd Carey would like to get paid. His company, Consolidated Fire Protection in Royceton, Ga., is owed $30,000 for the fire protection systems installed on the unfinished floors. But it has not joined the contractors suing for payment.
"I'm trying to be understanding but trying to keep my head above water," Mr. Carey said. "They didn't do nothing on purpose."
Horizon was able to sell 12 of the 17 available condos on the upper floors of the White's Building before the loan troubles arose. As owners of their condos, those buyers would not lose their homes if the federal government forecloses on the developer.
There are 34 more condos unfinished. Horizon's vice president, Mike Raeisghasem, said people who had reserved some of those units have pulled out, at a cost of more than $1 million.
Reach Tim Rausch at (706) 823-3352 or email@example.com.