FDIC seizure delays project, developer says

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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 timothy.rausch@augustachronicle.com.

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Augustaguy1962 03/04/09 - 09:16 am
The problems with paying subs

The problems with paying subs on this building started long before the FDIC got involved. Go check the dates of liens and you will find that the developer/contractor(same company) was not paying people way back in June of 2008. Theses people have filed their own lien on thier project for over $400,000. They want the people of Augusta to feel sorry for them. Chronicle it's time you did your job and find out why they weren't paying their bills long before the FDIC. CRY ME A RIVER SHERWIN AND MIKE.

Brad Owens
Brad Owens 03/04/09 - 10:27 am
Nice Puff piece on this for

Nice Puff piece on this for the developers and the banks get a pass too (anyone wonder WHY the bank was taken over by the FDIC in the first place? Was it because of the GREAT job they were doing down there at Haven Trust Bank?), but NOT the Government. Its all the governments fault. The FDIC made them borrow that money and start a condo project in bad times for condo sales right?. More PROPAGANDA. Augustaguy1962, you can forget the actual FACTS and DETAILS when it comes to trying to get people to understand how these guys work. It's NOT thier fault, it's the mean ol' government picking on em'. Yeah RIGHT! For far too long these Big Shot developers with there multimillion dollar development programs have been dominating all aspects downtown. Good thing the DDA financed the bonds for MCG and have the TAD dollars because they have lost much ground these past two years downtown and I would be hard pressed as a Commissioner to continue funding groups that produce no results.

themaninthemirror 03/04/09 - 12:02 pm
The federal government has

The federal government has communist powers concerning their stranglehold on the American public. I have student loans that they will be able to dig me up from the grave and see if I was buried with anything of value if these loans are not paid off when I die. And mention bankruptcy, all they do is laugh.

corgimom 03/04/09 - 01:39 pm
You can't discharge student

You can't discharge student loans through bankruptcy any more. Why? Because too many people would take out student loans and then file Chapter 7 bankruptcy immediately after graduation. Too many people take out student loans, without really understanding what they are getting into. Yes, you take out a student loan, you are pretty much stuck with it forever. Only in rare cases is it forgiven- usually if someone becomes 100% disabled or has very unusual circumstances. It's not communism, it's called you borrowed it, you have to pay it back so someone else can go to college.

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