Carolina Park goes into foreclosure

August 11, 2010 | 286 Comments

Wednesday, June 30, 2010

The Town of Mount Pleasant assembled a team of attorneys to position themselves when it was learned that Carolina Park Associates, LLC had filed for bankruptcy.Mount Pleasant Town Attorney Allen Young said officials have been on a deliberate and steady course to make sure that the town is protected in this matter. Working with him were attorneys Frances Cantwell, Sam Applegate, and David Wheeler, a distinguished bankruptcy attorney.

However, according to Town Administrator Mac Burdette a judge ruled against the bankruptcy proceeding so the property will be auctioned off in a foreclosure auction July 13.

The history

In October of 2003 Charleston County officials met with Carolina Park Associates, and CDM of Charleston, both LLCs, and they entered into a development agreement. Over the next year, town officials realized they were in a dilemma, as the town would have all the impact of this large development with no interest. Town officials then entered into negotiations with the county and the Carolina Park entities, and at the end of 2004 the town became a party, with the county dropping out and the town taking over their interest.

Through 2008, all of the obligations, and the yearly installments were all met by Carolina Park, but by September 2009 the mortgage holder, Palmetto Debt Holdings, LLC filed for foreclosure action and it was referred to the Master in Equity in December. In December their annual compliance report was due, and $500,000 was due on Dec. 20, under their annual payment along with a separate $100,000 payment to the Town for Whitehall Terrace. To date the town is owed $4.2 million. Carolina Park is obligated to pay the town $500,000 a year and $100,000 a year for Whitehall Terrace. Additionally they are supposed to transfer 2.4 acres to the town for the police, fire and EMS emergency station, and they have not done that to date. The Town entered into an extension agreement with Carolina Park for six months, which is the time frame the Town thought they would need to finalize the sale of the property rather than foreclose. That extended the due period to June 20, which is rapidly approaching. They paid the Town $15,000 in cash as an extension fee.

On March 11 a foreclosure settlement agreement was made and approved by the Master in Equity, and they all agreed to the foreclosure, but the court extended the sale date of the actual asset, the property, until May 18. A closing date was set at Lucas Padgett’s office, the attorney for Carolina Park, on May 12, and when that happened the town would get paid at that time, but the pending sale did not occur.

On May 17, a bankruptcy action was filed by Carolina Park

The plan

According to Wheeler the entire tract was going to be sold at foreclosure and the only way to slow it down was to file bankruptcy. He said once the bankruptcy is filed there is an automatic stay, so no collection actions may be taken, to some extent liens cannot be filed, and everything comes to a standstill to preserve the status quo, and then the parties start trying to assert their various rights. A bankruptcy involves everyone that has a claim or an interest or anything with respect to this debtor, and it is all under one roof with one judge. There is a section to the bankruptcy code that allows the sale of the property free and clear of liens, which is basically a glorified foreclosure.

Carolina Park Associates were able to make the payment to the town on June 15, avoiding a declaration of default, Burdette told the Moultrie News. Their next payment is due in December.

Burdette said the terms of the agreement with Carolina Park were that they would pay the Town $500,000 a year for 12 years, totaling $6 million, and they have paid about a third of that.

Burdette said town officials wanted to get that money up front, and so they bonded based on the $500,000 per year.

Had the money not been paid, Burdette said the town would have to come up with $500,000 either from the general fund, or by raising taxes in December another $500,000.

The potential sale amount for Carolina Park is between $50 million to $75 million. Carolina Park contains 1600 acres of which 213 acres are wetlands.

According to Burdette, Carolina Park Associates are in good standing financially with the town, however they have an obligation of land to Charleston County for library to be built and an obligation to Mount Pleasant for land for a fire and police facility and obligations to the town for warranties.

“We hope and presume that at the end of that day on July 13 there will be an owner of Carolina Park that can satisfy all obligations and can move forward with the development,” he said.

“We hope it is someone with the wherewithal to meet the obligations to us and pick back up with the development and take advantage of what they have out there. If the judge had not ruled against the bankruptcy proceedings could have been tied up for 120 days and had that stood there was no action the town could have taken. As much as we regret any of this for the owners and creditors, the only perspective we have is the public interest of the town and that is to make sure the provisions of the development agreement are met.”



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