Media Contact:
Sherwin Loudermilk
sherwin@metroconstructgroup.com
404-934-1441
(MMD Newswire) March 11, 2009 -- As president Barak Obama took office, he set his number one priority to improve the economy by creating jobs and pushing through congress the largest "stimulus package" in the history of the United States.
But there is a different story to be told of the ineptitude of government that is causing unnecessary job losses, vanished wealth, and erosion to the property tax base.
One such case is in Augusta, Georgia where after many years of stagnation the city started seeing a return of businesses to its downtown historic area. The revitalization was encouraged by a commitment between the city and entrepreneurial real estate developers who worked together to renovate the charming historical buildings and surrounding streetscapes. But now the downtown area is facing a potential financial disaster.
Two years ago, two young developers from Atlanta, Sherwin Loudermilk and Mike Raeisghasem, saw their future in taking on the renovation of the J.B. Whites Building, a dilapidated and uninhabited former department store in the heart of downtown Augusta. The plans included renovating the building as an energy efficient, historically preserved mixed-use building of retail shops and residential condos. Since the grand opening of the first phase in July 2008, the White's Building has become one of Augusta's most successful downtown renovation projects, inspiring the greater community to spend time and money in the downtown historic corridor.
As the 2009 New Year approached, the project was in good shape. The developers had already closed the sale of a quarter of the condos. Many of the remaining units were under contract and scheduled to close in the next few months. The ground floor retail spaces were 80% leased and construction was nearly complete.
On December 12, 2008, the project came to abrupt halt with news that the FDIC seized the lending bank, Haventrust Bank. Since then, the developers have had to deal with a government bureaucracy focused on the transfer of the assets and bank accounts but with limited authority and little concern for the businesses that Haventrust lent to. In fact, the FDIC canceled all further cash advances even though the project was performing on schedule and the developers were in good standing.
Without working capital to finance the day to day operations of their business, the developers have been forced to lay off all their employees while leaving a substantial number of subcontractors unpaid. Their employees stand in line at the unemployment office with their families worried about their future. Worse, the current residents and commercial tenants of the White's Building are caught in the cross fire and the project has been left in limbo.
The developers met with the FDIC to explore their options. At one point they were told that the FDIC would be able to advance a portion of the remaining construction loan so that the subcontractors could be paid. But after two months of filling out countless forms and providing numerous documents, it was clear they were given false promises.
As a last resort, the developers appealed to their public officials. Mayor of Augusta, Deke Copenhaver and Ms. Margaret Woodard, from the Downtown Development Authority of Augusta, were the first in line to help, writing letters to the FDIC and calling on senators for their assistance. With the backing of their congressmen and local officials, they were hopeful. But little did they know that this effort too would backfire. An FDIC official made it clear that the "interference" of the senators may have worsened the situation or any amicable resolution.
Late last week a call from FDIC brought news that the FDIC has decided to foreclose on the White's Building, a project that up until the time of the bank's failure had been in good standing with its lenders and subcontractors. Mr. Loudermilk, a bit of anger in his voice, says, "In less than 90 days the bank failure and FDIC incompetence have turned this project into a non-performing mess and nearly bankrupted our company and me personally."
During this time the developers have been keeping the lights on by using funds from their personal savings and home equity loans in the hope of saving the project. They had made Augusta their home, a town that embraced them as one of their own and provided them such warmth that they were happy to give up all they had to this project.
As they sit in the lobby of their building gazing at their creation, the developers are still hoping there is a way to save the building.
There are thousands of other projects facing similar demise as this one, their developer's only mistake-associating with a failed bank taken over by the FDIC.
For more information please contact:
Sherwin Loudermilk
sherwin@metroconstructgroup.com
404-934-1441
###