I have been following the proposed Augustalee development in Cornelius North Carolina for over a year now. There have been some major changes in the past couple of weeks that can change the total outlook of this project.Recently, the original owners have had some issues with it's lenders and now have lost the opportunity to continue with Augustalee. Here is an article written in the The Herald that explains the lastest news on the project.
The Michigan pension fund that took over the proposed Augustalee project Thursday predicts it can find the new capital and "additional development expertise" needed to "move the project forward."
In a statement released by their Charlotte attorney Friday, Aug. 28, BUILD Fund officials said they also look "forward to working with officials for Cornelius, other state and local officials and Fifth Third Bank."
Fifth Third Bank is the senior lender on the proposed $155 million, mixed-used development, and the BUILD Fund was the second lender until foreclosing on the original developers, Cornelius Bromont and Bromont Investments.
Katten Muchin Rosenman, the Charlotte law firm representing the BUILD Fund, held a foreclosure sale at 11 a.m. Thursday, Aug. 27, at the firms' offices on the 26th floor of 3 Wachovia Center. The BUILD Fund, which already has advanced the development $19 million, was the sole bidder for Augustalee, offering $2.5 million.
Walt Rector and his son, Josh, who own Cornelius Bromont, the original developers, attended the foreclosure proceeding with their attorney, but neither spoke a word.
Cornelius town officials have participated previously in meetings with the Rectors and officials with the BUILD Fund about "how this would proceed," Cornelius Mayor Jeff Tarte said Friday, Aug. 28. He said those meetings have been "very civil," and he knows that the Rectors and the BUILD Fund are working together on other projects in Dallas, Texas.
Tarte compared the Augustalee dispute to a "quarrel in a family," although he noted that "families sometimes divorce."
Bradley Pearce, the Charlotte attorney representing the BUILD Fund, told the Herald after Thursday's foreclosure sale that BUILD Fund officials have not asked the Rectors to leave the project. Pearce said negotiations between all the parties are continuing.
Earlier in the week, the Rectors sued the BUILD Fund, accusing the pension fund of breach of contract and unfair trade practices. The Rectors contend the BUILD Fund breached its loan agreement to provide an additional $4 million by May 13, triggering the events that led to the foreclosure. The Rectors have asked a judge to order the BUILD Fund to pay damages or the $4 million it promised.
Through a marketing firm, the Rectors have refused to comment. Amy Pritchard Williams, the Charlotte attorney representing the Rectors, said Friday, Aug. 28, that she could not comment on the foreclosure sale or the Rectors' suit against the BUILD Fund. Fifth Third Bank officials did not attend Thursday's sale and have refused comment previously.
In its prepared statement, BUILD Fund officials said they are "optimistic" about moving forward despite Bromont's "failure to satisfy certain milestones and inability to raise additional capital needed to complete the project, including the financing of certain infrastructure and required offsite improvements."
The BUILD Fund describes itself as "a commingled real estate fund that provides, among other things, equity and mezzanine debt financing for various real estate developments and projects around the country."
Once the BUILD Fund, the Rectors and Fifth Third Bank officials have reached some understanding, Tarte hopes the developers will come to a meeting of the town's Board of Commissioners "to share their view of the project."
"They might not want to change a thing," Tarte said. "They might want to scale back or they might want to do something completely different."
But the best outcome for Cornelius, he said, is getting Augustalee built as designed. "What other project could we bring to that 104 acres, or anywhere in North Carolina, that will immediately create 1,000 construction jobs ... and pay for $120 million in road improvements?" Tarte asked. "We need and want Augustalee," he said. "It would be unbelievably tragic and unfortunate," if the projects fails.
At the same time, the mayor said the BUILD Fund still faces an economy in crisis and a minimum delay of at least a year. "There's no magic," he said. "The biggest hurdle is finding the funding, which will pay for the debt service to begin building. No matter who they are, the owners aren't going to see any revenue until something comes out of the ground."
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