The Beaufort Commerce Park is closer to being sold at auction after S.C. Bank and Trust filed foreclosure papers last week on behalf of five banks.
Those institutions jointly loaned the Lowcountry Economy Network money to finance the park, which the network bought in 2006. The filing states $2.58 million was due as of April 5, with interest accruing at about $420 per day.
To satisfy the debt, the bank requests the property be sold at auction.
Officials of the Lowcountry Economic Network, the county's public-private job-recruiting partner, say it can no longer afford the debt. The network has asked Beaufort County Council to purchase the property. Council voted twice to buy out the full $2.5 million debt but on Feb. 14 voted to postpone a final decision 60 days.
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Two appraisals arranged by the county estimate the park's current market value at $1.64 million and about $2 million.
The LEN board voted Feb. 25 to offer the banks the deed to the property in lieu of foreclosure, but that negotiation appears to have failed.
It's unclear where a foreclosure would leave the network.
Ian Leslie, the network's marketing and membership director, said other LEN funds are not listed as collateral on the park's mortgage.
"The collateral on the loan was the land itself and not our general operating accounts nor any other accounts," he said.
However, the banks seek a deficiency judgment, which could compel the network to pay up, should sale of the park not satisfy the full debt.
If, for instance, the property were sold at auction for $1.8 million, a deficiency judgment could leave the network on the hook for the remainder -- more than $700,000.
In January, network executive director Kim Statler said foreclosure could cripple the organization.
"I can't shield any of my accounts," Statler said then. "You would basically be throwing away any progress that we've made in the last 10 years."
Council is scheduled to take up the issue April 25, but the new appraisals of the property could complicate the debate.
Councilmen Steve Baer and Stu Rodman have said discussions will likely begin about a lower purchase price, in the $1.8 million range.
Whether the banks would accept that amount is unknown.
In 2010, the county offered to buy the property for as much as $1.5 million, but the lenders rejected it. County administrator Gary Kubic has said he left that negotiation believing the banks would refuse anything less than the full $2.5 million.
County Council probably still has time to make another purchase attempt, and Chairman Weston Newton said he doesn't think the pending foreclosure "represents a point of no return."
Foreclosure auctions are held the first Monday of every month, but court requirements will buy council some time. The April 7 court filing states the network must respond within 30 days after it is served with the lawsuit. Property also must be advertised in the newspaper for three consecutive weeks before it can be auctioned.