The Lowcountry Economic Network is preparing to dissolve by the end of June unless lenders drop their pursuit of a deficiency judgment against it.
Executive director Kim Statler said the public-private job recruitment organization would have no choice but to fold if the lenders continue to seek the judgment as part of their effort to foreclose on the Beaufort Commerce Park. The judgment would make the network liable for any difference between what is owed on the property and what it fetches at auction.
"Unless that goes away, unless that clause is removed, we have to dissolve the network," Statler said Friday. " ... At this point, that's what we're preparing to do."
Statler said she is looking for a new buyer for the park after Beaufort County Council last week spurned the network's request to buy the property for $2.5 million to save it from foreclosure.
She hopes the lenders will drop their pursuit of the judgment if a new buyer is found.
Time to stave off foreclosure is running short, however, so the network's board has told her to research the process for dissolving the organization, she said, adding she is trying to help her staff find other work.
The network, which receives about $270,000 a year from the county, borrowed more than $2.9 million from a group of five banks to buy the Beaufort Commerce Park in 2006 with the goal of selling the property to companies interested in locating there.
The park remains mostly empty, and the network can no longer afford the debt.
S.C. Bank and Trust filed for foreclosure last month on behalf of the five banks that jointly loaned the money. SCBT officials could not be reached for comment last week. In court documents, the bank says the network owes $2.58 million.
Statler estimated the network has not collected dues from its members -- which include local businesses and governments, educational institutions and utilities -- since January because of concerns the lenders would soon seize any contributions.
"There's no cash on hand that's going to do anything," Statler said.
The County Council discussed on Monday whether the county could start a similar economic-development group, perhaps with the same people under the same terms, if the network were dissolved.
Councilman Jerry Stewart, the network's chairman, disputed that notion Friday, saying the lenders could continue to pursue such an organization for its predecessor's debt.
"Legally, you can't do it," Stewart said of the idea. "All you're doing is shuffling the deck."
County Council Chairman Weston Newton also said a new entity could be pursued by lenders if it appears to be "an alter-ego" of the network.
"Just because you might have plucked out a few of the feathers, it may be the same duck," he said.
Newton declined to discuss how the county might approach economic development if the network dissolves.
He said it would be inappropriate to speculate before more is known about the foreclosure case and before an ad hoc task force formed recently to review the county's approach to economic development delivers its recommendations.
He noted that the county remains a member of the Lowcountry Economic Alliance. The alliance is a separate organization from the network, but it contracts with the network's staff. It was created by Beaufort and Jasper counties' councils as a platform to discuss regional issues, Statler said.
Stewart and Statler cautioned the county against abandoning economic development efforts entirely.
Stewart said that would be "a disaster" for the county and region, adding that companies won't come to an area unless they're courted.
Statler believes the county is poised to win new business if it maintains its efforts in some form.
"To walk away without an economic-development arm would just be crazy in this opportune time," Statler said.