The Beaufort County Council did the right thing -- the only sensible thing, really -- May 9 when it rejected a request to purchase the Beaufort Commerce Park for $2.58 million and spare the property's owner the indignity of foreclosure.
The bailout was requested by the Lowcountry Economic Network, the county's public-private job-recruiting partner, because it no longer can afford the debt. S.C. Bank and Trust has filed for foreclosure on behalf of five banks that jointly loaned the network money to buy the park in 2006.
But the property is worth significantly less than the $2.58 million the network owes, according to two independent appraisals, meaning the county would essentially take the haircut borne of both market forces and the decisions of bank and network leaders.
Anxious days will pass before an outcome is determined.
One possibility is that the bank will auction off the property for less than is owed and seek a deficiency judgment, which would compel the network to pay the difference between the sales price and the remaining debt. The greater the difference, the greater the possibility that the network will be bankrupted.
It was mentioned in passing during discussions of this possibility that County Council could start a new economic-development group with "exactly the same people under the same terms."
Thankfully, there seems to be no sentiment among councilmen for such a "solution," which would prove politically unpopular, morally suspect and legally dubious. Further, it would be ruinous to economic development: Who would want to do business with a network that has changed in name only, knowing it has left creditors holding the bag, aided and abetted by county government, no less?
Even should it remain solvent, the network has diminished itself as an economic development player by its involvement with the park. Yes, it is true that many smart people did not foresee the collapse of real estate values and the recession that ensued. But there is more to the Commerce Park situation than that: Various owners have tried mostly in vain to get business bustling there for the better part of three decades.
Put another way, there are some things we should expect an economic development team to foresee. If a recession is not one of them, difficulty selling property at a long-fallow park certainly is.
Still, averting foreclosure and the network's insolvency -- if it can be done without a public bailout -- is a far better outcome for the county.
Toward that end, the network has offered to surrender the deed to the park in return for debt forgiveness. County Council's decision May 9 furthered that aim by sending a strong signal that no bailout is imminent and that the network and its creditors had best figure out the most equitable way to cut their mutual losses.
Meanwhile, the council should stand pat, at least until a task force report on economic development is in hand. That report should advise whether the county needs to own a commercial park and, if so, whether this site fits the bill. It also should examine the Lowcountry Economic Network's role in economic development and advise whether it should continue unchanged, be redirected or cease as a public-private venture.
In the meantime, there is a haircut coming, and it is properly administered to the heads that thought it was a good idea for the network to buy the Commerce Park.