http://www.tribune-georgian.com/articles/2010/06/16/news/top_stories/1topstory6.16.txtCumberland Harbour deal breaks, infrastructure progress is back in holding
CHANGES IN THE deal between a prospective developer of Cumberland Harbour, an upscale subdivision in St. Marys, and Cleveland-based KeyBank, the note-holder on the development, mean infrastructure might not be completed by November 2011. (Tribune & Georgian file photo)
By Ellen Robinson
Published: Wednesday, June 16, 2010 10:16 AM EDT
The completion of Cumberland Harbour's infrastructure is back on hold after a deal fell through between the prospective developer and the note-holding bank.Due to complications in the deal between developer Bryce Grafton and Cleveland-based KeyBank, which holds the note on Cumberland Harbour, residents and property owners of the upscale subdivision may have to wait beyond the November 2011 deadline on which Grafton had agreed to deliver infrastructure.
For the City of St. Marys, Mayor Bill DeLoughy said, this means the city has also been put back into a holding pattern. The city stood to not only collect the back taxes owed for the development, but also the estimated $600,000-$700,000 in fees and taxes that another 30 new homes would generate once the infrastructure is finished."We have 30 people who are ready and want to build right now, but they can't," DeLoughy said. "After learning that the deal isn't going to happen, we haven't heard back from Bryce Grafton. We were just trying to do what was best for the city."
The city agreed in May to accept Cumberland Harbour's unsold lots as collateral in exchange for releasing its call on security bonds. The bonds were intended to complete the infrastructure, such as roads and utilities, after the subdivision's original developer, Orlando-based Land Resource, filed for bankruptcy protection Oct. 30, 2008.
DeLoughy said the deal hinged on Grafton's purchase of the neighborhood from KeyBank. In the deal that Grafton drafted with the city following a May 14 special called meeting, Grafton agreed to invest $1 million into finishing the installment of utilities and roads. He also agreed to place another $500,000 into an escrow account as an assurance of his intentions."At this point we are back to square one. Everything is at a standstill because it was predicated on him owning the property. When the bank changed the agreement, that didn't happen, so we are now back to where we started from," DeLoughy said.
The deal apparently went south between Grafton and KeyBank for the purchase of the development. Grafton had proposed offering $4 million for Cumberland Harbour, however DeLoughy said the bank may have changed the parameters of the deal.
Council member Chuck Trader said that just like when an individual pursues buying a house, there are many phases in the process that can break a deal such as this one."This agreement was by no means a done deal. All contracts are always subject to a number of terms and items, and when those requirements aren't met, or fall through, the deal is broken," Trader said.
Trader said that the city was willing to take the risk of winding up with lots in Cumberland Harbour to sell in an effort to complete the infrastructure that was left incomplete in the final seven phases. However, the city was only going to be willing to accept the property as collateral if the appraised value for it came back at more than $1 million."We were looking for it to have a cushion over $1 million because had the deal progressed, once Bryce Grafton had invested $1.5 million into the infrastructure, there would be another $1 million needed to complete the project. We would have wanted the collateral of the land that we would have accepted to be greater than what we would need to complete the final phases," Trader said. "Our pursuit was also contingent on Grafton's company covering costs, appraisals and other associated costs. But the deal never got that far, so that's why were back here at square one."Phone calls made to Grafton on Monday morning were not returned by press time on Tuesday.
