Developers say sale could prevent it

By Susan Dickson
Staff Writer
After months of speculation, Bank of America said Tuesday that it would foreclose on the Greenbridge development on June 27.
But Tim Toben, one of the 217,000-square-foot project’s developers, believes he and the other developers can avoid foreclosure.
“We are confident that we can close on a sale or equity investment from one of our five bidders before that time,†he said.
The developers have been in contact with three potential buyers to purchase the remaining $29 million loan on the $58.5 million residential and commercial project – valued at $41.5 million in August 2010 – as well as two possible equity investors to cover construction overrun costs and enable contractor liens to be lifted.
The trouble started last summer, when construction costs ran over and developers requested a loan increase from Bank of America. According to Shirley Norton, a representative of the bank’s public relations division, Bank of America approved that loan increase, but when the overruns continued, the bank requested a $1.6 million equity deposit.
According to foreclosure documents filed by the bank, the developers failed to pay that deposit. Toben said the bank refused to pay the contractor’s final invoice, and contractor Weaver Cooke Wilson and various construction-material suppliers filed about $7.9 million in liens on the development.
Despite the financial difficulties, Dan Estes of Weaver Cooke Wilson said he is proud of Greenbridge.
“It is a great project. It’s great for the community and the state and the nation as far as green construction goes,†he said. “I hope that Tim and the group can come up with a buyer or some investors in this thing that will help keep it out of foreclosure.â€
Since the liens were approved, the developers have been prevented from selling additional units – including 15 that had contracts already in place – and without capital coming in, they were no longer able to maintain interest payments to the bank in December.
The bank began foreclosure proceedings earlier this month.
What went wrong
In 2005, when the developers began work on Greenbridge, “Everything looked like it was going to continue on its healthy, happy, profitable path,†Toben said.
Working with architect Bill McDonough, Toben and the project’s other developers – Tom Tucker, Richard Dlesk, Frank Phoenix and Michael Cucchiara – envisioned a healthy-living and -working community valuing environmental sensitivity, social equity and economic vitality, based on principles of smart growth and reducing the carbon footprint.
“We are all local people that came together to create this sort of model,†Toben said. “I think the intention behind it is something very different†than that of other developments.
The pieces fell into place, and by April 2008 construction had begun. Bank of America approved the developers’ $43.5 million loan in July 2008, but not before a last-minute request that the group increase their down payment from $8.65 million to $15 million.
“That was breathtaking for us,†Toben said. “We had been assured by the bank that the deal that we had with them was going to close.â€
But at that point, with a 30-foot hole in the ground where the development excavation had begun and the $8.65 million already spent, “there was no turning back,†Toben said. So they emptied their pockets, put out calls to family and friends and collected the remaining money needed.
A few months later, the stock market crashed.
“Our timing really couldn’t have been worse,†Toben said.
Throughout construction, the team worked well together, said Estes. “I think the whole project went about as smoothly as any project of that magnitude could.â€
However, changes were made to the development throughout construction, and “any time changes are made, costs go up,†Estes said. “There were clearly some engineering issues with the project, particularly the plumbing side of it.â€
Of the 60 units the developers had contracts for in July 2008, 37 closed, eight backed out and 15 remain under contract. Today, those 37 units remain the only purchased properties in the 97-unit development.
The bigger picture, and lessons learned
When the developers set out to bring Greenbridge to fruition, they wanted to build something with green features that was high density and sensitive to the surrounding community.
They designed the project with two buildings so it wouldn’t create a wall of shade into the historically black Northside neighborhood, and added features such as allergen-purified central air, solar/thermal hot water heating, high-efficiency water-sourced pumps and living rooftops. The development also includes luxury amenities, like an event lounge, private courtyard and multimedia theater.
“We put all the bells and whistles in that thing,†Toben said. “In retrospect, I think we would do a more modest project these days.â€
Because of the scope of the project, the developers needed a $43.5 million loan and were thus limited to large financial institutions, “which by their nature are going to be less personal,†Toben said. “The bank views this like a Miami condo.â€
Bank of America disagrees.
“[Foreclosures] are all done on a case-by-case basis and we always try to work with the developers,†Norton said. “We’ve been working with this borrower for some time.
“I think there are a couple things going on there,†she continued, pointing out that the recession had come at a particularly difficult time for this development.
Toben said if he could redo it, he would have made the project small enough that they could have worked with local or regional banks.
“Staying small, and having a local focus,†in terms of the institutions engaged in partnerships, he said, “is important.
“We did have a goal of making this the prototype and doing more of these in other cities and towns in North Carolina,†Toben said, adding that he doesn’t have any illusions that they will be the ones to develop such projects.
“What I hope happens is that others will kind of take up the baton,†he said, but with projects on a smaller scale.
Since Toben and the other developers sunk everything they had into Greenbridge, they’re adjusting their lives to be simpler, he said. He wants to focus on local energy efficiency and policies to support local farmers and food production.
“That’s the kind of thinking that we need to get back to,†he said. “The more that I think we can move towards what we need as opposed to what we want, the more equipped we’re going to be to deal with these economic shocks.â€
As for Greenbridge, Toben believes the project will ultimately be fine.
“Three to five years from now,†he said, “it’s going to be a big success.â€.
Hey, Tim Toben, you and your partners should have given that money to the people of the town to insulate their homes and it would have had a greater impact than Greenbridge.
Sad to see your environmentalism only reaches as far as your profit motive.