Foreclosure takes North Carolina project

While losing a development in Belmont, Tom Graham hopes for a turnaround with an infill development in Charlotte. The 20 percent complete Eagle Park development in Belmont, North Carolina, was surrendered to Sun Trust Bank in a foreclosure in October after the partners in Firmitas Development were unable to continue financing its $6 million debt. Tom Graham, one of the four partners, said that because of the collapse of homebuilding in metropolitan Charlotte, spec houses in Eagle Park ended up selling for $100,000 less than they cost to construct. And that was with the land basically being given to the homeowner at no charge. “We lost millions of dollars,” said Graham, who earlier helped develop the I’On traditional neighborhood development (TND) in Mount Pleasant, South Carolina. “When the market turned, we were just trapped.” Eagle Park, envisioned as a 290-unit TND on the former site of the Eagle Mill in downtown Belmont, about a 20-minute drive from downtown Charlotte, was marketed at the height of the housing boom as a small-town environment that people working in Charlotte could reach without a long commute. The highest-priced detached house sold for $500,000, and Firmitas expected to sell most detached houses “in the high threes to low fours,” Graham said. “Now they’re selling for $323,000 to $290,000.” Townhouses have fetched $130,000 to $160,000. “We had design guidelines and controls that pushed the price up,” said Graham. “Our markets just weren’t able to pay that. If they had been smaller homes, we might have done better.” Graham, who with Jim Strickland of Historical Concepts also developed the North Cove TND in Peachtree City, Georgia, said he prefers to be a developer rather than a homebuilder, but in Eagle Park “I had 20 spec houses.” His partners in Eagle Park were Mark Turner, Rob Pressley, and Fran Reiner. Reviving an in-town project Asked what he intends to do now, Graham replied, “I’m working on getting retired.” Then he quickly switched gears and started talking up the virtues of Morningside Village, a planned 32-acre infill redevelopment in Charlotte that he sees as holding great potential — once the market recovers and financing begins to flow. “The infrastructure is in place — utilities, streets, curbs,” he said of Morningside Village, about two miles southeast of downtown Charlotte. He described the 10-block project, planned by Torti Gallas and Partners, as “surrounded by lots of funky restaurants and shops” as well as a 17-acre city park. An apartment complex that had stood on the site since 1950 was demolished in 2007. Post Properties contracted with Firmitas Development in February 2008 to build 400 loft-style apartments and 25,000 square feet of ground-floor neighborhood-style retail on two blocks (five acres) of the development. Other developers were purchasing land so that they, too, could build parts of the project. “We had $20 million in sales booked in July of last year,” Graham said of Morningside, “but they walked.” “We’re working on getting that resurrected,” he noted. “We own it,” he said, but “banks can’t finance anything,” so for the time being, a developer who wants to move forward “has got to be able to pay for anything out of pocket.” Townhouses, flats, and detached houses also have been planned for the pedestrian-oriented, 1,000-unit, $400 million undertaking. In a phone interview with New Urban News late this October, Graham seemed to alternate between lamenting the difficulty of getting financing and voicing optimism about the prospects for Morningside Village. “We’ve got builders that are coming back now,” including a national townhouse builder, he said in one of the more upbeat assessments of the Charlotte project.