A South Carolina bank has filed a notice of foreclosure against Little Creek Road Partners (LCRP) in regard to a $21 million loan it holds for land that was intended to be the Canton West, and later, the Etowah Valley, development.
The notice, which appeared last week in the county legal organ, says First Citizens Bank and Trust Co. Inc., as successor in interest to the Federal Deposit Insurance Corp. as receiver for Georgian Bank, will sell the land on the courthouse steps on March 2, unless the land-holding company for PEC Development becomes current on its loan.
Tax bills for 2009, listed under Little Creek Road Partners in the Cherokee County Tax Commissioner’s database, were due at year-end, and remain unpaid.
Several other foreclosure notices on large tracts of land also were filed against PEC development land-holding companies recently by the same bank, including on Forest Creek in Canton and the Estates at Fernwood Creek in Woodstock. Foreclosure notices also were filed on developments in Troup County and Forsyth County.
“All this has happened in the past 30 to 60 days,” said PEC President Paul Corley, who said he was trying to restructure his loans to avoid foreclosure. “We are in discussions with the bank, and I’m hopeful we can work out something that’s amenable to both of us.”
Corley has filed two lawsuits in Superior Court, one, in 2008, against the city of Canton for failure to annex the property, and one, in 2009, against Cherokee County for failure to rezone the property. The agricultural acreage, made up largely of wilderness along the Etowah River, was slated for a master-planned community first called Canton West, and then scaled down and renamed Etowah Valley.
When the concept was first introduced, Canton appeared to be accepting of the plan, but later, after many area residents protested, the city council rejected it as being too costly because of the infrastructure that would have to be provided.
Corley continued to say, Feb. 11, that he hoped to work out an agreement with both the city and the county. He said he has presented a compromise rezoning agreement for the 8 acres already inside Canton city limits for the city’s review.
“It has a plan for 8-plus acres with neighborhood commercial on the front and office behind – very low density,” he said.
Among the contentions made by Little Creek Road Partners in its lawsuit against Canton are that the city’s refusal to rezone 8.6 acres of PEC-owned land as commercial violates the company’s property rights and that not annexing 902 acres of county property damaged Canton’s ability to repay $19.2 million dollars in 2005 building authority revenue bonds.
The suit claims that the refusal to annex the property causes the city to take on debt that will be a burden to its citizens and places Canton in peril of losing a favorable bond rating if it defaults.
Canton Mayor Gene Hobgood confirmed that the city discussed Corley’s plan in an executive session called for pending litigation at the city council’s Feb. 4 meeting, but Hobgood would not elaborate, saying no decision was made. City attorney Bobby Dyer also said he had no comment other than that no decision had been made.
“I don’t know what ramifications foreclosure would have on the lawsuit,” Dyer said, noting the suit was being handled through the lawyer for the city’s insurance agency.
When the Canton West development was first proposed, it was to have had a four-lane connector, with half the community located in the city and half in the county.
Corley brought the project back before the county as Etowah Valley.
That proposal, as well, was turned down by the Cherokee County-Municipal Planning Commission and then, by the county Board of Commissioners, after both boards heard area residents protests against the development. Corley’s attorney, Doug Dillard, said the developer had reduced the development plan to less than one unit per acre at the time of the final zoning hearing. The plan was to have included commercial space, a church and a senior living center.
Dillard said Feb. 10 that his instructions had not changed.
“Hopefully, they will work something out,” he said in regard to the threat of foreclosure, saying that, even if the bank ends up with the property, it’s worth “timber prices” unless it is rezoned.
Dillard said he was waiting to see what Canton has to say about the compromise he has presented, and the county suit is still in the discovery phase.
“I’m hopeful we will work something out with the city and then go to the county and get it resolved,” Dillard said. “Either that, or get on with the lawsuit. The damages to PEC are in the millions of dollars.”
