PrintPrintWith two-thirds of the Noisette Co.’s North Charleston property the subject of a foreclosure lawsuit, one key state lawmaker says the state should take a serious look at the opportunities this presents for maritime-related rail activity on the former Navy base.
By Molly Parker
mparker@scbiznews.com
Published June 10, 2009
With two-thirds of the Noisette Co.’s North Charleston property the subject of a foreclosure lawsuit, one key state lawmaker says the state should take a serious look at the opportunities this presents for maritime-related rail activity on the former Navy base.
“I think it is wise for the state to own as much property near deep-water access as possible,” said Sen. Larry Grooms, R-Bonneau, chair of the Senate Transportation Committee.
Grooms said he will be studying the potential costs and restrictions of the land and said the state should “learn as much as we possibly can about it.”
“I would like for that property to fold into anything that we may do,” said Grooms, who is exploring a run for governor. “That’s a very valuable piece of land for the economic viability of this state.”
Last week, three creditors, including Capmark Financial Inc., foreclosed on 240 acres of the Noisette Co.’s planned 340-acre development on the northern end of the Navy base property. Noisette has been in default on a $23.8 million loan facilitated through Pennsylvania-based Capmark since August.
This action came on the heels of a contentious legislative session in which lawmakers, including Grooms, attempted to orchestrate a deal to allow rail access onto the property to serve the new container terminal the S.C. State Ports Authority is building on the base’s southern end.
The ownership of that rail line is the subject of dispute in a pending legal case between the Charleston Naval Complex Redevelopment Authority and the Noisette Co. The suit was filed more than a year ago when Noisette set about ripping up tracks on the property.
The redevelopment authority was created by the state to divvy up the land when the base closed in 1996.
In the end, the General Assembly recessed in May without signing off on heated legal language that would have handed ownership of the rail line to the state. North Charleston Mayor Keith Summey, outraged by the legislative action, moved into a full-court press against the running of a rail line through Noisette’s property. Doing so would run contrary to a 2002 memorandum of understanding between the city and SPA, Summey said.
As the debate ensued, rumors swirled about the economic stability of the Noisette Co., which has aggressive plans to build a sustainable community of businesses and homes on the former industrial site. A few weeks ago, Noisette CEO John Knott told the Business Journal his financing was on solid footing.
Knott said this week he believes the company is close to securing the long-term financing necessary to meet Capmark’s loan obligation. He said he was taken aback by the foreclosure lawsuit, because the two companies were involved in ongoing negotiations.
The loan with Capmark, taken out in 2006, was to serve as bridge loan while Noisette sought traditional long-term financing. Part of that money was used to pay off North Charleston for the $9.6 million price tag on the property, and other money was set aside for infrastructure developments, Knott said.
Knott said a deal with a traditional loan institution crumbled last fall as the capital market imploded. In recent months, Knott said the company was close to securing an alternative deal with a conglomerate of private investors but that they were scared away by the General Assembly’s rail debate.
“They put their hands up and said, ‘What in the name of heavens is going on? You have all these leaders working against this project and the city of North Charleston. What is going on?’” Knott said.
Knott said the investors, after reviewing the relevant paperwork, are still interested in the project and confident that the law stands on Noisette’s side. He believes the deal will come through in time to negate a foreclosure.
As to the timing of the lenders’ foreclosure lawsuit, Knott said he believes it came about because another buyer might be in the mix.
“It is clear that the link between what’s been going on with the state agencies and state Legislature and state leaders and Capmark is not accidental,” Knott said. He declined to elaborate further.
On Monday, Commerce Secretary Joe Taylor said in a statement that the news “may create an opportunity for all parties who have an interest in this site to re-evaluate the options that may exist.”
Taylor’s statement read, “The Department of Commerce is certainly interested in looking at any option that will result in long-lasting, good-paying jobs for the people of North Charleston and the surrounding area.”
Through a spokeswoman, Taylor declined a phone interview.
The Business Journal sent the following question to the department via e-mail: “Is the Department of Commerce, either on its own, or as part of other state agencies’ efforts, actively in negotiations to purchase the property on the former Navy base that is now subject to a foreclosure lawsuit?”
“I was able to get the secretary briefly and the answer to your question below is no,” spokeswoman Kara Borie responded.
Summey said the zoning in place on the property would preclude a new buyer from running intermodal trains through the area or from building a warehousing district, both of which are called for in a S.C. Commerce Department rail study that was released in the spring. The study suggests this is a solution to providing competitive rail access to both Norfolk Southern and CSX.
Were the state looking to buy the property, or facilitate a buyer for the property aimed at implementing those interests, Summey said “they are stepping up the wrong tree.”
“The ownership has nothing to do with the validity of the agreement with the State Ports Authority,” he said.
Summey said Monday that he believes the project to redevelop the Navy base, kicked off in 2001, “will always be successful whether it is the Noisette Co. or not.”
“We will work with the Noisette Co. if they can pull out of this, or whomever takes over on that portion of the properties,” Summey said.
Reach Molly Parker at 843-849-3144.
Print