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County puts lawsuits on hold to work with Bank of America on developments

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By Brian Slattery

Brunswick County will put a number of bond lawsuits involving some developments on hold as part of a deal with the new owner of those developments.

In May 2012, Brunswick County went to court in an effort to complete infrastructure improvements in Mark Saunders’ various developments throughout the county.

Brunswick County commissioners voted to call bonds for several of Saunders’ properties in March 2012 and sued the bonding company, Bond Safeguard Insurance Co., in U.S. District Court.

In the lawsuits, Brunswick County demanded Bond Safeguard either put in the infrastructure or pay out the bonds to the county.

The county required developers to buy bonds at 125 percent of what engineers said it would take to complete the infrastructure.

In January 2012, Bank of America sued Saunders for defaulting on $78 million in loans.

In December 2012, Saunders handed over 750 parcels of property to Bank of America, including parcels in Ocean Isle Palms, Seawatch at Sunset Harbor and Ocean Ridge Plantation.

The properties involved in Brunswick County’s lawsuits are part of, but not the entirety of, Ocean Isle Palms, Seawatch and Ocean Ridge developments.

After Bank of America acquired the properties, it offered Brunswick County a deal.

County Attorney Huey Marshall said the county brought the lawsuits to finish the infrastructure or give the county the money so it can do it on its own.

The county isn’t interested in getting into housing infrastructure development, he said, but needed to act before the bond agreements expired.

“Now, with the potential for developers to be interested again in building, the developments have no roadways, water and sewer, stormwater management and no access for trucks to get through,” Marshall said.

The county’s new agreement with Bank of America is a step toward providing for new development.

“Bank of America will (spend) the $5.5 million in two years; the trust will do the work,” Marshall told commissioners at the Monday, Aug. 5, county board meeting. “The money spent must be geared to reduce the unfinished infrastructure amount in the bond(s).”

As part of the offer made by the bank, the lawsuits will be put aside during the agreement. If the terms are not met, they can be continued.

There is an estimated $18 million in infrastructure work still to be done across all the properties involved. North Myrtle Liquidating Trust will guarantee $5.5 million in work will be done in the next two years.

Bank of America has different options for how it spends the money: It can either spend it on utility improvements or use it to buy back or trade properties with the property owners.

If Bank of America can collect all the properties in a development, Marshall said, it can take the whole development “back to acreage,” which would end the need for infrastructure requirements and cut down the price tag for all the unfinished work, allowing the bank to go back to step one in the process of developing the properties.

If the terms of the offer are met, it could lead to the end of the litigation, but Brunswick County expects the infrastructure work that was bonded to be completed.

Marshall asked the commissioners to approve entering into the agreement, which they did unanimously, 4-0. Vice chairman Marty Cooke was absent.

 

Brian Slattery is a staff writer for the Beacon. Reach him at 754-6890 or bslattery@brunswickbeacon.com.