I hope none of you were surprised to hear about this development. (If so, it's because you apparently didn't read my recent rant about "the problem with downtown." Hint: It has something to do with negligent landlords.)
The bank filed a request late last month for a foreclosure hearing in Orange County Superior Court, saying Spencer C. Young Investments wasn't making payments on $2.63 million it had borrowed in 2005 to buy the property.
[...]
In June, a collection agency sued Young, saying he had defaulted on a $15,000 credit line from Citibank. Earlier, Wright Co. Electrical and Maintenance Services sued Young in Orange County small claims court, claiming almost $3,000 in unpaid services there and at a shopping center he owns in Durham.
This summer, Raleigh-based Benjamin Construction Inc. sued Young for more than $550,000, saying he did not pay for construction of Baba Ghannouj, a Middle Eastern restaurant, and various general improvements to the property.
I believe Spencer Young's purchase of the Courtyard may be one of the worst things to happen to downtown in many years. Although I have never met him (that I know of) I have to say that in the papers and on his web site, Young comes across as belligerent and irrational. Joe Riddle - owner of Top of the Hill and several other vacant lots - is on my lousy landlord list too, but apparently Riddle can afford to just let his valuable properties sit empty and gathering dust while Young cannot.
Issues:
Comments
Its a shame
that 3Cups has been driven out. I love their coffee, and there's nothing quite like it anywhere else. Not to mention my family makes an extra effort to visit Baba Ghannouj and Locopops a couple of times a week.
This is just the beginning of the end. I'm sure the legal drama will drag on for another 6-12 months, but there's no way to put off foreclosure on a $2.63 million dollar loan forever, and there's also no way he's going to be able to make the payments given the current vacancies. I'm guessing the monthly payment on the loan is around $17K, and the combined rent from Locopops, Bonne Suiree, Penang and Baba Ghannouj can't cover both the payments and other monthly expenses.
Is there anyone out there who can make a case other than Young is simply incompetent?
Ex Courtyarders' and moves to S. Estes and Elliott
Hi Czei... yes, bummer on 3Cups, however I presume you know they are re-opening on S. Elliott in a few weeks more time. Bummer too, about Benjamin Construction being stiffed for the finish on Baba G.'s. We at ncdm.tv moved out Oct 31st, a fine day for that..!! and are now on S. Estes, glad to note that we can walk by backlots to the new 3Cups in 12 minutes time. As well, LocoPops has a store over there too, 4 doors down from the new 3Cups.
And, Ginger and Roger are still, last time I checked in the back of the Benjamin Contractor's office at the courtyard, waiting for their chance to dance again.
Trees, yes, they came down twice, the first time, our office was on the third floor, I came in in the morning and there was guy with a chainsaw outside my window working on the trees, the frist time was for the 3Cups remodel. I've got lots ofpictures if anyone wants some.
So, all is not lost, except we all miss West Franklin St. And the old courtyard before it was "destroyed" perhaps it will live again.
Regards
Jim Fink
ncdm.tv
Can current residents remain
I think so, as long as they
I think so, as long as they continue to pay their rent. The "pickle" building on 15-501 was in bankruptcy a few times and it didn't seem to have much impact on the existing tenants. A few turned over.
I think the tenants that are left there have weathered the hardest times and anything forward could only be an improvement.
fred and ginger were the first to go
I still haven't forgiven this guy for getting rid of Fred and Ginger and cutting down all the trees. (Though my daughter loves the new fountain and stream.)
It would be wonderful to see this property in the hands of someone who can be civil. Hopefully, Wachovia will see the tenants as value added as they sell the property.
3 Cups is moving to Elliott
Don't forget Phydeaux
We used to get our dog supplies there after brunch on Sunday or random nights when we would be up that way. It will be just as easy or easier to get our stuff now that it is on Elliott Road, but I'll miss the old locations.
One man with courage makes a majority.
- Andrew Jackson
Well the silver lining is
Well the silver lining is that there is actually a third party entity--the bank--with some leverage The fact that there is a loan on the property at least makes the owner accountable for sound business management of his property.
And once again, Joe's properties ARE performing from his point of view. The Gap and Sunglass Hut and First Union--now Wachovia--pay rent every month on the empty spaces. One could make the case that those businesses are part of the problem-----as national firms, you would think they would have better lease negotiators who would have put a sublease clause in there so that they could re-lease the property if they vacated it. Instead they keep paying on empty space and have no recourse about filling it up.
Using the only real ltools that a government has to motivate desired outcomes, maybe we should tax empty buildings more than occupied ones in a central business district.
Wachovia may not want to
National chains that own downtown properties
Anita, I don't understand something that is relevant to your last post.
The Outback restaurant chain owned the vacant building on West
Franklin former occupied by the Wicked Burrito. They owned it -- vacant --
for several years. Did they have revenue coming in that was not revealed
in any of the media stories? Why would Outback want to own a vacant
building for so long? Or is this just another problem with chains owning
local business properties, i.e., on the national scale, one building
is of little consequence to the chain, even though it has great consequence
to local people, especially the nearby businesses.
Your last point is probably
Your last point is probably the most correct one. I would guess that the problem there is that the one location was such a small part of their portfolio that it probably didn't make a blip on the balance sheet at corporate.
If the system works right, there is some accountability to shareholders to maximize returns so it theoretically should not have stayed vacant as long as that one did. I honestly think that something must have happened at corporate that kept that particular property off the radar screen for a while. Someone may not have been aggressively managing the real estate portfolio. I seem to remember that there was some coporate restructuring going on during the time this property was vacant and the ball was probably just dropped.
Some speculated at the time
I heard that too. Well
Corporate Citizenship
A vacant house in a
A vacant house in a neighborhood has negative implications for its neighbors--housing values, etcetc---- but i don't see anybody demanding that residential owners keep their homes occupied or rent to a certain kind of tenant that is believed to benefit the community more than another tenant. I understand the frustration-- I get frustrated too. Perhaps we should start a campaign to find someone who is civic and community minded to purchase some of these properties. Would the local governmental entites be willing to sweeten the deals by doing something on their end to make it attractive to a private entity to do that?
What about "soft power"?
Some of this is ongoing
It is our business
Anita, I have very frequently heard people around here complain about precisely whether and to whom landlords rent their property. I think we all know the refrain... "sure, I like students, just not in my neighborhood." Not to mention the outcry aginst the recent social engineering attempts fom the owners of Abbey Court.
And all you have to do is drive down Broad Street in Carrboro to see that 3 or 4 vacant or neglected houses are reducing the value (both financial and psychological) of a neighborhood that is as close to Weaver Street Market as the vaunted mill houses that sell for about 3 times the price.
I think it is absolutely our business when property owners are consistently acting in a manner that is contrary to the public good, especially when it's in a place like downtown that is central to the health of the entire community. I am really disappointed that the Downtown Partnership and the Town of Chapel Hill don't appear to have any mechanisms to improve this kind of situation.
Tax Write off on vacant properties.
I imagine Outback and the likes also get a tax writeoff on vacant properties in addition to whatever amortization they are using. So, perhaps, Outback uses the losses on the vacant property to reduce it's tax burden. Certainly would be a good financial counterweight to any loan interest. And from a capitalistic point of view, why not? It's a win-win - reduce your tax liability AND hold the property until you really need the cash or get an offer too good to refuse. That may not be the case, but it's logical, if a perverse incentive. Companies will do about whatever they can to get to zero taxes...
David Beck
Intentional losses for tax benefit
Intentional losses for tax benefit are probably more common than some might think. Have worked in a situation where it became clear that the owner really did want an overall loss at that location to reduce taxes on his corporation overall; breaking even wasn't acceptable. The management behavior that follows from such a goal can be bizarre, both from the point of view of consumers and employees, and often from the community's perspective as well. I think, at least in the case of the vacant Wicked Burrito, that was exactly the goal; and the next "incarnation" of the place, as a locale for a non-profit effort, seemed to follow the same logic. However, nothing that logical seems to be at work with the Courtyard.
Businesses aren't the only
Tax dodg'em
The analogy to individual taxpayers' strategies to reduce their liability doesn't exactly hold. It's short-sighted to run part of a business into bankruptcy for immediate tax relief, especially when proper management of that part of the business could have made a profit.
Moreover, putting such a high priority on lowering tax liability that clients, employees, tenants, and community all suffer raises questions of citizenship and ethics, even if strict legality isn't at issue.
Finally, I don't think anyone would argue that the tax structure is so rational that adherence equals integrity: we all know of examples of corporations and wealthy individuals who benefit enormously from "legal" deductions and tax shelters, such that most of us probably pay more taxes individually than they do.
If the reason Lone Star or Young or any of the irresponsible landlords are doing what they are is for a tax dodge, I don't think we should excuse it as something we all would do in the same position.
Don't assume the Wicked Burrito was profitable
If Outback gave the new restaurant a test try and found out it was not a winner, then they would have had greater losses on trying to keep it open.
Next option is to hold on to the property until it appreciated, and when the Franklin Hotel opened up, the property reached a sell price.
Couple comments...first,
Couple comments...first, IIRC it was Lone Star Steakhouses that owned the Wicked Burrito property for so long and left it vacant. They constantly turned down requests to lease it long term or sell it, and the only reason anyone could think of was they needed the tax writeoff somehow. I was a business owner in Chapel Hill at the time and was very interested in that property.
Supposedly the guy who owns the vacant stuff under Top of the Hill is also VERY difficult to work with and there seems little end in sight to that property remaining vacant. I've heard the town has tried and tried to help the owner and he's just incredibly difficult and in no hurry at all to have it rented. Very strange situation.
But as has been pointed out, these things happen. There's just not much that can be done to force people to do reasonable things with their property. A civic minded group buying it would be a good idea, but the problem is most of the time the people in this situation won't sell. I believe both properties I've mentioned have had suitors try to purchase them at very reasonable prices. The owners wouldn't even negotiate!
As for a law on what people must do with property, we already have controls like that. It's called zoning. IMHO, anything much past that starts to seem pretty communistic.
--Donnie