Myrtle Beach ~ Market Common hits financing roadblock
Myrtle Beach and the bank financing parts of the urban village on the former air base are at odds over how to structure the project’s contract - leaving city officials and developers scrambling to fix a financing snag.
The developers, McCaffery Interests and Leucadia International, said that J.P. Morgan Chase would only provide the $96 million needed for the commercial phase of The Market Common if that phase were incorporated separately from the other two phases.
The city, on the other hand, wants all phases of the $650 million development to remain under one contract, and has repeatedly rejected the developer’s request to create a separate corporation - and contract - for the latter phases.
Officials are cautiously optimistic, saying they do not believe the project, a 113-acre residential and commercial mix, is in jeopardy.
“I just do not believe we’re anywhere near that point yet,” said Buddy Styers, executive director of the Myrtle Beach Air Force Base Redevelopment Authority. “There are solutions to this.”
City Council withheld final approval of the project this week but could hold a special session to vote on the issue before the next meeting on July 11.
The city’s objection is twofold: First, administrators prefer to deal with one entity, and second, city officials are concerned about the lack of protections in a second contract in case the project fails, City Manager Tom Leath said. The first contract included enough financial assurances to make the city feel comfortable, he said.
However, the bank would not consent to financing a project that included liability for anything beyond the initial construction phase.
“Right now we’re still putting the final touches on the deal, mainly as it concerns their bank,” Leath said.
When everything is ready to go, the city will issue around $35 million in bonds at the same time the developers receive a construction loan, “so that one, theoretically, doesn’t happen without the other,” Leath said.
If the decision is put off until the next council meeting, the bonds scheduled to be issued in July or August will not be delayed, Leath said.
Council members said they were surprised when the bank’s objections were raised at the council meeting.
“It’s not that we want to be obstructionists, but we will not advance if there’s any question about the deal,” Councilman Phil Render said. “It was not one council member that really expressed concern or surprise, it was several. They just wanted the deal struck with the city protected.”
Source: Lisa Fleisher and Emma Ritch, The Sun News, Myrtle Beach, SC
