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Published: Tuesday, Mar. 09, 2010 / Updated: Tuesday, Mar. 09, 2010 07:49 PM

Financing questions loom over tower project

FORT MILL TOWNSHIP -- 

Each morning, when Roy Van Polanen takes his 9-year-old daughter to school, he passes the Heritage Towers project.

The Fort Mill man retraces the same path in the afternoon when school ends to collect his daughter. Again, he passes the incomplete Heritage Towers project.

Some describe the project as an eyesore, but Polanen said he doesn’t see it that way.

“I see it as an obligation that is not fulfilled,” he said of the MorningStar Ministries’ endeavor.

That obligation is one York County leaders also have an issue with. At a March 1 meeting, the York County Council voted to give MorningStar a new deadline to move ahead with plans to turn the 21-story building – a remnant of Jim and Tammy Faye Bakker’s PTL community – into housing for active senior citizens or have it demolished at MorningStar’s expense.

Marketed by MorningStar as the future site of a “Refirement Center” that would encourage seniors into the ministry, the project, according to county officials, is past a six-month deadline for renovations. Claiming that MorningStar Ministries breached an agreement with York County, county officials served noticed that MorningStar has 60 days to remedy the problem.

County Manager Jim Baker e-mailed local newspapers a copy of the certified letter dated March 5 that Baker said was sent to project officials. The letter contends that according to the development agreement, within 180 days of county approval of the commercial site plan for the property, MorningStar was to provide several documents related to financing.

“This letter constitutes a notice of default by MorningStar for breach of its obligations to provide bid, performance and payment bonds, a letter of credit or a demolition bond or its financial equivalent,” the letter states. “...York County reasonably finds that the developer has committed a material breach of the terms and conditions of the development agreement, and MorningStar, as the developer, is required to cure the material breaches of the development agreement within 60 days of the date of this letter or the county...may unilaterally terminate or modify the development agreement.”

The county asserts in the letter that, “More than 180 days have elapsed since the approval of the commercial site plan, and MorningStar has not met its obligation to provide bid, performance and payment bonds, a demolition bond or a letter of credit for the completion of the project or the demolition of the tower.”

The day before the letter was sent, MorningStar pushed back at the county, contradicting claims made at the March 1 meeting that the Heritage Towers project is behind schedule and under financed. MorningStar’s leader called a press conference March 4 to say officials have no reason to consider condemning and demolishing the tower.

“This is such a shock,” Rick Joyner, director and founder, said during the press conference.

And the project is on target, he said.

“We’re on our timeline,” he said. “Everything is going good.”

The next day, Baker commented on Joyner’s message.

“I hope what they said in the press conference is correct because if it is they ought to be starting construction soon, and we won’t have any problems,” Baker said. “Obviously, if that’s not really the case, then we will have to go forward.

“Short term, that would mean that we would try to force them to honor their commitment,” Baker added. “Ultimately, that would mean demolition of the tower.”

But last Thursday, Joyner said the project was moving along so well that the demand for units surpassed available units. The first phase has 140 units with more than 200 reservations with $1,000 deposits, he said.

“You can’t do much better,” he said. “We could have gotten more people.”

Baker appeared skeptical.

“If they over subscribed and really have 200 people who really want to move into 140 units, why haven’t they got the financing in place and started construction?” he said. “They made a written agreement to have their financing in place in 180 days, and we can’t understand why they didn’t take that seriously. That was their agreement, not ours.”

Baker asked a rhetorical question:

“Are they really on track and expecting to go forward, or are they desperately trying to delay their commitment?” Baker asked.

York County officials wanted to demolish the hotel in 2007 and threatened to fine the company daily after MorningStar missed a deadline to tear it down. The county said it might tear the tower down itself and send MorningStar the bill. Fast forward about three years. In mere weeks, Morningstar is set to debut a model unit at the tower that will feature two bedrooms, two full bathrooms and floor to ceiling glass, project officials said.

“How important can the model be if they already have more requests than units?” Baker asked. “I’m not following the rationale.”

That debut is set for March 26 and it will help set the stage for the finished project, Joyner said.

“I think any community in the country would love to have a $40 million construction project going on,” he said. “When we get finished, we expect this project to be a true crown jewel for the county.”

During the press conference, Joyner also expressed concern about a recent newspaper story that suggested MorningStar failed to market its active adult community appropriately and lacked funding for the project.

“We’re hoping this doesn’t slow us down,” he said of the news story. “This is the kind of media coverage you don’t want.”

MorningStar officials contend that moving their deadline up isn’t feasible.

“We’re not asking them to move the deadline up,” Baker said. “We’re asking them to honor the original deadline.”

MorningStar also noted that project financing is not an issue, considering the project started with multiple lenders. Initially, the project commanded the attention of about 14 to 15 lenders, Joyner said.

“We’re down to four that we feel are viable sources,” Joyner said. “That’s good during these (economic) times.”

However, County officials found fault.

“If they were on track from our prospective, they would have their financing in place,” Baker said. “That was what they committed to do.”

Joyner said that, until now, he thought MorningStar and the county enjoyed a good relationship.

“Until this, they’ve been great to work with,” Joyner said.

“It’s extremely unusual for the county to be issuing public statements without any official correspondence with us and not allow us to demonstrate our progress,” Dave Yarnes, vice president and tower project supervisor, noted in a prepared statement issued March 4.

“We have over $2 million dollars in soft cost development of the tower to date.”

At least one resident remains skeptical.

“Everytime that deadline comes, there is yet another excuse that results in an extension by the county,” Polanen said. “You’ve got to put your money where your mouth is.”