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Bank forecloses on Hall commissioner’s property

Powell deals with office building’s decreased value, loss of tenant

POSTED: September 15, 2012 12:19 a.m.

A bank has filed for foreclosure on a property owned by the soon-to-be senior member of the Hall County Board
of Commissioners.

BB&T of North Carolina recently filed a notice of foreclosure on a $2.6 million debt Commissioner Billy Powell has with the bank on the 329 Oak St. property in downtown Gainesville.

Powell is the third member of the current board to face financial difficulty. Commissioner Scott Gibbs’ home was foreclosed on in 2011 after his business went into bankruptcy. Commissioner Craig Lutz dealt with a personal bankruptcy in 2011.

Still, Powell said he is still hopeful he can work out an agreement with the bank and that the foreclosure process may free the bank up to negotiate with him on the unpaid loan.

The two-story building houses office space for a few businesses and government entities, including the Internal Revenue Service and Koch Foods.

But a “for lease” sign with Powell’s name on it indicates there also are vacancies in the building.

A website for Hall County’s Tax Commissioner’s Office shows that Powell is up to date on property taxes for the building.

Powell said other properties he owns are not at risk of foreclosure.

Hall County records show that Powell and his wife, Helen, purchased the property in December 2000 for $170,000.

The couple purchased the property from the estate of Helen Powell’s aunt after her death in the late 1990s, the commissioner said.

The property had previously been in Helen Powell’s family “for generations,” and a home formerly on the property was where the mother of the commissioner’s wife was born, Billy Powell said.

In 2002, the couple built a 17,902 square-foot brick office building on the edge of the property closest to the West Academy and Oak Street intersection.

“A lot of blood, sweat and tears went into that building,” Powell said. “My son and I used to cut the grass; my daughters used to clean the bathrooms. It was kind of a family affair for a few years until it got up and going.”

The building upgraded the value of the property tremendously, and Powell said it earned him and his wife a “Golden Nail” award from the Gainesville City Council for an effort to bring business to the downtown area.

Today, the tract is worth $1.89 million, according to information on the Hall County Geographical Information Systems website.

It was worth as much as $2.7 million in 2008.

Originally, the Powells financed the building’s construction through Community Bank and Trust, but the commissioner said he refinanced it a few years ago — a foreclosure note dates the loan back to March 2008 — with BB&T to take advantage of a lower interest rate available to him.

That same year, Powell said he had a chance to do a “derivative swap” which he said allowed him to stabilize a fluctuating interest rate on the building loan but also left him with no flexibility with the bank when a major tenant moved out of the building in 2010.

Powell said in 2010, WellCare gave notice that it was moving out of the building. He hasn’t been able to fill the space since, though he says there are potential tenants, and another 4,000 square-foot “incubator space” for new businesses is only about half-occupied.

“I think it all comes down to the real estate market,” Powell said, noting the damage done to the housing market and the construction industry and the domino effect it has had on the larger economy. “Businesses feed on each other, and when one leg of it starts getting wobbly, then sometimes it falls.”

When WellCare announced it was leaving, Powell said he showed BB&T his books “and said ‘here’s every dime of income and every dime of expense on this building.’”

“I said ‘I can tell you when this tenant leaves I’m not going to be able to make this payment, so I need some help,’” Powell said.

Despite an offer to pay interest only on the loan for a year, Powell said the bank didn’t budge and instead raised the interest rate on the loan. A lawyer representing the bank in the foreclosure process did not return a call seeking comment on the case.

“That just put the nail in the coffin when they did that,” Powell said.

Still, Powell “tried to make as much of a payment as I could” until January, when the bank called the loan due. He said he continues to maintain the building and pay utilities.

“Of course, I didn’t have $2.6 million to pay the note off,” Powell said. “When you start talking to people in headquarters locations, they don’t know me, the history I’ve had with the bank, they don’t know the property. It’s just a number to them. Therefore they’re a lot less compassionate and a lot less willing to work something out.”

Powell said tenants in the building should be protected by their leases and should make the property more attractive to potential buyers. The Internal Revenue Service, he said, recently signed a 10-year lease on the building.

Powell said he thinks the foreclosure notice is a formality that might allow the bank flexibility to work with him. At least he said he hopes that is the case.

“Sometimes it generates negotiations, sometimes not,” Powell said. “I continue to be hopeful and optimistic that things might work out, because I’d love to keep the property. It’s got a lot of family history to it.”


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