Growth & Development
Fire Station Foreclosure Drags On
Mayor, Other City Officials Pulled into Case
The foreclosure of an old fire station in the Vista has been held up in court for more than two years because a local developer says city officials and the city’s Columbia Development Corporation prevented him from developing the property.
And in the coming weeks, a judge will decide whether the developer can force several prominent city officials to give testimony: Mayor Steve Benjamin, former City Councilwoman Belinda Gergel and City Attorney Ken Gaines.
The Face of Downtown
Developer Tom Prioreschi has been one of the main forces behind downtown Columbia’s revitalization — and thus a close ally of the City of Columbia. Over the last decade and a half, he bought up several Main Street properties, using historic tax credits to restore and build out the Tapp’s building, Berry’s on Main, the Kress building, the Barringer building and the Lofts at Lourie’s. His company Capitol Places manages more than 150 apartments downtown.
And in 2008, Prioreschi bought the old city fire station on Park Street in the Vista for $1.45 million, announcing a $14 million live-work-play redevelopment of the space.
To buy it, Prioreschi obtained two mortgages: one for $750,000 with BB&T, and one for $400,000 with the Columbia Development Corporation, a partner in the project, which made the loan at the request of City Council and then-city manager Charles Austin. The CDC also advanced Prioreschi money several times, and has paid the property taxes and insurance on the fire station ever since the sale. The CDC later bought the BB&T loan to protect its investment, believing BB&T was about to foreclose on the building.
According to an attorney for the CDC, Prioreschi never made any mortgage payments. (Prioreschi says he did make some early payments on the BB&T loan, however.)
In late 2011, after years of trying to work out a way to get its money back or develop the property, the CDC filed a foreclosure action against Capitol Places, seeking about $1.4 million, Free Times reported in February 2012. That number has grown, says the CDC’s attorney, as the case has dragged on in court. The CDC has now named Prioreschi personally in the suit. Prioreschi is on his third attorney since the case began.
“This is not a complicated case,” said Paul Harrill, the CDC’s attorney, in court April 30. “They’ve never taken a position that payments have been made.”
But for Prioreschi, the case is anything but simple. It’s a tale of betrayal and bad faith.
“Morally They Did the Wrong Thing Here”
Prioreschi told Free Times he couldn’t comment on the pending fire station case. But in an affidavit filed in December, he lays out part of his case against the CDC and the city. In the lead-up to the sale, Prioreschi alleges, then-city manager Steve Gantt privately asked him to delay buying the fire station so the city could use the space as a homeless shelter for the winter.
The delay, according to Prioreschi, meant he had to try to launch the project in 2008, right as the global economy was crumbling.
“We tried dozens of different development scenarios from mid-2009 to late 2011,” Prioreschi says in the affidavit.
He also claims the CDC breached its fiduciary obligations when it filed for foreclosure, because it was a partner in the deal, and the entire purpose of that partnership was to develop the fire station property.
“Legally they have a right [to foreclose],” Prioreschi said in part of a deposition quoted by the CDC’s lawyer. “Morally they did the wrong thing here. … CDC did the wrong thing, the City of Columbia did the wrong thing and all the decision makers in this did the wrong thing.”
Fred Delk, director of the CDC, tells Free Times he can’t comment on the pending case, either.
The CDC is a quasi-public entity that gets operational funding from the city. However, the money invested in development deals like the fire station doesn’t come directly from the city, but from the corporation’s various capital investments over the years. In other words, it’s not taxpayer money that the CDC is seeking to recover, but the CDC is deeply entangled with the city — and the city is becoming ever more entangled with the case.
Will City Officials Testify?
Prioreschi’s attorney has already deposed several city officials: Planning and Development Services Director Krista Hampton; Preservation Planner Amy Moore; and former city manager Steve Gantt.
At an April 30 hearing, the attorney wouldn’t say exactly what he hopes to learn from Benjamin, Gergel and Gaines, but it has to do with a letter Prioreschi was seeking from the city in yet another attempt to redevelop the property.
In 2011, as Prioreschi was trying to put together a plan to develop the fire station and save it from foreclosure, he approached the city asking for a letter stating that a particular development plan would comply with the deed restrictions on the property. According to Prioreschi’s testimony, the letter “was a specific requirement” of a company he planned to work with on the development. He never got the letter. According to Prioreschi’s attorney, city officials’ testimony is crucial in understanding why the city didn’t issue the letter and how that may have damaged Prioreschi’s attempt at redevelopment.
An attorney for the city says that Ken Gaines, as City Council’s attorney, shouldn’t have to give testimony because he has an ethical duty to protect attorney-client privilege. As for Benjamin and Gergel, the city believes they’re protected by legislative privilege, which means they don’t have to give testimony about things that are within the scope of their official duties.
“Mr. Prioreschi contends that if this letter had been issued, this project would have been resurrected again … everything’s golden again,” said Pete Balthazar, attorney for the city. However, he said, “There is no evidence that even if this letter had been issued, anything would have been different.”
Benjamin told Free Times he couldn’t comment on pending litigation.
As for Harrill, the CDC’s lawyer, he calls the entire question of the letter a “red herring.”
“By foreclosing on the mortgage, we’re not in violation of any statute in any way,” Harrill said.
Judge Joseph Strickland, who conducted the April 30 hearing, will rule only on the question of whether Benjamin, Gergel and Gaines can be compelled to testify. A trial on the actual foreclosure is scheduled for July.
The fire station isn’t the only trouble Prioreschi has suffered of late.
Last year, a judge awarded the City of Columbia a $308,217 judgment against Prioreschi for a 1999 mortgage on Berry’s on Main.
And last year, South Carolina Bank & Trust filed for foreclose on a mortgage for the Main Street building that houses New York Style, right next to the Berry building. However, the parties settled and the foreclosure sale was canceled.
Prioreschi owns several other Columbia properties, but he says nothing’s currently for sale.
“We’re not selling anything,” he told Free Times after the April 30 hearing.
In fact, he said, he’s launching a new downtown project: He plans to develop 1321 Lady Street into 134 apartments.
He also recently took over operation of the Tapp’s Arts Center, which had been under the management of Brenda Schwarz. In 2011, with Prioreschi’s blessing and backing, Schwarz got a city loan for $200,000 to run the arts center. With Schwarz out of the picture, Prioreschi will now be on the hook to the city for that amount.
Even today, Prioreschi maintains the fire station project is still viable.
The structure has sat empty for years, many of its windows broken out, with the old fire rescue practice tower looming above the Vista.
“Mr. Prioreschi has tried since 2007 to make this work,” said Robert Lyles, Prioreschi’s attorney, to Free Times. “The question begged is why the CDC will not cooperate.”
As for the CDC, it says it just wants to see the station developed. If it’s successful in winning the case and forcing a foreclosure sale, it’ll probably bid on the building, Harrill told the judge.
“We’d probably attempt to sell it to someone else with a development plan,” Harrill said.