A plan to construct a federal-style office building in downtown Havre de Grace has been put on hold because the property owner has filed for bankruptcy protection.

The city had agreed to grant the builder a property tax abatement when the project was completed. The builder was seeking a state loan to help him with financing the project, but that may be in jeopardy because of the bankruptcy filing.

The property owner, Joseph Robert Harris of Washington, D.C., filed July 25 for personal bankruptcy protection under Chapter 13 of theU.S. Bankruptcy Code.

The property is located at the corner of St. Johns Street and Pennington Avenue.

On the site is the former Swan Inn that city commissioners and housing officials say is "blighted" and has at least 10 city housing code violations filed against it.

"The whole thing is in limbo until we can get this thing resolved.Everything is up to the courts," said C. Coale Hawkins, of Hawkins Enterprises, a renovation contractor based in Aberdeen.

Hawkins said he had intended to buy the former inn property and renovate it for offices.

The proposed construction plan, Hawkins said, would keep intact the outside of the former inn while gutting the interior. Whencomplete, it would consist of about 6,500 square-feet of leaseable office space.

In April, Hawkins and his partner, William A. Carricoof Havre deGrace, applied for a state loan under the State Action for Targeted Areas (SALT) program. The state program provides financingfor commercial projects that assist revitalization of urban areas.

Borrowers pay back the loans at varying interest rates and other loan terms.

The state has not approved the loan yet. Stanley Ruchlewicz, Havre de Grace city planning director, said there is $1.1 million available statewide for SALT loans this year. The longer the Hawkins projects lags, the more likely that fund will dwindle as other projects receive loan approval.

He also said under new terms of SALT loans the city would have to pay 10 percent of the total cost of the project -- in this case about $400,000.

Hawkins and Carrico sought $190,000 in their SALT loan application.

The city, according to a commissioners' resolution signed May 5, was planning to assist the project by granting a five-year 100 percent abatement of all city property taxes, not to exceed $13,500.

Hawkins said he and Carrico had hoped to have purchased the property by Aug. 15, and to have completed construction of the building four to six months later.

Harris was unavailable for comment. But his lawyer, Jeffrey C. Hines, of Baltimore said his client wants to sell the property.

Bankruptcy court records show Harris lists debts of $35,950.

Those debts include: a$32,000 for mortgage to Arthur G. Bennett of Silver Spring; $3,000 for mortgage to First National Bank of Maryland; and $950 to Hines, his attorney,

Under Chapter 13, which Harris filed for, a debtor canask the courts to reschedule debt payments that will be acceptable to priority lien holders.

Hawkins said he is not abandoning his plans to develop the office building, which he plans to call Hawkins Centre.

City administrators had hoped the project would spur other property owners to rehabilitate their buildings, encourage others to purchase downtown properties, and create jobs.

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