Part of the Clipper Mill development in North Baltimore will go to a foreclosure auction later this month, including more than two dozen partially built upscale homes - the first setback for a project that has transformed long-vacant factories into an mix of shops, offices and homes.
BB&T; Bank has foreclosed on unfinished homes and lots in Overlook at Clipper Mill, planned as a community of contemporary two- and three-story houses, as well as on the cavernous Tractor Building, meant to become apartments, offices and parking.
The Dec. 17 auction is a sign of how Struever Bros. Eccles and Rouse, the Baltimore-based developer known for decades of mixed-use urban renewal projects along the East Coast and in Baltimore neighborhoods, has struggled amid the recession. It has been forced to downsize and hand over some projects to partners, while facing mounting debt, mechanic's liens and contractor lawsuits. Among its projects: Tide Point in Locust Point, the Can Co. in Canton, Brewers Hill in Southeast Baltimore, and housing and retail projects in Charles Village near Johns Hopkins University.
"We are working in very, very challenging times," Carl William "Bill" Struever, the company's president and chief executive, said Monday. "I thought the early '90s would be the worst time in my life, and I was wrong. But we managed to come through it."
Struever stressed that the foreclosure has no effect on most of Clipper Mill, a 17.5-acre project in Woodberry that is tucked in the woods along the light rail line. It is home to tenants such as the popular Woodberry Kitchen restaurant, artists, craftsmen and residents who live in loft-style apartments, condominiums and town houses.
Struever Bros. has renovated several buildings in the former machine manufacturing plant, which employed thousands in the mid-19th century. It had begun building Overlook, designed as 38 semi-detached, "green" houses with large windows, industrial steel accents and open floor plans with pine timber ceilings. Eleven of the homes were completed and sold, and about 95 percent of the commercial space in the project is occupied, Struever said.
But plans to redevelop the Tractor Building and to finish building on the remaining residential lots were derailed by the economy and the implosion of the housing market, Struever said. "We were not able to secure the financing to complete them."
As for the Tractor Building, a 42,000-square-foot historic building on Clipper Park Road, Struever said, the company had counted on using state historic tax credits to make the project economically feasible. Plans called for two levels of parking, 54 affordable apartments and 20,000 square feet of office space. But the developer failed to secure the credits because a rule change limited their availability, he said.
"The Tractor Building is a glorious, magical building, but it's hard to adapt," Streuver said. "Even in a strong market, it would be hard to do without the state credits."
According to a foreclosure case filed Nov. 2 in Baltimore City Circuit Court, Struever's limited liability company, Clipper for Sale LLC, owes mortgage debt of $3.8 million on the 27 Overlook properties. A second case filed Nov. 6 shows an additional $1.25 million owed to the bank on the warehouse building and nearby land.
Both cases were filed by Shaun F. Carrick, a Miles & Stockbridge attorney representing BB&T;, and a call Monday to the firm was not returned. The auction, overseen by Alex Cooper Auctioneers Inc., will be held outside the Clarence M. Mitchell Courthouse.
The Clipper Mill project has transformed "an eyesore" of dilapidated vacant buildings into a thriving community, said City Councilwoman Belinda Conaway, who represents the area.
"It has uplifted the area. ... And when you have a development like that and it works, it helps bring other developers to the area," she said.
Other projects are being discussed or are in the works along the Jones Falls to transform former factories into housing, she said. "These are projects where they will be preserving the historical nature of the buildings and working in the framework to restore it. There is a lot of excitement in that area."
She believes there will be interest in the Clipper Mill properties, too.
The housing slowdown and economic crisis have taken their toll on Struever Bros. The company has struggled with its debts, and defaulted earlier this year on a $5.3 million commercial loan made by National City Bank in 2007.
Once an employer of more than 300 people, the developer has trimmed its work force to fewer than 100 and traded its headquarters space at Tide Point for smaller quarters at the former Procter & Gamble factory.
The company has been focusing on either completing or selling interests in projects, and Struever said it is working with lenders and contractors to resolve outstanding debt.
In May Struever Bros. was replaced as a lead developer on the $1.4 billion State Center redevelopment in midtown Baltimore. Also that month, Struever Bros. and joint venture partner Canyon Johnson Urban Fund II sold a vacant block in Charles Village for $12.5 million to the Johns Hopkins University after abandoning plans to build the Olmsted apartment tower with offices, shops and a parking garage.
In July, Struever Bros. sold its share of the Brewers Hill project, now 99 percent leased, to partner Obrecht Commercial for an undisclosed amount.
And last month, Struever said the company would give up its ownership stake in the $230 million American Locomotive Works construction project in Providence, R.I., a 23-acre residential, office and retail project.
The developer, which had been a partner with H&S; Properties in Harbor East and Harbor Point, major waterfront projects east of the Inner Harbor, now has a diminished role in those projects, Struever said. He declined to elaborate, and Michael Beatty, president of H&S; Properties, could not be reached for comment.
Still, Struever said, he considers it a big accomplishment to have developed or contributed to projects that are succeeding despite the rocky economy - projects with key tenants such as Under Armour in Tide Point, Legg Mason in Harbor East, and Morgan Stanley in Harbor Point.