The former Charleston Naval Hospital is going into foreclosure, dashing North Charleston’s hopes that the city’s struggling south end would soon be revitalized by a redevelopment project whose investors include Donald Trump Jr.
Plans to renovate the long-vacant 10-story building, which is the tallest in the city, were announced with much fanfare in 2012 by Mayor Keith Summey. The city bought the building for $2 million that year at a federal government auction and later sold it to developers for $5 million.
A plan to turn the hospital into offices focused on medical services got truly under way two years ago when Charleston County agreed to be the anchor tenant, allowing private developers to use the promise of rent payments to secure loans for the renovation work.
But as months went by, county officials complained about delays, and more than a dozen contractors claimed their bills had not been paid by developer Chicora Life Center LC. Three of the companies that complained of non-payment are listed defendants in the foreclosure claim because they have liens on the hospital property.
Charleston County Council decided to back out of the lease deal earlier this month, and then lender UC Funds of Boston, Mass, foreclosed, claiming more than $15 million in unpaid debt.
“I wish we would have moved on sooner, but the other side kept giving us assurance that they were going to make it happen,” County Council Chairman Elliott Summey said Friday. Elliott Summey is Keith Summey’s son.
Elliott Summey said the county is already studying other sites in the area for potential office construction. Other officials have suggested the county could buy the hospital property. Summey said he assumes the developer will sue the county.
“We will accommodate them,” said Utah lawyer Douglas Durbano, who leads the Chicora Life Center group and who said he will file a federal lawsuit next week.
He blamed County Council for the foreclosure, insisting the three floors of the hospital building the county had agreed to lease were ready to occupy.
“The shocking thing here is that the county has triggered the basis for our primary lender to start a foreclosure,” Durbano said. “There are some things that have gone on that we think are almost scandalous.”
According to UC Funds’ complaint, interest payments on the loan to Chicora Life Center were not made in January, February or March. The company is asking for the appointment of a receiver to sell the property.
Charleston County Councilman Teddie Pryor said the county might like to buy it.
“Our first priority is to see if we can secure the building, finish what needs to be done, and move our people in,” he said. “We would have a chance, like anybody else, to bid on the building.”
In 2014, after the county agreed to lease three floors of the hospital building, the county sold a building on the Charleston peninsula housing many of the employees and services that were expected to relocate. The Charleston Center off Calhoun Street was sold to the Medical University of South Carolina for $17 million, but county employees have not moved out because they have nowhere to go.
Pryor said that $17 million could potentially be used toward buying the former Naval Hospital. Under the lease agreement, the county had planned to spend $1,177,044 each year for 25 years to rent three floors of the building.
The former 175-bed hospital opened in 1973 to serve the Charleston Naval Base and Shipyard and once employed more than 1,200 people. Operations were scaled down in the years after the Naval Base closed in 1996, and the building became vacant in 2010. The nearly 400,000-square-foot main building sits on about 24 acres, which include a three-story former enlisted quarters, tennis and basketball courts, and parking for about 900 vehicles.
When the building went to federal auction in 2012, there were several bidders. Keith Summey later said that Donald Trump Jr. had been one of them.
“We knew that was who was bidding against us,” Summey said at the time.
The involvement of Trump, a son of real estate tycoon and now leading Republican candidate for president Donald Trump, was mentioned often by government officials when redevelopment plans were announced. His role may have been overstated.
“He hasn’t been involved on a management basis,” Durbano said Friday. “His father, who is running for president, is not involved at all.”
In an email Friday, Donald Trump Jr. said he has a “passive 10 percent carried interest with no voting rights or control, and I am not involved on a day-to-day basis.”
“I simply thought it could be a great project for North Charleston,” he said.
But even as the building slides into foreclosure, some officials wonder if Trump family money will come to the rescue. Just last month the elder Donald Trump acquired a different commercial building in North Charleston, the former Titan Atlas Manufacturing, another business in the city that Donald Trump Jr. had invested in that ended up in foreclosure.
“Maybe his (Donald Trump Jr.’s) dad will lend him the money or buy the building,” Pryor said Friday, referring to the hospital.
North Charleston’s mayor recently met with Donald Trump while endorsing his candidacy for president, and said the hospital property was not mentioned, though Trump did ask about the Titan Atlas site.
Summey said he remains hopeful that the hospital redevelopment will eventually happen.
“I think what you’ve got now is a building that’s had a couple of the floors redone, and are pretty much ready to lease out,” he said. “I think what will happen is that someone will buy out the mortgage.
“While I’m disappointed, I’m not disheartened,” he said.
Reach David Slade at 843-937-5552 or twitter.com/DSladeNews.