The fog of bankruptcy has been hovering for 18 months, if not longer, over a swath of former industrial land on the upper peninsula.
It could lift soon.
Once known as the Magnolia tract, the property is in the Charleston Neck Area, between King Street Extension and the Ashley River. Most of it was sold late last year to a group that includes the real estate development division of packaging giant WestRock.
The final pieces are ready to go on the block.
A willing buyer is already in hand, with the guarantee of a minimum purchase price. The only unknown is whether other competing bidders will jump into the fray.
Either way, a change in ownership is imminent, the latest sign that development activity will follow on the long-vacant site.
The sale also could turn the page on Magnolia, an overly ambitious urban reuse project conceived more than 15 years ago.
The tract is just across the marsh from Charleston's Wagener Terrace neighborhood on the upper peninsula, and it's hard to miss from Interstate 26. Decades ago, the land housed fertilizer factories, a lumber-treatment plant and other heavy industrial businesses. Those tenants left a legacy of lead, arsenic, creosote and other contaminants in the soil.
Led by Cherokee Investment Partners, the Magnolia backers set out to scrub the dirt clean so it could be reused, describing their mammoth infill project as the largest redevelopment of polluted land in South Carolina. The goal was to build a dense mix of homes and commercial space on the remediated land.
Raleigh-based Cherokee and its local investors formed two companies, Ashley I and Ashley II, which began buying up property in 2002. Over time, they closed 33 sales and amassed 182 contiguous acres around Braswell and Milford streets.
The master plan called for a small city to rise from the former industrial wasteland: some 4,400 residences, 900 hotel rooms, 2 million square feet of commercial space, parks and a marina. At one point, there was talk of extending an old rail line from the lower peninsula to the property for a commuter trolley.
The city of Charleston also caught the fever. It sold bonds to fund $15.6 million in infrastructure work to help to nudge this future tax base along. Among the improvements was an $8 million span linking the south end of the Magnolia site with Heriot Street. The structure has since become known as Charleston’s “bridge to nowhere.” Only its pedestrian lane is open to traffic.
The Magnolia deal faltered and never regained its footing. Bogged down by the 2008 economic downturn, cleanup expenses and costly litigation, Ashley I and Ashley II filed for bankruptcy protection early last year, listing debts of more than $23 million.
The land owners also disclosed they had invested more than $50 million in the “Magnolia Project” from 2002 to 2008.
The companies were out, no bones about it. The purpose of their bankruptcy filings was to “seek court-approved sales of their properties to ensure future cleanup and development of these properties to the great benefit of the Charleston community.”
Ashley I sold its portion in late 2016 in a deal that generated $1.75 million for creditors. The buyer was its biggest lender, the WestRock-led group, which was owed about $18.6 million. The new owner said it would continue the environmental cleanup and other preliminary work so it can break ground on the first phase. It has said it did not expect to veer much from the original master plan.
The two remaining parcels owned by Ashley II were more problematic. One of the big sticking points was that no one could predict with any certainty how much it would cost to complete the soil remediation on the 31 acres, said Columbia bankruptcy attorney Bill McCarthy, who represents the seller.
"It's the unknown," he said after a May court hearing.
Even the buyer of the neighboring land, the WestRock-led group, "would prefer not to be a purchaser," attorney Rick Mendoza told Judge David Duncan at the same proceeding.
Despite its warts, the site, which runs along Milford Street to the Ashley River, "is an extremely valuable piece of property," said Bill Metzger, a lawyer who has been tasked with liquidating Ashley II.
At least one real estate investor seems to agree. Clarius Partners will serve as the "stalking horse" when the land goes on the block. In that role, the Chicago-based firm has agreed in writing to pay $6.25 million for the land, unless it is outbid.
The auction is scheduled for Sept. 18 in the offices of a Charleston law firm. The bankruptcy judge will hold a hearing the next day to hear from creditors and decide whether to approve the sale.