Old Naval Hospital (copy)

The old Naval Hospital, on Rivers Ave, still remains empty from a failed revitalization project. On Monday, a federal judge accepted a settlement that awards the property to Charleston County. File/Brad Nettles/Staff

Charleston County will become the owner of the old Navy hospital as a result of a ruling Monday in U.S. Bankruptcy Court.

Judge John Waites approved the county's offer to pay $33 million to settle claims by creditors involved in a failed project to redevelop the Charleston Naval Hospital property.

"The litigation has been vigorous and hard fought," Waites said.

Continuing the legal battle would be extremely expensive for both sides and not likely to resolve remaining issues, he said.

Waites commended the county for its decision to use the property to provide public services. At the same time, he said the settlement was in the best interest of creditors.

At issue was a $30 million lease agreement the county signed for space in the building that was used as collateral by the developers to secure loans and buy the hospital property from North Charleston.

The county backed out of the lease deal in 2016 after delays, complaints from contractors about unpaid bills and demands for more funding from the developers. With the anchor tenant for the project gone and a lack of other tenants, lenders quickly foreclosed.

Chicora Life Center then sought bankruptcy protection and acted quickly enough that the county's lease agreement was ruled to be an asset in the case.

Last month, Charleston County Council voted to make a $33 million offer to the developers to settle the case which was accepted.

Waites' decision Monday formalized that agreement.

"We think it's the right result," said Bill McCarthy, an attorney representing Chicora Life Center.

Councilman Teddie Pryor said acquisition of the Navy hospital represents a huge opportunity for the redevelopment of the area. The county will locate services there. Voter registration, social services, drug and alcohol treatment and the disability board are possibilities. Tenants could be a combination of retail and government. A pharmacy is an option, he said. A bank might be located there.

"You'll see the revitalization of that area comes quickly," he said.

The nearly 400,000-square-foot hospital is on 24 acres and has 1,000 parking spaces. Redevelopment of the building will lead to higher property values and new businesses, such as restaurants and daycare, he said.

Pryor noted that the city of North Charleston is working on bringing a grocery store to property across the street from the hospital at Rivers and McMillan avenues.

"You could get everything. One stop shop," he said.

He expected ownership of the hospital will be transferred to the county in a few weeks.

"It's a great idea. Not only do we become the anchor. We become the anchor owner. That's huge," he said.

The first and second floors are ready for occupancy, and the eighth floor needs a bit more work but it is not far behind.

"It's a lot of options," he said. "In the next five years that building will be up and running. it will be a major hub for that area."

The county had planned to lease the first, second and eighth floors of the hospital building for the county's Department of Alcohol and Other Drug Abuse Services, and other offices. In a related deal, the county sold its Charleston Center building on the Charleston peninsula, where DAODAS is currently housed, for $17 million to the Medical University of South Carolina.

The county has been unable to move county staff out of Charleston Center because of the failed Naval Hospital redevelopment.

North Charleston paid $2 million to acquire the property from the federal government in 2012, then sold it to the developers for $5 million in 2014. The development group included a local manager, Jeremy Blackburn, with whom North Charleston Mayor Keith Summey had done business.

Blackburn built a rental property for Summey in Park Circle and sold the city miniature wind turbines for the roof of City Hall, which were later taken down.

The primary developer was Utah lawyer and businessman Doug Durbano, who has a long business history with Blackburn, including founding a bank that was later seized by federal regulators. Donald Trump Jr., the president's eldest son, invested in the venture, as he did in two earlier North Charleston business attempts involving Blackburn that failed. Titan Atlas Manufacturing and Titan Atlas Global.

Reach Prentiss Findlay at 843-937-5711.