Struggling like many others in the real estate industry, the developer of an unfinished Johns Island subdivision is arranging to file for bankruptcy court protection.
Developer John D. Lisi told residents of the Whitney Lakes subdivision that he plans to reorganize his company through a Chapter 11 bankruptcy. The company plans to file its legal papers by Aug. 1, he said.
"We are working on a reorganization plan that would basically allow us to move forward with the project," he said. "We do have a very workable plan that addresses the needs of the homeowners and the payments that are due to venders (and) lenders."
The bankruptcy filing would help Lisi manage his mounting business debts. Since Jan. 1, various construction-related companies have filed liens against the company totaling more than $700,000, according to Charleston County court records.
After reorganizing, Lisi said, the company plans to resume building out the 160-acre community located off Murraywood Road. Construction at the project stopped in February, leaving a handful of skeletal buildings among the completed residences.
The legal move would allow his company to sell completed townhomes, though it's unclear how many buyers plan to follow through with their purchase agreements, he said.
Some buyers have refused to close on their units after receiving a letter from the company in late 2006 asking them to pay 18 percent more than the price they agreed to in their sales contracts. The letter cited delays in installing water mains as well as rising construction costs.
Although the company has continued to landscape the completed portion of the community, residents say they've grown weary of the instability that the developer's financial hardships has created.
Cameron Blazer, who moved into one of the first completed townhomes two years ago, worries that Lisi won't be able to follow through with his plans, putting the incomplete portion and proposed amenities center in jeopardy.
"It makes you question what this is going to be like in a year. What's it going to be like in five years?" she said.
Blazer said residents are divided over the issue of trying to take over the homeowners association, which is still in the Lisi's control and managed by a separate company. Legal disputes between the developer and residents, coupled with stalled construction and an array of rumors, have left some residents feeling glum, she said.
"I can't say that I'm that excited to hang out in my neighborhood because I'm not happy about it. I think a lot of people feel that way," Blazer said.
"Getting together and hanging out with a bunch of frustrated people — that doesn't sound like something I want to do."