Record-Journal
08-04-2007, 12:28 AM
Carabetta Enterprises Inc. has sold one of its military housing development projects, and is considering bids for four other projects now on hold because of contractor nonpayment.
Forest City Military Communities LLC announced earlier this week that it had purchased American Eagle Communities LLC’s project to demolish, renovate and build about 3,000 new single family homes at three Naval bases in the state of Washington. Forest City would not reveal the price, and the deal is expected to close later this month.
American Eagle is a partnership between Carabetta and Shaw Infrastructure Inc. that formed in 2003 to build about 10,000 units of private military housing on bases in five states.
The projects are not typical military contracts, but 50-year real estate transactions between the developers and the Air Force. Developers agree to offer privately owned homes for rent to military families in exchange for initial government funding and long-term rent payments.
Moody Air Force Base in Valdosta, Ga. has had the most problems, although work also has stopped at bases in Little Rock, Ark., Hanscom, Mass. and Patrick Air Force Base, Fla. Shaw is a partner in every project except Moody.
The military has resisted taking punitive action against American Eagle over the delays, in favor of reaching an arrangement that will finish construction of the housing.
“The projects are experiencing distress due to substantial cost overruns and lower than projected occupancy rates,” said Air Force spokesman Michael Hawkins.
“The cost overruns are primarily due to inaccurate cost estimates by the project owners. The Air Force continues to actively work with the bondholders, the project owners and other stakeholders to resolve the issues as expeditiously as possible.”
Through meetings with bondholders and the military, Carabetta is shopping for a developer who can buy the four contracts as a package, and complete the projects. The military has given the green light to request bids for later review and approval by the trustee/bondholders and Air Force.
Forest City was mentioned as a possible suitor by some of the subcontractors, but company representatives did not return phone calls on Friday.
Carabetta is also fighting a bank takeover of its military housing project at Moody Air Force Base in hopes the bondholder will release enough money to pay subcontractors before selling the project. Only two model houses have been completed at Moody.
Regions Bank filed a lawsuit in a Georgia court against Moody Family Housing LLC, a Carabetta partnership, to have the court appoint a receiver to take possession and authority over the assets of Moody Family Housing LLC.
According to the Valdosta Daily Times, Regions Bank holds a $29.6 million bond on the project since 2005. At a July 31 hearing, Region attorneys asked a judge to allow the bank to secure the site and prevent more damage to the unfinished units. The judge agreed, but the matter is still in court.
But Carabetta’s attorney Scott Consoli believes a takeover would leave millions in unpaid debts to subcontractors and vendors in jeopardy if it forecloses on the project. Carabetta is trying to convince the bondholder to release enough cash to pay the subcontractors.
“CEI is continuing to work with bond holders to reach an agreement to pay the necessary vendors,” Consoli said. “The bond holders have been unwilling to free up the funds to pay the vendors.”
The military housing deals, valued at $3.3 billion, were seen as a way to get the Carabetta family back on track after a bankruptcy that began in 1992. But cost overruns, contractor liens and trustee pullbacks have dramatically scaled back that vision.
At Patrick Air Force Base, Carabetta contractors were allowed to complete 163 units that comprised phase one. However, the trustees there have cut off funding to maintain the project’s value, Hawkins said.
At Hanscom Air Force Base, only 17 new houses were completed out of 784 proposed, and 163 completed at Patrick out of 552 proposed units. At Little Rock, 25 homes have been built out of 1,200 promised, and at Moody two homes out of 400 planned.
Only about six or seven developers nationwide have the resources and experience needed to complete the projects, Consoli said.
Forest City Military Communities LLC announced earlier this week that it had purchased American Eagle Communities LLC’s project to demolish, renovate and build about 3,000 new single family homes at three Naval bases in the state of Washington. Forest City would not reveal the price, and the deal is expected to close later this month.
American Eagle is a partnership between Carabetta and Shaw Infrastructure Inc. that formed in 2003 to build about 10,000 units of private military housing on bases in five states.
The projects are not typical military contracts, but 50-year real estate transactions between the developers and the Air Force. Developers agree to offer privately owned homes for rent to military families in exchange for initial government funding and long-term rent payments.
Moody Air Force Base in Valdosta, Ga. has had the most problems, although work also has stopped at bases in Little Rock, Ark., Hanscom, Mass. and Patrick Air Force Base, Fla. Shaw is a partner in every project except Moody.
The military has resisted taking punitive action against American Eagle over the delays, in favor of reaching an arrangement that will finish construction of the housing.
“The projects are experiencing distress due to substantial cost overruns and lower than projected occupancy rates,” said Air Force spokesman Michael Hawkins.
“The cost overruns are primarily due to inaccurate cost estimates by the project owners. The Air Force continues to actively work with the bondholders, the project owners and other stakeholders to resolve the issues as expeditiously as possible.”
Through meetings with bondholders and the military, Carabetta is shopping for a developer who can buy the four contracts as a package, and complete the projects. The military has given the green light to request bids for later review and approval by the trustee/bondholders and Air Force.
Forest City was mentioned as a possible suitor by some of the subcontractors, but company representatives did not return phone calls on Friday.
Carabetta is also fighting a bank takeover of its military housing project at Moody Air Force Base in hopes the bondholder will release enough money to pay subcontractors before selling the project. Only two model houses have been completed at Moody.
Regions Bank filed a lawsuit in a Georgia court against Moody Family Housing LLC, a Carabetta partnership, to have the court appoint a receiver to take possession and authority over the assets of Moody Family Housing LLC.
According to the Valdosta Daily Times, Regions Bank holds a $29.6 million bond on the project since 2005. At a July 31 hearing, Region attorneys asked a judge to allow the bank to secure the site and prevent more damage to the unfinished units. The judge agreed, but the matter is still in court.
But Carabetta’s attorney Scott Consoli believes a takeover would leave millions in unpaid debts to subcontractors and vendors in jeopardy if it forecloses on the project. Carabetta is trying to convince the bondholder to release enough cash to pay the subcontractors.
“CEI is continuing to work with bond holders to reach an agreement to pay the necessary vendors,” Consoli said. “The bond holders have been unwilling to free up the funds to pay the vendors.”
The military housing deals, valued at $3.3 billion, were seen as a way to get the Carabetta family back on track after a bankruptcy that began in 1992. But cost overruns, contractor liens and trustee pullbacks have dramatically scaled back that vision.
At Patrick Air Force Base, Carabetta contractors were allowed to complete 163 units that comprised phase one. However, the trustees there have cut off funding to maintain the project’s value, Hawkins said.
At Hanscom Air Force Base, only 17 new houses were completed out of 784 proposed, and 163 completed at Patrick out of 552 proposed units. At Little Rock, 25 homes have been built out of 1,200 promised, and at Moody two homes out of 400 planned.
Only about six or seven developers nationwide have the resources and experience needed to complete the projects, Consoli said.