Speaking of Horizons (Updated)

In one of my many posts yesterday I mentioned the Horizons development in Stone County going up in smoke. Like Pearl River County to the west Stone County has been a net Katrina beneficiary. Geography made land speculation inevitable. Horizons was the over the top project that smart money knew would never come to fruition but not so fast according to Sun Herald article source Gerald Bond:

Unpaid debts and a stagnant housing market are jeopardizing a megadevelopment proposed in Stone County, but county officials are hearing an auction scheduled for Friday will be called off because developers are going to catch up on their loan payments.

“I’m hearing from good sources that they’re going to catch it up, but who knows?” Chancery Clerk Gerald Bond said Wednesday. “There’s a possibility they won’t.”

Mississippi Investors VI, a real estate investment partnership based in Florida, announced plans in January 2007 for a community of 8,000 single-family homes in 12 distinct villages. The company has purchased more than 10,000 acres from various companies and individuals.

On Friday, 2,250 acres the company bought from Double A Firewood was scheduled for auction to satisfy unpaid debt. Bond said a second auction also had been advertised because of pending foreclosure, but he did not know how much acreage was involved.

Frankly I think this is wishful thinking. Even if they get enough money to keep the project on life support, it is doomed. The article explains why:

Stone County Supervisor Wendell Patton said the developers are proceeding with Beaver Creek Estates, which he said will have 498 lots on 346 acres. He said they have installed a water tank, drilled a well, paved roads and built sidewalks.

But Patton does not think the larger planned development, called Horizon, is feasible in the current economy. He said property was selling quickly after Katrina, and developers overbuilt. He recently learned 200 homes were on the market – a sizeable number for a county with fewer than 15,000 residents.

“This economy is going to drive housing into a slump, from what I’m seeing,” Patton said. “With fuel prices, jobs are going to start dropping off.” Fuel prices are hitting the county hard because logging is its major industry.

Real estate broker Paul Hardy, who owns Paul Hardy Properties, said property sales escalated in Stone County after Katrina, but have slowed down.

He hasn’t heard much talk about the auction, he said.

Smart money will be at the auction buying the land back. IMHO this is just the beginning of the bubble burst. Steve, the Florida connection rears it’s head again. I wonder if the Small Rental program was involved with Horizons?

Update: The project remains on life support. The auction is called off. Anita Lee has the Sun Herald update. Oh yeah, the plot thickens. Bingo Steve, MDA. Thanks Anita :)

By paying up the debts, developers Robert Windham and Mike Adkinson have avoided foreclosure on the properties. The partners in Florida-based Mississippi Investors VI have not returned telephone calls from the Sun Herald.

Windham and Adkinson previously courted media attention for the project, announced in January 2007. At the time, they revealed plans for 8,000 single-family homes, shops and offices, apartments and townhouses, and recreational amenities.

They announced the project in a meeting with the Stone County supervisors, appearing with Leland Speed, former director of the Mississippi Development Authority, and a representative from Gov. Haley Barbour’s office.

The developers said a year ago that they had purchased a total of 11,000 acres in Stone County and had other land under contract.

sop

8 thoughts on “Speaking of Horizons (Updated)”

  1. Time will tell but the players will not. Local lawyers are circling MDA likes sharks in a pool of blood. Great coverage SOP.

  2. Steve, after reading your comments on Sop’s post about the Hancock County development and now this one, I take it you’re suggesting he’s is on top of a big story.

  3. Could be Nowdy. The real estate speculation attracted my interests beginning with Paradise Bay.

    Some of the land speculation is not connected to MDA that I can discern and some outsiders used the MDA program to promote private investment syndicates.

    At this point it would be a leap to connect the failures to State Government but there is a persistent Florida under current to many of the post Katrina redevelopment issues beginning with the early contracts let to Ashbrit.

    What you are seeing now is the beginning of the fallout from the deals made in 2006 and early 2007.

    sop

  4. I’ll ask around and see what I can come up with specific to Horizons.

    In general new single family tract building is happening right now only in East Harrison/West Jackson Counties (Biloxi/Ocean Springs) with a few exceptions. Financing for these type project is becoming very hard to come by – at least from the Mississippi based lenders that I am familar.

    The market niche that has a good bit of pent up demand is subsidized rental housing – we simply have not replaced the section 8 and public housing stock that was lost in Katrina.

    Horizons was to be affordable single family houses. It is located in southern Stone County around 40 minutes drive form the Biloxi casino strip and 25 minutes from the intersection of I-10 and Hwy 49.

    With gas at $4.00/gallon commutes are an issue along with insurance which is not much cheaper in Stone County than Harrison. Real estate sales are still very sluggish and there are still many homes on the market across the coast.

    Throw in the fact that only 4,000 or so folks remain in temporary housing and those that remain are generally the poorest of the poor and it is hard to see where the demand for these new houses will come from, especially with the developments far closer to the Biloxi strip and plenty of housing for sale all over Harrison county where the jobs are located.

    This is JMHO but putting more money into developing the land is simply putting good money after bad in the present market.

    sop

    1. Last night I was drinking a Vespers enjoying a quiet moment and like a bolt of lightning…SHAZAM! The OIG report has been on my mind since it hit the media. McHenry is just NOrth of the county line from the most unused of the unused Harrison County water infrastructure. Traveling back and forth between the coast and my office I watched contractors lay miles of water and sewer pipe for quiet some time. Ironically my office has a new water line just waiting to be hooked up as Wiggins is having a brand new system installed as I write this.

      McHenry was growing before the storm and somewhere in the Sun Herald archives is a pre Katrina story about people straight piping their sewerage in McHenry or installing septic systems that consisted of a 55 gallon barrel buried in the ground so the sewer was a godsend to the community but Horizons ended with only 3 starts and a local infrastructure contractor stuck with a mid 5 figure bad debt.

      No doubt in my mind there is a tie in on some level.

      1. Knowing that there is a significant cost and time factor to permit and build water and sewage infrastructure, it follows that there are winners and losers from the post Katrina build out ‘mistakes’.

        Winners: owners of bare land with regulation compliant utility capacity ready to go. At some point there will be demand for some of this land. A significant bonus: landowners not paying (either in time or money) to speculatively build utilities, or build utilities at the time of development.

        Losers: owners of bare land not served by the new speculative utilities, whose values decline compared to the lucky winners above. Also losers: taxpayers who are paying for these ‘mistakes’.

        There ought to be the usual suspicion of just how mistakey these ‘mistakes’ were; and cui bono should be a part of a proper look see.

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