The failed attempt to build the Carolina Panthers football franchise into a new headquarters in York County, South Carolina has resulted in a thorny legal battle over who is to blame.
Construction of the planned $800 million mixed-use facility in Rock Hill, to include state-of-the-art training facilities, offices, millions in utility investments and open green spaces to the public, was canceled in April after developer GT Real Estate, founded by Panthers owner David Tepper, said funds pledged by city officials, including a $225 million municipal bond offering of the town of Rock Hill, never materialized.
Sued by the resulting lawsuits seeking to recover millions lost on the project filed by the York County and Rock Hill governments, where the resort was to be located, as well as the project’s construction contractor, GT Real Estate filed for Chapter 11 bankruptcy protection in a Delaware court on June 1.
“The success of the project depended on a significant financial and political commitment from the city and county,” GT said in the filing, adding that the pledged public support in the form of Rock Hill Municipal Bonds will not be forthcoming. never materialized.
Rock Hill, whose general obligation bonds are rated AA-minus by S&P Global Ratings and Aa3 by Moody’s Investors Service, filed a lawsuit and sued in South Carolina court seeking at least $20 million and claiming that GT , not the city, is responsible for breaking financial support after official concerns about the structure of the bond agreement the company drafted were ignored.
They went so far as to call the deal ‘fraudulent’, citing issues with the tickets’ tax status as well as the underlying debt servicing program, saying the city never agreed to the deal. broadcast and that the agreement had been drafted without official input. other than GT Real Estate.
York County is also suing GT Real Estate for $21 million, claiming it wasted road building funds on the failed project, as well as Rock Hill; County officials say the city mishandled the entire deal.
In a blow to officials from both governments, who filed an injunction last month seeking to move the case from Delaware to South Carolina, a bankruptcy judge has approved a debt restructuring plan proposed by GT Real Estate allocating about $60 million to building contractors to cover debts but cut the city and county off entirely.
GT says in the approved plan that they had offered the city and county $40 million to cover project losses in June, providing “clear paths of recovery for the city and county” which it hoped would “would be met with receptivity or at least a willingness to negotiate further toward a fair and reasonable resolution to the failed project.”
However, the city and county followed with “exorbitant counterclaims and unreasonable conduct,” forcing the company to seek Chapter 11 protections, GT said in the bankruptcy court filing.
The plan still needs to be approved in a bankruptcy confirmation hearing, but if GT is successful, York County and Rock Hill will have to pursue their claims in bankruptcy court.
Despite the massive size of the flop, the deal will have little effect on the municipality’s overall credit health.
“We would have reviewed the rating and taken action by now if we thought this particular situation was going to affect their credit quality, but the city hadn’t put all of its faith and credit behind any type of obligation,” the lender said. S&P Nora rating analyst. Amazed.
Rock Hill’s creditworthiness is underpinned by a growing economy that has recovered well from the COVID-19 pandemic, particularly a sports tourism sector that draws visitors from nearby Charlotte, North Carolina, a she declared.
Along with a growing population and healthy reserves, the city’s long-term debt and liability profile is “also fairly manageable” and credit positive, regardless of the current meltdown.
“We’ve had other situations in the United States where local governments put all their faith and credit behind an obligation and they were determined, as the project went south, not to take ownership of the service. debt,” she said.
“What we would see as a strain on credit, particularly if they failed to meet their obligation to pay debt service on any of the debt they issued. That’s not what Rock Hill did,” Wittstruck said.
The plans ultimately failed because Rock Hill did not issue bonds.
“The opinions are that their economy will continue to grow, and while this development was going to contribute to that raw number, they weren’t counting on it,” she said. “They didn’t factor any of the project’s revenue or employment into the forward budget forecast.”
South Carolina has poured in millions in capital investments over the past two years.
Like many other states, it “is sitting on a ton of federal stimulus money,” she said, and investors will likely see investments in large and small municipal projects funded by those funds for at least another six months. months to a year, according to Stunned.
The city was also rated AA-minus by S&P Global Ratings.