The Stonebridge public improvement district defaulted on $22 million in special assessment bonds that were sold in 2007. Stonebridge opened to much hoopla in 2008 right before The meltdown began. The Mississippi Business Journal reported in May 2008:
According to its developers, the mixed-use development StoneBridge is the largest such project the City of Brandon has seen in nearly a half-century. And, Marcus Martin Builder and Heartland Development Company, LLC, held a grand opening befitting the project’s scale May 16.
The grand opening included home tours as well as free crawfish boil (3,000 pounds worth), hot air balloon rides, live music, space jumps, face painters, free T-shirts, door prizes, treats and more. Some 1,500 people turned out for the festivities.
In short, it was a community celebration, and that is what the developers say StoneBridge is all about — community. And they don’t just talk it — the developers have donated land for a new school and are planning other ways to boost the community.
The developers boasted of many attractions for Stonebridge as well:
StoneBridge is situated on 403 acres just south of Mississippi 18 and adjacent to the new Brandon High School. Homeowners may select from 432 townhouses, 162 independent living units or 536 larger three- and four-bedroom homes. These residences span a variety of separate yet complimentary architectural styles.
The list of amenities will include a central clubhouse and pool, 16-court professional tennis center and an approximately 52-acre lake. Abundant “green spaces” will be incorporated and connected by a network of sidewalks and walking trails that often avoid the development’s roadways all in an effort to curb or hide vehicular traffic.
These sidewalks will also connect StoneBridge residents to more than 75 acres of commercial/retail space totaling approximately 500,000 square feet. This will include a storefront “lifestyle” center offering an assortment of retail establishments and restaurants. At press time, Sallis said an anchor was being sought, but was not at liberty to discuss the ongoing negotiations. He did say that an anchor could be announced within a month.
That is not to say that StoneBridge does not have anything going on yet. On May 12, ground was broken for the StoneBridge Elementary School. The developers donated the 16-plus acres for the school out of community-mindedness. Sallis said a project as large as StoneBridge would put an undue burden on the local school system, and said donating the land “was just the right thing to do.”
The 78,000-square-foot school is slated to open in the fall of 2009, and will encompass approximately 35 standard classrooms, a P.E. room, language facility and other specialized rooms housing more than 900 second- and third-graders. Rest of article.
The developers of Stonebridge were Heartland Development, LLC and Green Hills Development, LLC. Ben Turnage is the manager of both companies.
The article does not mention the Stonebridge PID but both the Rankin County Board of Supervisors and Brandon Board of Aldermen authorized the creation of the Stonebridge PID.* Stonebridge's board members were Jason Womack, Grayson Orman, Jeremy Clements, David Quirin, and Watson Purvis. Attorney James Bobo was the district's legal counsel.
Stonebridge's official statement issued for the sale of the bonds stated:
Stonebridge Public Improvement District. Rankin County. Mississippi (the "Issuer" or the "District"). a public improvement district organized and existing under the laws of the State of Mississippi, is issuing $22,000,000 aggregate principal amount of its Special Assessment Bonds, Series 2007 (the "Series 2007 Bonds").
The Series 2007 Bonds will bear interest on each April I and October I, commencing October 1, 2007 (each an "Interest Payment Date") …. Payments of principal of, premium, if any, and interest on the Bonds will be made by Bank of the Ozarks, Little Rock. Arkansas as trustee for the bonds (the "Trustee") ….
The bonds were sold but problems began to occur within a short period of time. The Bank of Ozarks sent a letter to the district on February 24, 2010 that stated:
The Bank of Ozarks followed up that letter with a notice of default to the bondholders on April 1, 2010:
It is our understanding that Stonebridge Public improvement District Rankin County, Mississippi ("Stonebridge") no longer has a duly qualified and acting Board of Directors as required by Mississippi law. As you know, this is an event of default under the Trust indenture executed between Stonebridge and Bank of The Ozarks as Trustee.
and another one on December 14, 2010:
One or more Events of Default have occurred and are continuing with respect to the Bonds. The Issuer does not have a functioning board of directors and the Special Assessments have not been fully collected due to a failure of certain property owners to pay same.
Stonebridge PID, the landowner that failed to pay its Special Assessments in 2008, Green Hills Development Company, and the lienholder, Credit Union Liquidity Services, LLC ("CULS"). The lawsuit seeks to enforce the lien of the Special Assessments on the property.
The taxes and assessments went unpaid on the unsold parcels. The Secretary of State eventually took possession of them. UMB Bank replaced the Bank of Ozarks as the trustee. It sent a rather damning letter to bondholders on June 19, 2015:
Commencing in 2008, the District failed to pay debt service on the Bonds due to the failure of the developer, who originally owned all or substantially all of the property in the District (the “Developer Property”), including the property on which Special Assessments had been levied, to pay those Special Assessments when due. Real estate taxes and assessments levied by other governmental entities on the Developer Property were also delinquent….The letter also states that Oppenheimer Rochester High Yield Municipal Fund holds 75% of the bonds. The most recent letter states the interest and payments that were due on October 1, 2016 were not paid. A Minnesota court ruling states that the bonds are in default (order is posted below on page 6 of the first set of documents.)
As a result of the Developer’s failure to pay its tax bills relating to the Developer Property, including the Special Assessments, the Developer Property was forfeited to the State of Mississippi during 2009 and 2010 pursuant to procedures governed by Mississippi law. These procedures provide that if any taxes or assessments remain delinquent past the time permitted by law, the county sells the land for delinquent taxes. If no tax sale occurs the county places the property on a list to be struck off to the State of Mississippi. The District took no steps to enforce the lien of the Special Assessments against the Developer or the Developer Property, or otherwise to prevent the loss of the Developer Property. The two year redemption period provided by Mississippi law within which the Developer could redeem the Developer Property by paying the delinquent taxes and Special Assessments expired during 2011 and 2012 and the State now owns this property, free and clear of any claim or interest of the Developer.
The Bank of Ozarks went to court to foreclose on the development in 2010 but the lawsuit is still tied up in the Rankin County Courts (That court fight could be the subject of several posts. Not quite Stowers v. Germany but getting there.) NMB replaced the Bank of Ozarks as the trustee in the lawsuit. The case was recently transferred from Rankin County Chancery Court to Circuit Court where it plods along through literally the legal equivalent of trench warfare.
*The Board of Supervisors voted unanimously to approve the Stonebridge resolution on November 6, 2006. The Brandon Board of Aldermen did so on February 6, 2007 in a unanimous vote as well.
Kingfish note: None of this should affect the homes already sold. Those homeowners are paying their taxes and assessments as anyone else would in another co
The table of contents of the Official Statement is on page 6.