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City council votes to begin foreclosure proceedings on property

Plans for high-tech center in Gulfport haven’t panned out

GULFPORT — The City of Gulfport had great hopes for the creation of a high-tech records storage business to be located at the site of the old Food World property on U.S. 49 in Gulfport. But plans for that business involving NBA star Oscar Robertson have not come to fruition, and now the city council has voted to begin foreclosure proceedings on the property due to not receiving payments on a second mortgage.

“The Oscar Robertson development just hasn’t panned out,” says City Councilman Ricky Dombrowski. “The city is part owner in the transactions, and is responsible on this building because of some loans. If it goes into default, we are responsible for it. They (the property owners) have not made some payments on it, and it is currently in default. The city is being hounded for payments.”

Like many communities in Mississippi, Gulfport would like to encourage high-tech businesses that provide good paying jobs. But most of the new high-tech businesses being launched in South Mississippi are locating at the Stennis Space Center, which has the advantage of the technological resources at Stennis combined with programs such as a high-tech business incubator that provides low rent and other assistance to launch new technology businesses.

Dombrowski says he believes it is a worthy goal to work on attracting high-tech jobs to the city, but that is important first to look out for the needs of the city. He believes the Food World property, which includes 6.32 acres of land, a 54,000-square-foot building and 300 parking places, should be considered for a new police station and offices for the court system. “If you talk to our chief of police, they are overcrowded,” Dombrowski said. “Detectives are in cubicles set on top of each other. The court system has the same problem. I feel like we could relocate to a more centrally located place in Gulfport in a new facility that would house police and the courts.”

The present police station is located downtown in an area where there is not room for expansion. The station is bordered by the railroad, and if an emergency occurs at the same time that a train is blocking the crossings, it can create difficulties with response times.

Gulfport city attorney Harry Hewes said the city is involved in the property due to a HUD grant loan made on the facility. The HUD loan was secured with the provision that the development be used to provide jobs and economic opportunity in a low-income area. The Food World grocery store opened in 1996, and didn’t operate long before closing down.

Hewes said the HUD loan included several years of deferred payments. The first interest payment came due on July 20, 1999, and a schedule of payments started at that point. “Food World had closed by then,” Hewes said. “No payments have been made to the city, but there has been quite a bit of negotiation for a year between the shopping center and shareholders regarding selling or leasing the building, none of which has taken place.”

In January the city council asked the city administration and city attorney to enter negotiations to acquire the property at a price not to exceed $1.85 million. Hewes said they thought at the time that Gulfport Shopping Center Inc. wanted to convey property to Gulfport in return for forgiving the HUD loan and Gulfport taking responsibility for the $1.85 million loan to satisfy the first mortgage. The negotiations were not concluded, and the city council voted in August to foreclose on the second mortgage.

Gulfport Shopping Center Inc. maintains it is current on its payments on the first mortgage to Guardian Life, and on the second mortgage payments to the city. John Hill, chairman of the board of Gulfport Shopping Center Inc., blamed the problems on an out-of-state escrow company that he said had not been forwarding the mortgage payments.

The escrow company is Laureate Capital in Charlotte, N.C. When contacted by the Mississippi Business Journal for comment, Mark Hill, senior vice president of Laureate Capital, said he had no comment on whether the escrow payments had been forwarded to Guardian Life. Hill said that a news article on the issue was forwarded to Guardian Life for resolution.

The Food World property is now scheduled for public auction Sept. 26. Hewes said the city could bid on the property, subject to the lien of Guardian Life. The auction would be cancelled if payments are brought up to date. For the shopping center to bring the city current, they owe us a little more than $134,000, Hewes said.

It isn’t clear if relocating the police station and court offices to the Food World property would satisfy the government grant loan provision that the development create new jobs and development in a blighted area. City Council member Ella Holmes-Hines said she wants the city to look to the original purpose of the grant if it decides to acquire the property.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

About Becky Gillette

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