Whitney Lake, a Charleston, South Carolina building company that created a townhome subdivision by the same name (website whitneylake.com, has filed for Chapter. Whitney Lake was a project of developer John Lisi. Charleston's Post and Courier reports:
Developer John D. Lisi told residents of the Whitney Lakes subdivision that he plans to reorganize his company through a Chapter 11 bankruptcy. The company plans to file its legal papers by Aug. 1, he said.
"We are working on a reorganization plan that would basically allow us to move forward with the project," he said. "We do have a very workable plan that addresses the needs of the homeowners and the payments that are due to venders (and) lenders."
The bankruptcy filing would help Lisi manage his mounting business debts. Since Jan. 1, various construction-related companies have filed liens against the company totaling more than $700,000, according to Charleston County court records.
Further research into Whitney Lake turned up a thread over at city-data.com. Some interesting tidbits were found.
One poster recounts Lisi's grand plan for Whitney Lake:
He put together a super plan to develop Whitney Lake with upscale but affordable parks and amenities like no other development in the area. If you look at the finished first phase anyone can see he does things right. Before construction, he and his family held community meetings for over a year to discuss concerns of Johns Island residents.
Presale of Phase 1 units sold out almost overnight. Construction activities were slow to start because of permits mostly. When construction activities got a bit off track he hired a Vice President of Construction, and things got moving pretty well... until a few months ago when the subprime thing stopped sales of ALL realestate in the country. John is a trustworthy, dedicated professional who has much of his life involved in making Whitney Lake a great place to live and work. If there is a way out of this quagmire, John surely will find it, I believe. Give him some time to work it out.
Back on June 9, 2008, Lisi allegedly sent the following notice to residents:
Over the past few months we have been attempting to work with trade vendors and ourlenders to reach a voluntary workout agreement. This agreement would have resulted in the removal of the liens that have been placed on unclosed units and would have allowed us to move forward to close on these units. Unfortunately, this effort has not come to fruition and as a result we cannot proceed in completing units at this time.
We are exploring the possibility of a Chapter 11 Reorganization. Through this course of action, we would be afforded a "breathing space" 'to organize a plan for payment of debts owed, once the plan is approved, to hopefully continue with our business operations. While we are working through this situation and evaluating our options, we have decided to close our trailer and sales office at Whitney Lake.
And of course, we know where this story ends. And below are the observations of one resident who claims that Lisi is starting up another, similar subdivision "just around the corner":
As it stands now, all development has stopped and 42 houses are standing incomplete, including 8 that have no siding or windows. I also understand that where he promised the pool is land not even owned by him neither is the interior of the lake. He said he had no idea what the buoys were in the lake. I found out later that they mark the property line. There has been no progress for months, no club house, no pool, nothing! The sales office is closed and the construction office has been hauled away. So it appears he is leaving Whitney Lake behind and starting fresh somewhere else, but remains in charge of the HOA. I understand that many of the unfinished houses are in the beginning of the foreclosure process. As mentioned above Whitney Lake LLC is considering bankruptcy. I understand that Mr. Lisi will be starting another subdivision under another business name just around the corner called St. Johns Square. He is advertising all the same items he promised with Whitney Lake, it even has a lake! If you ignore the abandoned houses, Whitey Lake looks good.
Our take: the story of Whitney Lake is that of a subdivision development big on promises — promises that could only be delivered assuming units were sold and the bustling housing market marched on. Its a tiny implosion, admittedly, but we wonder about how many other developments out there are stagnant. And for homeowners who bought into the belief that these new super-developments would be able to deliver the amenities, what happens when the overhead of maintaining pools and golf courses is too much to maintain at only 30 - 50% capacity?
In short we expect to see more subdivision bankruptcies in the future. And when they come, existing residents of these developments will have to ask themselves whether they want to wait it out or walk. And when walking leaves them in a better financial situation than throwing money away on an underwater home, its easy to guess what they will do.