A North Carolina bank has asked a 19th Judicial District Court to seize the Lakes at Magnolia Trace and sell it to settle a $6.1 million debt.
Construction work on the 81-lot subdivision off O’Neal Lane began in 2008. Roads and sidewalks were laid and utilities installed. Lots were priced at between $120,000 and $180,000.
None of the planned upscale homes were built, and the lots remain empty and overgrown with weeds. Residents of a nearby subdivision have complained that the Lakes’ back streets have become an illegal dumping ground.
Branch Banking and Trust Co.’s lawsuit said Magnolia Trace LLC has not paid the property taxes on the 60-plus acre development in three years. The bank had to pay the East Baton Rouge Parish Sheriff’s Office nearly $67,000 in delinquent taxes to redeem the property.
Kenneth Tackett, a Realtor who marketed the subdivision until 2010, said the Lakes at Magnolia Trace was a very good project when the developers started.
“But they ended up taking too long to get it done,” Tackett said. “They had some problems, and then the economy went south.”
Tackett said he couldn’t talk about what those problems were.
Still, if the subdivision had finished on time, the lots would have been available under more favorable economic conditions, Tackett said, and things might have turned out much differently.
Louisiana Secretary of State records list Robert C. “Conner” Farmer Jr., of Pelham, Ala., as one of the company’s managers.
Farmer would not discuss the issue at length, but said what happened at the Lakes at Magnolia Trace is probably the same thing that happened all over the country.
“You start out with lot values of $100,000 and halfway through the lot values drop to $50,000,” Farmer said.
With the property worth half of what it was, it’s impossible to borrow more money to finish developing the project, Farmer said.
Branch Banking’s lawsuit says Magnolia Trace signed a promissory note for $4.5 million from Colonial Bank, a Montgomery, Ala.-based bank on Feb. 2, 2006. On Aug. 15, 2008, Colonial modified the Magnolia Trace loan, increasing the note to $5.4 million.
In August 2009, Colonial Bank failed, and the Federal Deposit Insurance Corp. took over the firm and transferred its assets, including the Magnolia Trace loan, to Branch Banking.
Ralph Hood, attorney for Branch Banking, could not be reached for comment.
David Guillory, assistant director of maintenance for the city-parish Department of Public Works, said the department mowed a strip along the south side of the subdivision last week, in an effort to keep “the forest” from encroaching on neighbors’ properties.
But the size of the problem, more than 60 acres, is more than DPW can take on — the cleanup costs could be more than $10,000 — unless the department can bill the property owners, Guillory said. It has been difficult to get in touch with them.
In an effort to stop some of the mischief taking place in the Lakes, such as illegal dumping, DPW placed concrete barriers at the entrance to the subdivision, Guillory said. But people have just driven around the barriers and are still dumping their trash on the back streets.