REPORT OF THE SOUL CITY TASK
FORCE,., JUNE 4979
THE LIBRARY OF THE
UNIVERSITY OF
NORTH CAROLINA
AT CHAPEL HILL
THE COLLECTION OF
NORTH CAROLINIANA
PRESENTED BY
Planning Library
GOS ino
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U.S. Department ousing
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June 1979
of tie
Soul City
- Task Force
TASK FORCE MEMBERS
Co-chairmen
William J. White
General Manager
New Community Development Corporation
sterling Tucker
Assistant Secretary for Fair Housing and
Equal Opportunity
Members
James Crawford
Special Assistant to the Secretary
Yvonne Scruggs Perry
Deputy Assistant Secretary for Community
Planning and Development
Elizabeth R. Raymond
Assistant to the Secretary for Labor Relations
Albert R. Diehl
Special Assistant to the Director of the Office
of Operations, New Community Development
COLDOLati ol
Thelma Watson
Equcie@ODpOGCUNnILVespecliallst
New Community Development Corporation
Edward Cachine
Director of Office of Operations
New Community Development Corporation
Richard Mapp
Special Assistant to the Assistant Secretary
for Housing-Federal Housing Commissioner
Task Force staffed by:
AuyuSta vay sior _. Staff Assistant to the General
Manager, New Community Development Corporation
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TABLE OF CONTENTS
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Tremoocul mC1CyVecoMpany «Sorinancial Crisis #2... cess 1) 20
emeedat atc Cm OO LOACI CS alslelstslcts ae) elsicl oi clcialeieletcie se «/s/0 er etei sins 625
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Appendices
A. Report of AVCO Community Developers, Inc.
B. Bibliography of Pertinent Documents Used
by the Task Force
C. Material Previously Prepared by the Task
Force in Response to the Secretary's Charges
Digitized by the Internet Archive
in 2023 with funding from
University of North Carolina at Chapel Hill
https://archive.org/details/reportofsoulcityOOsoul
Lio teOFmI ABLES
Page
Comparison of the Development Plan (1974)
and the 1976 Revised Development Plan ........... wz
Comparison of Projected and Actual Land
Sere Sime u/Omec Owl Oi Ohmmtew a) ohare sft e Sista .%s c's fo bia ste 's plese 0 16
Sources of Federal, State and Local
Grant Support for Soul City and the
SMM LOM Un OmeRe Od ONlec tte 6 ote esta letsvs o crete ofa stats cs es ce e's uF
Federal, State and Local Grant Assistance ....... 18
SUMMA yAOTEADDLOVeOsBUACGetCMEOL 19798 ire es e's «os 20
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INTRODUCTION
Secretary Patricia Roberts Harris created a Task Force
BOmsLuOVeoOULsC lL, NOL COsCaLOlina, Onehebruary. 9, 1979. At
that time she pointed out that this freestanding new community
was located in one of the poorest counties in the nation.
She stated that chances for the success of Soul City rested
Giatsuability to attract industry and jobs.
So that Soul City would have the best chance for
healthy development, she charged the Task Force with responsi-
Baty. Or:
l. Reviewing relevant current and future conditions
which impact on the viability and success of Soul City.
2. Estimating the number of jobs, land sales and
housing starts needed on an annual basis to make Soul City
viable.
3. Identifying Federal and state agencies and programs
which could be used to assist Soul City.
4. Specifying private business entities that might *
consider locating in or near Soul City.
5. Creating a strategy which might include advertising
Or economic incentives designed to encourage employers to
Comemco..coul, City.
6. Combining the results of this research into a
series of specific recommendations to be used by Soul City's
developers.
In order to consider its response to these charges, the
members of the Task Force held ten meetings between February
and June 1979. The meetings included a visit to the Soul
City site, where extensive interviews were conducted with
the developer and his staff, with local officials and with
officials and staff of ayencies af the State of North
Carolina.
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Technical staff of the New Community Development
Corporation assisted the Task Force in assembling cash flow,
market and other economic analyses prepared by the developer,
by NCDC staff and by independent consultants. Past and
present industrial employment, land sales and housing starts
“were examined for the three-State market area of Soul City,
the State of North Carolina, the five-county region, Warren
County and the site itself.
Estimates of future growth in these areas obtained from
a number of sources also were examined. The uses, sources
and amounts of Federal, state and local assistance to the
project and to its surrounding area also were examined.
Possible sources of Federal, state and local assistance to
Soul City in the future were explored.
Inquiries were made of State and local officials
concerning the prospects for the location of industry in or
near the Soul City site.
Following these analyses and deliberations, the Task
Force compiled a list of six optional courses of action
which might be pursued in assisting Soul City to solve its
urgent cash shortage and a continuing deficit created by
insufficient land sales to cover operating expenses and debt
service. (See "Alternatives" section of report.)
As Task Force deliberations progressed, members of the
group indicated growing support for an alternative approach
of restructured debt that seemed to offer the best solution
to Soul City's problems.
At this point, AVCO Community Developers, Inc., a
contractor hired to develop financial restructuring plans
for other Title VII New Communities, was asked to undertake
a study of Soul City. At the conclusion of its investigation,
AVCO found the project was not viable and would not gain
viability by any of the solutions proposed. Even if Soul
City's debt was reduced to zero, there was no means by which
the developer could pay operating expenses.
Purther, the report concluded that substantial additional
infusions of cash by HUD into Soul City would not improve
the situation. :
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As a result of its findings, AVCO Community
Developers, Inc., presented three possible options.
(See “Alternatives” section of report.) Task Force
members closely questioned the consultant on his
conclusions and his recommendations at two separate
meetings. They accepted his analysis in principle.
After studying the AVCO report and considering all
the possible alternative approaches, the Task Force
voted to make the following recommendations to the
Secretary for her consideration:
1. The Task Force accepts in principle the report
by AVCO Community Developers, Inc., including the finding
that, Soul City is not viable.
2. At a meeting on April 27, 1979, the Task Force
reached an informal consensus opposing foreclosure as a
workout solution. In light of the AVCO report, it seems
that foreclosure must be considered, but only as an option
of last resort.
3. The Task Force recommends that HUD move to
acquire the property of the Soul City project with a deed
in lieu of foreclosure as the preferred means.
As indicated by the above recommendations, the goals
set for Soul City at the time of its founding have not been
achieved. The Task Force believes, however, that this in
no way reflects adversely on the capability of the
developer. Task Force members have been impressed with the
developer's persistence in attempting to achieve his original
goals. Overwhelming odds made the dream impossible to
realize in the location selected and at the scale necessary
for new town development.
The following report to the Secretary provides:
== Background history of Soul City
-- Analysis of the project's current financial crisis
-- Alternative approaches suggested by the Task Force
and AYCO Community Developers, Inc.
-- Recommendations to the Secretary from the Task Force.
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PROJECT HISTORY
During the 1960's, Floyd B. McKissick, a nationally
known attorney and civil rights activist, decided to
create a minority-owned and managed new community
development. He reasoned that long-term economic growth--
and particularly industrial growth--would occur along
Interstate 85 between the Raleigh-Durham, North Carolina,
industrial and research complex and the Richmond-Petersburg
area in Virginia. He also reasoned that the traditionally
economically depressed counties north of Raleigh would offer
the best opportunity for capturing such growth.
McKissick began acquiring land for Soul City in
December 1968, when he purchased an option for about 1,800
acres of dairy farm east of I-85 near Warrenton, North
Carolina. In April 1969, McKissick submitted to HUD a
"Proposal to Develop Soul City," a free-standing new town
On a 2,000-acre site. The Soul City preliminary plan
emphasized the creation of an urban environment in a rural
setting.
To assist in the planning process, McKissick created
two entities which ultimately were funded by the Federal
government. The first, The Soul City Foundation, a tax
exempt public foundation, was established in March 1969
to plan and develop social and human services for residents
Of Soul City and the surrounding area. The second, The
Warren Regional Planning Corporation, a non-profit entity,
was incorporated in December 1969. Its initial functions
were to develop a general land use plan for the new community
and to study the impact of the proposed development on that
portion of the state.
Justification of the premise that a free-standing new
town could develop sufficient economic base to become a
self-sustaining community became a prime concern at this
Stage of the planning and application review process. To
address this issue, an economic base study for the proposed
Soul City development was conducted by the firm of Hammer,
Greene & Siler Associates. The study, which was completed
in December 1969, concluded the following:
5 The Soul City site was strategically located
in a region with the potential for a dynamic
economy and rapid growth.
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: The projection of 9,000 industrial workers
in Soul City would represent only a small
fraction of the total market in the region
of which it was a part and upon which it
could draw for its economic base.
: The=two most significant factors in Soul City's
potential for economic development were its
favorable location and its access to a large,
trainable labor force.
The study, however, pointed out an important caveat:
5 The favorable market and labor factors reported
by the study, while absolutely essential pre-
conditions to Soul City's development, would
not assure the successful development of the
new town. If this potential was to be realized,
Soul City would need appropriate construction
of infrastructure and other measures, along
with promotion of these advantages.
McKissick submitted a proposal for Federal new community
guarantee assistance under Title IV, Housing Act of 1968,
in December 1970. The final application was submitted in
Pebruary 1971. During the next 18 months, HUD and the
Developer entered into extended negotiations, and undertook
additional studies and clarification of issues. Much of
the controversy and expressed doubt centered around the
adequacy of projections for the industrial base and the
provision of water and sewerage to the project.
A conditional offer of commitment for a Federal debt
guarantee of up to $14 million on The Soul City Company
debentures was made by HUD in June 1972. The commitment
was contingent upon the proof of an adequate job base in
the new town and the provision of an adequate water supply.
The Developer accepted the conditional commitment offer in
October 1973. In March 1974, $5 million in Federally-
guaranteed debentures were sold by The Soul City Company,
with sale of subsequent issues contingent upon the Developer
meeting a number of conditions, providing an adequate job
base and water supply among them.
A new Project Agreement for Soul City was signed in
December 1976, and an additional $5 million loan guaranteed
by NCDC was made by the Federal Financing Bank to provide
additional funds for land acquisition and development in
Soul. .city,.lecving a balance’ of $4 million yet unused of
the original Federal commitment. The Soul City Company
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acquired an additional 1,400 acres of land to provide
access to rail transportatic naeroreconstructionwot
an industrial park. Four hundred acres of this newly-
acquired land was platted and restricted for industrial and
commercial uses.
In April 1977, Soul City's residential grand opening
occurred. In October 1977, the regional water system was
opened and in early 1978 a funding commitment was made for
the regional sewage treatment plant.
Since that time, development at Soul City has progressed
far behind the rate projected by various consultant studies.
Concern on the part of Secretary Patricia Roberts Harris
regarding the viability of the Project caused her to establish
a Task Force on February 5, 1979 and to set before it the
Six charges described in the Introduction.
1974 Development Plan
The Development Plan for Soul City, approved by NCDC
in February 1974, called for the development over a 30-year
period of 5,287 acres to support a population of some
46,000.
This Development Plan was based on the following
objectives:
“ Establish the necessary conditions for development
of all basic activities and facilities required of a
Cltveores cOwn.
5 Create an economically sound and attractive
environment.
: Provide a broad range of housing types, prices and
amenities to prospective residents.
: Preserve the natural qualities of the physical
environment.
: Create an environment where both formal and infor-
mal education: become an integral part of each resident's
tate.
From these objectives evolved a plan which placed
residential areas within walking distance of major areas,
schools and o sne.c.ty facilit° ss. Residential villages were
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Zit 123. J re
28 : wad te ecaas bani SdSivo7t >
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et uabLaox eviszeqaorg 22 eelsiauscs
(es; | 3c epicilavp Lexv2tan 247 avisee sd
/aquewioxbvae
wy
7
F
hae leracd aded xsi dneaiotivas : “a ssnexd an
ens fese te Jug Aoredent, ¢ ie ean aotisnube Ie
ie.
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- ae f _
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oo
7 a 7
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, Peis ez
planned to contain a village center, consisting of
convenience shopping, community recreation, and social
and cultural facilities. Together, these villages were
to be served by a regional commercial center and jobs
were to be provided by an extensive industrial base.
The plan envisioned a new city which was to become the
central feature of rural Warren County.
In 1976, when $5 million in additional loan guarantees
were awarded, a revised development program was adopted.
The following table compares the 1974 and 1976 plans:
1
crt bev bs, tata
Racer weet “Og bike
“ephrtZ petty *
aks < a frne2 a
‘Zs ay ws PT; we & ae the
achitt etme eee na ee Sok ace i
7? cow AS iow ies “ue ¢ beet sabre te
i656.) ec teH
* ie. 2
a
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e
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20 the ae be
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Table 1
Comparison of the Development Plan (1974) and the
Revised Development Program (1976)
Lend Use
Fesidential
Single-family Detached 102 4,564 860 2,581
Town House 367 3,942 B21 = 3,887
Multi-famil
Commercial
Institutional including
open space 2,358 1,091
Excess Land 970
Total 5,287 32 6 379099
Population 46,000 22,000
nr
Jobs 8,200 7,000
12
reat
ns piezinie
a. pee
wet 22 ; —
2) aes S
: rir ro ‘
a
5 2S
tt —
- - ie A en
a =i i Aneel
Current Development Status
Following are the development activities at Soul City,
ASMOLEMALCiw elo 1 o's
Residential
: Single Family
A total of 143 lots for single-family homes have
been developed on some 40 acres in two subdivisions
(Green Duke, 72 lots, and Pleasant Hills, 71 lots);
46 lots have been sold to individuals or builders
on which 33 homes have been completed or are under
construction.
“s MOLCish amily
To date, 14 acres of multi-family land have been
developed. Two projects are in the advanced
planning stage: The first is 100 units of
Section 8/221(d) (4) for which a conditional
commitment has been issued by the HUD Greensboro
Area Office. The second, 100 units designed
primarily for the elderly, has received a con-
ditional commitment from The Farmers Home
Administration, U.S. Department of Agriculture.
Industrial
Sixty acres of industrial land have been developed
with 9 acres sold. A 73,000 square foot building,
SoulTech I, has been completed, which houses the offices
of The Soul City Company; Madison-Madison International,
a minority-owned planning and engineering firm; the
Soul City Parks and Recreation Association; The Soul
City Sanitary District; Gaston Industries and The Soul
City Interfaith Committee in approximately 20,000 square
feet. The remaining 50,000 square feet is currently
unused as a result of the recent bankruptcy of Welmetco
Ltd., formerly the single largest employer in Soul City.
Commercial
Commercial land totalling 6.5 acres has been
deve.rvpec, c* which 7? scres have been sold. A 4,000
square foot convenience center building has been
constructed, which houses a gift son and @ nortion
of HealthCo, the regional Health Mouunte..ance Urganiza-
LOM.
13
(70° toue sw acbdtvi Seas
sf (gunk yleet=afetic 163 ets
Shoe 3. Vawtiw® OW? ws eerpe 0 ote rg od ; ;
- CAgGu . (~SLIIH sasdaeds Sis (ages Ss Toe eae: ay
or Liew, % tVisavSivions of Alce ‘wad svaK pact Be
sesoiques Ased ofed eefed 86 -c3e ao oe
firs dJscenesd
e os > ww? oe
ur . ae (oly Lak 4 |
a oy ~
Cae } oe? osyhee Bateeels
‘ 4 -4 a a c a : , : a iz <7¢) E to oS2 :
j
® : a" ; +s
ee 7 fis wo Chee Ce Bie Ga) eo Ceara oe ‘ a
2 * * ba. : :
Lien as 2 POL wihetnte. Bled Oe TRS: aes
I aoa ®
5 - ryt Bac +B Ota > 5 a! »s Lauci see tse siidendale Fi
; : * d ys mn af _ s * a e wit fqnle2 bas a 8 ,
wesc 43 @ Sete Be i cectee tend ‘rte thee
ra.) = = 4 4 +2 5 = 44 .
the os
ny 0 . a4
i A » e ne
I ais - ee) a) ; o “4 7-4 - oe v ii 9% ‘ > 7 ° ri 7
| : a “¢4 (a60 FS es2si's ed bas -
: ord io solizvéesc ister) entten
é ,
4 ? hire ‘oot e2agpe O02, GA _
. “ie Sit barsrxtecos od
- _ J : 3 “ ae a | ‘ : ie
S407 { “AD ££ 2oeGe aiseem ~
+ 1
q riz 4 - 54° RSS ti A ~ 5
| : . tins [ a6 nebsazea
: i \ a © ° _
_ ahh é y! j se ry ~ - ‘oleae
- £078
i‘ gas ¢ | 4st 2o8 .
gsi * A re al é 4 aan):
a: dae notatelbdee sez2
gedeid Giielers 20
_ ow | ae . = D ej re-(1 5: a.
s - ue —_ ul > - ian? eels Mia ———
Z a La-m0 wae .¢ zk — *
e 2 .o3ggs ie B2.84 ; y iJ aven
ebsoy t6 asiio ¢ .
ent L2uygGg bg gw Et . . 2
7 . ; ; Feo ead ha PAS:
~)}¢4 possodiaserlS AS7AW 20 BGA2G Gee ba
as ® ; 4
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7 SZET YT SA TIAL Oe 2_ 20h eM
evad asvetoxg fasoz} hayes. owt
r
ais
208: Tisus woes rake aie) ae
: The Kerr Lake Regional Water System which provides
10 million gallons a day (mgd) of treated water to the
three-county area surrounding the new town site, with
the capacity to expand to 30 mgd. Prior to the opening
of this system in 1977, the region experienced chronic
water shortages.
: Development of a regional sewage treatment
plant. This plant, which is in final design stage,
will provide 2 mgd of sewage treatment capacity and is
expected to be in operation by the summer of 1981.
This new plant will supplement the limited treatment
capacity of 350,000 gallons per day (gpd) which currently
exists in the Warrenton Sewage Treatment Plant. Soul
City currently is limited to 20,000 gpd of available
capacity, an amount which can serve about 65 dwelling
units.
Following is a table comparing actual land sales
through 1978 with projections contained in the 1976
development program.
5
~& , ; . Fi
ghoveay aethe estes paso lanes
rataw. “¢-ces/ “asi j ape” Aa aves
hy = S g- 2a ~ ween ae" Pate OO Tt es r
=5 1 eee 2 ee Cs ee oe bescxe: at yt
‘sisoiwd gar 6h Ete cious Sho .°vGl ab eve
seyes =
a 57 = * -
* = _ P
a oad to guam F mete * ae ie JaamQolaves. | Tr “a _
st Ae ae oe viene SR wreit led -#
>
>
. » Sees i nuswen, 2a) Dew & Savers he
; ‘Zz oF. edi ASME ID TEs ae os oe Sy
ya. 29e%y ORS = aes “oc poet
“nh “ya; enakies Ree ne 2 aSeGke -
i ruamabana neces: ok ae
. ot sk tere ato
4» \YstoesRe,
Table 2
Comparison of Projected and Actual
Land Sales (Ac.) (1976-1978)
Percent
1976 1977 1978 Total Accomplished
Residential
Projected (1) rie ISP) yal 54
Actual ial 7 1 19 35%
Commercial
Projected (1) Oa 6 0 6
Actual 0 1 2 3 503
Industrial
Projected (1) ey, 3h) Ls/, s/s)
Actual 0 9 0 9 16%
Institutional
Projected (1) at 2 0 3
Actual 0 2 0 2 67%
Total
Projected (1) 29 49 38 116
Actual Led 19 5 S35 28%
Difference (18) (30) F553) (83) 69%
(1) Developer's 1976 Cash Flow
dal Sole
16
tastnA. 306 bevnecont 7“
; (\s OLeSvely (aA), vel
; ;
ba § ’ -
e 224 285 BS 4 “st RS
§ ‘fo ; a
" e% ‘f ri i. ome sate a
rn / cd Lees
, Wil
oc tke
SLITS . |
=p © ; a - e
) a G fi) berte bot. —
4 i ; i » e Auaon |
as z
+64 be eubax Ay
a
7 es ’ . . pao omr oa nt
; r LavtsAk. -
te
“agl2c3 2 sound a
eR ED e
, b ‘, 24) Begod tox¢
nh c n ; Ta BIGR
eo hoe
i. : va
Lasoz
—eea
‘ P . al
i é es s ii) pega stoxt :
Sw | : i de k Lau 2A 7 ie
2 a
Pi ; = 7 »
eee (58) (2c) (of) - '° tL) 2psa7083 i 2%
: , i e ps : a -
7 @ ,
7 wee Bra are
THE SOUL CITY COMPANY'S FINANCIAL CRISIS
The Soul City Company entered 1979 with $1,084,000.
The approved budget for 1979 assumes levels of expenditure
and receipts such that the Developer's cash balance at the
end of 1979 is projected to be $229,000. As a consequence,
it is anticipated that the Developer will completely exhaust
all available cash early in 1980, even if operating
expenditures are reduced and a limited amount of cash is
received.
Table 5 summarizes the approved 1979 budget.
TABLE 5
SUMMARY OF APPROVED BUDGET FOR 1979
(000's omitted)
Sources of Cash
Beci nani nGeCashi tere «ile Seto wetets oteKs $1,084
oars ALeSe ee oie 1s oso lets tole tots tere ots $ 2512
Scner vourcessk. 62 Kioto whois tals otsie tate 347
Subtotaleesofit “Asriack wists ies Gls Sis, 065
ear AUT) Sites Oc ke ea Gels ole ts ofetels close fe ‘els ofete « ° By, 054
Totadll.ius. ctr eden et fete te Lets Son, ue
Uses of Cash
Land Acquisition & Development.. 51,898
Selling, General & Administration 819
Debenture Interest**....... TSn 50 -0-
Others EXpPensSes ic. 2 c'Sieye oj eieis sAo8s 252
BoansetorAtiiliates... 7 . aicelete le ¥e eo
Gommuna tyera cil) ts OS sieteisleretels AGL: 1,944
TC ed We vetevs! siskevelioke sete clcheke lots ve $4,988
IN @ tC iGaS Nae OWicteictete o torote teers ters
* Amount of receipts from thnése souscc, 15 © 72'7*red
to be optimistic.
SoBe To be paid by HUD. If paid by The Soul City Company,
its funds will be exhausted faster.
20
‘i ‘ ¥
ry fartpe: tov cue ta, OEE S388
= ¥ s i} siove a: : ‘ aa nat M2
. wal a ee a a E02 ou “ne sas 0a ie rons ’
jhe 2 eA | S0\SS? Bod eeenetoRe, © sy greed
; es [ite sso level €22 wah he: G83, "7 is
%> nove 090! off Vi taectize> Ole ‘*
‘ “ nos s tet tll & She Ba@ieee she aes
tes » ‘vr “
% i Vv ~ ® Bag q Pad + b4 4) 2
’
» |
eae
’ S.JGAT ist a
Teg
-_) : - OavVoUus7A- GO YAMS 7 7
ee
‘aa2)29 nce!
“ ° ive ize or pritrates -_
«¢¢ moiea- Get oth
. - #3932068 . p! pec Lo
= re) She 2P later aus
q e 6 —T eae ss oe ge 4 ESE > » tad .
pe
° ° Ps ‘ a) «+ eek BOT. : we
a»
7
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' 3 £8 22> a Seite , ee
7. °«¢ eit essa
S ¢ ° ee ee ee ee | ‘a ¢ sarap ase
‘ See eta @ewe eseal eRe "22 sia
; Bee : [ pease eee Je ESE rae8 (rh
7 ha = 7 , =
aD ie - sie a aepliare as tometer nl
-
oh 7 ++ allied Aeon eee MONE -_
“ee
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#4 pow? ¥ nee apes
po
en pe
"
ante
=
The Soul City Company asked for an additional $4 million
in guarantee assistance in 1978. In order to make the
guarantee, the Secretary is required to determine that the
new community development program represents an acceptable
financial risk to the United States. A method which has
been used to aid in determining acceptable financial risk
for Title VII loan guarantee assistance has been to determine
whether the developer has adequate financial resources to
meet all financial obligations as they become due throughout
the entire development period.
Title VII developers are required to submit cash flow
projections covering the entire development period of the
project. The cash flow projection submitted by The Soul
City Company and reviewed by NCDC in connection with the
sale of guaranteed debentures in 1974 contained no grant
assistance. But in 1976 as part of The Soul City Company's
request for an additional $5 million in guarantee assistance,
The Soul City Company cash flow projection included $29
million in grants (Title I or others) in order to meet
expenses over the remainder of the development period (1977
through 2003).
When it appeared that the land sales targets set forth
in the 1976 cash flow projection were not being met, the
NCDC Board late in 1977 requested another examination of the
potential of the project. Data obtained from a market
analysis prepared in connection with a land appraisal for
Soul City was used as the basis of this new analysis (called
the 1978 NCDC staff analysis or "Richardson Revised"). The
NCDC staff analysis contained assumptions to reflect possible
concessions which might have to be made to cope with difficulties
in marketing industrial land.
One of these assumptions was that there would have to
be a substantial markdown in industrial land prices to
induce sales. The pace of industrial land sales and the
jobs they ultimately created were the driving force for all
land sales activities. The number of imdustrial jobs determined
the amount of residential and commercial land sales projected.
The results of the NCDC staff analysis were substantially
less promising than those of the 1976 Developer cash flow
projection. The NCDC study indicated that from 1978 through
the remainder of the development period, the Developer would
need about $50 million in Federal or cther gravt+ assistance
to cover the costs of land development and community
PAak
2” i Pn ot a),
is pitiseeb ie! Suge Lae
shoppe vs aries wane eres a
, a £ ‘snTe, Sew. «
. ot
7 1) iar a e : y al
int by 1 afkjrepsas ote legal, ss eee ee
M r “| ha 34
: ' 3 tS ge Bol sar est eRe vs ¥
' - “ “1-4 ey Ps wy ; *
~ ) a ea ) Se
eel Te
Ld
1 Bites Psubynes. eee | taxied x
15209 ; ay eee:
- : a . j a is
, alls . baie: = TP .. -
_ q - a wa & : Si.»
, 34 i ve ~ 4 NLS verges a Ps
a
y Oa 4 oN
; veh ON 9 . role ee ve Se D
i a j f - i i
> ‘ - a -
. § & A
eine ey | eer |
° Tr ae
+ é bad |
é 4 ‘ Die
> 7 «.
2 .-
i & cm
ya,
aa ! ie
r -
pay i » =
i : : f ' = Ey
4 > |
mn .?; 4 * ,
: be > ‘to
por be
4 f af t
e e > pa P
m= ty i .
ts _ :
D2 ‘ J a7 j ; 7 ey “
i i
% ; ‘ 4 O06n 482 ae if eLe6
y+ - ~@ 452 YVLE08 ~47¢ DSS o-. tO 23
a = = ° — - 4 ;
_@ aia wh, i oe aq .-6 T aobes oe ee |
~ ap ™ , _._ i . Ao me
7 a ' oe a! . > a jy & IPe2mnes s ‘ > 1 “8238 off
. 2 op _ a < J 7 7 - —.
2a on q ® m 7 o
pis _T | f ne 8
facilities construction. Aetotal- of $46° million in
Federal. grant assistance was seen as the maximum possible
amount which could be provided the Developer under current
regulations and policies. Even if this $46 million in
grant assistance could be provided over the remaining 26-
year development period, Developer cash deficits were
projected to occur as early as 1980.
22
aig ae
et Se ier
_ a oti ie ae pga,
“obi: 440! hab A:
>
nm G!
ALTERNATIVE APPROACHES
Faced wich the economic and market realities con-
fronting Soul City, the Task Force formulated and
analyzed a series of six alternative approaches which
HUD could pursue in addressing this most difficult
Situation. A description of each of the six alternatives
formulated by the Task Force, including an estimate of
the cost to HUD incident to each, is presented on the
following pages.
25
£
bells “2
nom Oe; ' ;
la >: Angee wn
~ 7”
Task Force
Alternative Approach I
Provide developer with an additional $4 million in
TIL LesVLE guarantee assistance.
ASSUMPTIONS:
: That the NCDC Board of Directors (acting in behalf
of the HUD Secretary) determines that the proposed Soul
City development represents an acceptable financial risk
to the United States, taking into consideration the
following:
thes The financial and security interests of
the United States;
2G The public purposes of the program and
the special problems involved in financing
new communities.
That no new determination of economic feasibility
(as defined in Section 712(a) (2) of the 1970 HUD Act)
is required by the NCDC Board of Directors, for the
new community, since such a determination was made
for the original $14 million commitment for Federal
loan guarantee assistance.
: That the guarantee fee and the annual fees for
the additional assistance will be waived.
- That the interest on the additional $4 million
guaranteed loan will be deferred for 10 years.
: ANMEFS KSl ois) TGhIKebey Shel “ebiheg hy 2h tepct-behe assistance is
assumed for 1979, which will provide:
Mees Two basic industrial buildings
Ps 3 Scheduled infrastructure
: That Federal assistance (HUD Section 8 and FmHA)
for the two low- and moderate-income housing projects
is approved, that land sales occur in 1980 and that
construction begins in 1980.
24
is Lerun) 2c 4 +5 “red Soar saaee
° eh alt tap 5) eer he ‘ie.
iS sJhegelte fees be iS Levey .
Lit ae7A per IZ rev ot |
a - : Ps ~
= a. 1 } " rd icu
sonawels
y ri >
.. 4 = f na Mls oom
o a «é 7
r ’ ae BS a= ;
‘ qi ~~
¢ + ae eee baila. »4
~~ e2an
i ia
—_ a) (2.33 »
‘ ; SI ( $3L059
; J pee tt oe & oe mae v, ei :
* ' P ; ‘+ “4 a | so8r 7 :
saaxsay amed |
is Seo e Fi 5
‘ aft Ta +a) &
a
é . a “2
: p ‘s, 268
‘- £2 7%
t
t ¢ ia Al
= ’ ~- ¥ —e 4
F A . = - 7 vate, snl Ane.
4 —2TLe -& Au ee a) LP 4.2 eel FO La vig: | 3 ane :
ry Agen amosuincdakeohur Bas -wei iad eee
wand Gre GSES zk tws0c ketee Sel rete hee dehy.
~ ‘ ‘ “ ne
ge ranger Olde,
PROS
= Provides a relatively uncomplicated solution.
: Additional guarantee assistance is under HUD
Control.
: Provides immediate relief to the developer,
the Soul City Company.
: Provides opportunity to market land with
utilities in place.
CONS
: Provides no long-term solution. Developer will
run out of cash in 1983. Developer continues
to be insolvent, with NCDC borrowing money to
pay bills.
. Substantially increases HUD risk and exposure
for debt repayment.
: Increases the debt burden on the Developer.
° Unreasonable to make a finding of acceptable
financial risk.
: Increases NCDC borrowings from Treasury.
COST TO FEDERAL GOVERNMENT*
$14 million Accelerated Debentures
ot million Back Interest
9 million Additional Grants
GOmonmr lL 2on Foreclosure, Interim Management
and Disposal Costs
Senate On Total cost through 1988
* Does not include $30 million in grant assistance provided
rior to 1980 nor cost of Treasury borrowings.
As
3 é a. | - ‘ee 7, f
a t Fe :, Aeeclogn
ce teeyme) se? SD {ube omg .
IGARET OF Ve Leseoees rcs a we
sed as mf et by kL eee, w,
= ¢f >
a td Gane -
» e “1 v
/ |
; \
‘ »
- al > :
oxaalt
a
,
i t t 3 7 a) .
- | Dip QS Py in
J . ; rca Paks
\ , °¢ ad :
-
eo) Sh
OT ° zE02
nee
wou os hes wees crease mk pilates tas
| -epttive he Ceased 3 4
- i. a vey a er a
ro) nit aaa 7 oh APL
7 See 1 ai '
ale 4 °
Task Force
Alternative Approach II
Negotiate a restructured relationship between NCDC
and scdev elopermmethatewouldmt ranster sthes Vand? tor NCDC
andSperm2 tethensou Mert yeCompany stomcontinwe) asiithe
developing entity under a contract with NCDC.
ASSUMPTIONS
‘ NCDC would acquire all property through a deed
or friendly foreclosure.
: Bonds would be accelerated and paid off and the
Gebt of Soul City would be extinguished.
- NCDC would view Soul City as an experimental
effort to build a free-standing new community in a
poor rural area.
: NCDC Board would determine its plans to continue
Soul City development as a full-scale community.
rs Project would remain eligible for Title VII
assistance.
. NCDC would enter into a two-year contract with
The Soul City Company under which the company would
be paid up to one million dollars per year for two
years and would be required to meet certain development
and sales goals.
4 The management organization, however, would not
be eligible directly for Title I grant assistance.
Such assistance would be provided by grants to local
public bodies and the community association.
: Contract would be renewable under one year options
provided the development and sales goals were achieved.
If the goals were not met, contract would be terminated
and The Soul City Company's involvement would be ended.
: Contract would specify that The Soul City Company
must take certain steps, such as bringing in staff with
expertise in industrial development or hiring qualified
consultants.
26
_
:
ea
Pate ‘ oii
ee cee
wi TOR zy
Sek inte wages end
Ser ha 77 ata 2HGe, oe y Aer jos Ny 4 adhe Ps ae a.
oe Pep Ee Oe noe Were g
*~ oa 7
ae we, me ’
i ia
beet 6 Fomosds we seoxe fig: ot hipps a
pana vib
yi? hae 230 téee Gnas ft ey rien: ‘& ‘ae bLaow oe ae
. Ge lroilzae si bhldew vsro fel Jo rab
~, @ , an
(nano? 2 Ww 2 vat LBOe) wwks ) Supe be
4 ob Va bapiies-s ectbiotgeast 8 SSbod ows ceatie’ 7
e Aas | ine =o 2 te
sunigznce of analaied) ectmeteb bioow. fbesdd Bree a
velcunnes of4%¢-l fo) 6 es arsmgolavel, saeom ae
tY siacT sto8 sicipels alent bl yow JSoeraee ey
een:
J “wink r — altw = ’ © t Hy
| | 10: Whey 282 27a lied Adgeiisa cad os yea ws
Iranjoleaveh ay etme sow Oo bes 1 Oo a aie er &
ai cigop aela@ 7
f
ton Sivow ,tavewedt \rokeess) ipso insaeriintsts atte
Slat Th nae Wary L else vos Vitel se eid ew Ey
Iguo. OF etaeap ye Sebivesip kc SF cece anenhore hone
acta, sores whee Wa. sis. bee eoghedt sm
C224 200. -Sévy RD _vohirw elds witha af Awa doapameb: a oe
SHOOTS S18 ELeQp eylaz Sag sceneoloveh ens Bebiwey
Sevatinieads wh bloaw xesarisn ert Sort pir ah? HI :
-kelca od Sige saaweviovss oe Sel tose 7 ) s
ae 99D Ysa [yO8 ont torn xiiae
4 [ie38 42 pn zd ee uaue #
bodSa! ayy on
ty
: Under the contract, The Soul City Company could
either:
Le purchase land from NCDC at a specified price
under favorable terms, such as five or ten
percent down with the balance upon sale,
with an understanding that the company
would become self-sufficient and no longer
be paid one million dollars a year after
the first two years, or
ie Simply act as an agent for NCDC in developing
the land.
5 NEDC 7 would grant Jitte Lefunds for two basic
industrial buildings prior to the termination of the
Soul City Company as a Title VII developer and would
assure completion following the restructuring.
; To protect the security interest of the United
States, land development expenses and local property
taxes will be paid from the Revolving Fund, which
will be replenished by additional borrowings from
the Treasury.
Local governmental entities would continue to
be eligible for Title I funding, and the Soul City
Sanitary District and the Parks and Recreation Association
would receive financial assistance from the Revolving Fund.
PROS
: Permits continuation of Soul City development as
as new community.
Provides a means for the continued direct
participation of The Soul SARS Company in
the project. od
: Provides a means of terminating project if HUD
criteria are not met.
27)
ps i | 4 yaa
vag te ove a ee a
‘ ‘ ape tw Or. gas ns agree : os ca
a, OF ne 2agints es aa sO
m2in 3504.5 ‘eat ATR SAS Siae
2 eS mer a 2a
,
‘ovab «al 142%. 208: 2¢ap6 An’ ae 728° ; unde Sime A,. ie a
poo bay See: soln ee Stage" 4 ‘doar S ieire ee
ote sj): SRFken x Cum nek: Pe SOqGoon |
ef ins syed? .e0i¢r.oG hop Seemgoierad, abduct oft.
ation as
sig soamgelaveh & at (pe oD o Sere Sieeerteves Se
ny
iar SGlstw gcefssasege 128Le“g. ce Ppa onekd Gy
efts of fotesteapis Lida Sewt gRiviowen eay,
Ap Be uate uy
a 40
7”
van alidw vele sae “ris3
wrpselespes efacG anile ve?’ e
ade? os xoscenntyisn THN A BGP, ag
Ja o~ —6/ te ng "Ss,
'
PROS
2 Provides possible means of assuring a long-range
development if industrial and other sales occur.
A Provides greater public sector invovement and
commitment to the project.
é Provides a workable mechanism for continuing
(and possibly increasing) Federal/State/local
grant assistance to the development.
. Preserves the new community as a permanent, on-going
focal point for development of the region.
. May provide an opportunity for continued participation
in the development of Soul City by the Developer.
Minimizes the negative image of foreclosures and
failure by immediate transfer to a State agent--
the public development corporation.
CONS
5 Lack of an existing public development corporation
in State which would serve as the Soul City
Developer.
- Possible negative image of foreclosure, although
temporary, might adversely affect the short-term
market.
4 Substantial increase in borrowings from the Treasury.
COSTS TO FEDERAL GOVERNMENT*
SEOUnmMiuLLLon Accelerated Debentures
2 million Accrued Interest
_46 million Grants
$58 million
* Does not include $30 million in geant zssi*2nce nrovided
prior to 1980 nor cost of Treasury borrowings.
ai
wwieT 7O% opt eetpes Sine « anbieoee:
aool oaks steel (ozseeMiog yi asec has? 3h
Bitte “ Y.. Bas UG? oo0ee - oes .F Ire te 14
Lloro , srer 7460 5 8G YO Lnvinngop Wet ens SOvspeest ; &, ol
ale ciate dhe | S sareq Lage? “Ay
Swede ‘ge bocoiinba set vedas rg 7a. seiverq Ya".” 4 ae a
7 wi a : 4 |
. , e “ 4 Fle . { y 2 ’ ; tj oH i 7 Oo ~ 178i Be “oJ oA sb oJ bs ad ay ; , hy
bre seeping Soret 32 : ovidsoan’ Balt ate”) Se 8
. K tare) 2S ta enats sfelbeems vi eauize®
.coldgshevoy trance lsvs> Saar ae
620G %On saofe\ey 2: (deq parges 4 2a TDS .
v2id feo? odt See of ea GldGw Adotw epeen Be a
| . Loaoleved ano
| r
wpe ot Jeoioewot to opie @vegeger Glateent . a
ve sofa ed), Jeetia yloatevaw omg: ce . eitntogm? a A i
=O A Lat ;
wecos? gas 2oTl abn i@oT 1 “ee eeees ms iets rassdge s) :
“Teen APsoe% oF eens:
ebics reded Dez sre Lacan soll l dm, ole oe
Saezercl Sequoos noiiiies & 7 zs -
ernate oki iwe a ae
| | noiitie aay . ae
'
e
-TRtivessad ytpneet? So Jead “60 0
SUBPe oy aeitis +4903 o Sealy: as cess see ssi
Task Force
Alternative Approach V
ReseoucCeoUrLiGgsOre new rinanclalyDLanmrOresoun City,
Wien epoer current roevel oper continuingsthescevelopment:
ASSUMPTIONS
: NCDC will acquire all Soul City property through
a deed in lieu or friendly foreclosure.
: SLOUSIL LL One Time Clem Ville DOnGS#plusws2 mittionein
accrued interest will be accelerated and vaid off in
January 1980.
5 Debt of the Developer will be restructured. Terms
of the restructured debt will be:
As The interest rate on the principal amount
of $12 million:will be one percent.
one Term of the loan will be 26 years.
cee The $12 million payment of principal will
be due in year 2004.
NCDC guarantee and annual fees will be waived for
the Pvlesore tne project.
: To provide working capital, a cumulative cash of
advance of $3.7 million will be made.
5 Local government entities will continue to be
eligible for Title I grant assistance.
The Soul City Company will remain an eligible
Title VII developer.
: Title I grants will be supplied in the total amount
of $46 million over the life of the project, with grants
in support of the new community development received by
both local government units and The Soul City Company.
33
. tite 32 eric. eGned De¥ pare ae sade d
% £55 2262 .2n8, eos. iueoue “ci vee teeta
atoreT hoso+nusteds od erie agolsited sz +6 , soe:
red I ides Sort soe tI aue,
f ieyisning att no tht gaiaons et «eau
~e, vac ed {law Wea Gane ee Poa
s eT eae
: ‘ . , he
teasy. o> ov iw aeol 28-30 met “ve ty,
) Po,
iliw lserontuq. 20 saenye@ melitin 22% wae ee 1)
cool tany aL @ab od Bs
: =
a} bovikew od Live EP cnvene beam sates p04 |
| 150 Gre ety to stilt att
bo
nap ov teiongs, 6 .iariges vareaer acral ot “he id
than oc Liam Abit in T.88 Bo eoasvbs —
ai on Ssuntsnan. -Liie Beads 7a sHecmh aioe lesod _#
| . sued eee sae 1 otsl> xe vidios tae
‘eldleccs Be slames Like aRbeaeD etd Kuar sav 2 ¢
Hse Sore
abioas lage, Src ~~ 2 si leave sa cae wv, Berga
hoverp Ci bw... 2547) 93C rt 74 oxil a
¥G nev ios x sa ngage B8 at, vt tga
‘Yangndd yorite lua “(FP has ef
ok
PROS
; Relieves the Developer of a substantial interest
payment burden.
. Allows development of Soul City as a full-scale
new community.
. Maintains Developer's participation in the project.
: Presents possible opportunity to recover $12 million
in debt.
CON
: Increases NCDC borrowings from Treasury.
COSTS TO FEDERAL GOVERNMENT*
a0 million Accelerated Debentures
2 million Accrued Interest
Sig Of Fup kepel Working Capital Advance
46 million Grant Assistance
Sener mid lion
-12.0 million Possible Repayment of
HUD Note
Sgak qublabikseye| Possible Repayment of
Working Capital Advance
626) mitlizon TOtalecostecnrougnmc,
year+ development
period (2004)
* Does not include $30 million in grant assistance provided
prior to 1980 nor cost of Treasury borrowings.
34
ah! 7
-
(=se-LI0? 5 a6 yo ble = 8 pet ave = .
ROS on
. soebotg sae al ne saqipnsted a aaapeoren. md se
te adéeveoced oP ate OE SEER LOF, nas
Ou « a '
vy
'
vitwaees? nox? seriveed: Salm essay iver
TINNED saat
f resic oT ee. Pe ee
nets. J2 phe Tre
enneven 46 7B EAas TO
eT ' ns 24 ~ a=
Pe. «ie
+ cemnyoqed .eicier og moed iim. Sin aes
: aI0F be us
é 17S S 4 ya 4 netttie tak a ae
2 Lee Elle cn A es
» a5 La. 23 ot
e e 1
ad * "| -
we! va oe
mn Oe 2 nabardat
aprecnianitanatet iment = % {Heap ita) as 7
4203) 798-4
Task Force
Alternative Approach VI
Declare the project a "New Community Demonstration
Provect”™ with an on-going Federal commitment to assist
in its develooment. (Sections 23 eit lenviie Housing
and Urban Development Act of 1970)
ASSUMPTIONS
A Financial default occurs, and the Board of
Directors, NCDC, so determines.
: Foreclosure occurs, ordered by the NCDC Board.
: Title VII debt is accelerated and paid off through
Revolving Fund borrowings from the Treasury.
: Remaining land in Soul City becomes Federal property.
5 The President specifically authorizes the Soul City
project as a New Community Demonstration Project.
4 The Congress authorizes and appropriates funds
specifically for the development of Soul City (possible
fund authorization and appropriation for the development
of the project).
. NCDC serves as the Developer, either directly
through staff or indirectly by contract with a management
£irm.
: Close cooperation would occur between Federal
agencies in support of Soul City as a demonstration
project, and grant assistance would be available from
a number of Federal agencies to support the demonstra-
20n . =
: Agreement by the Soul City Developer not to contest.
PROS
. Provides a long-term, financially stable Developer
and ensures the completion of Soul City as a new
community.
35
>> Sxor edt ons Hcg. . _ $s?
jaan iaratenene a ~ e er on
a * a _ ‘
i
Vee
ye welt ‘ai Laaaes0 vempeae- peste a
44
a
seuents to bisa Bia Belvvelibod eh, saee TE eee at eae?
gaia d yoke? qb ost kertweraed Rat
. ee 2. ‘ , ./. ne tal ® 3 ,*) al vy fed batt paisel samen his
. « ; > © i. al = ad 4
92 eascbtnddse. y hha age jouhannst ot -
Te Old = or) Wa ieee val 6 oe poet
ptm? soot LX wteGe Fie, Maun cp ouidtis ‘aeeie
pee iym ited. io) chemo lorem sig “en VA rsaeeee
ves 42 102 cada. taqences faa ae Sssen needa sed
‘ vasatere exlz Laat
+
>
’
¢
-
\
b=
£
mths taisia , sagotevs@ eet me) ear ras Seat Poel
_ Ww oak eda tateer: ve ses y ae OT gg [634 mnentes
— =<
fpaewied tuaao) bl eon rte! vied ide “9 ie
bs anos 6 age St ee Etiood 2 sian ag mh,
mont oo. li ate at hla eoreee abana rm one
5%) 240m fy Stones os estonsge. T5 1% ad
soc Laved. sldsse-¥s ieee a
wo) S BS Yee lugusse
4 Provides a highly visible Federal commitment to
the provyect,
thereby enhancing marketability,
and particularly industrial marketability and
the creation of jobs.
: May be the means by which continued participation
by Developer in the project could be brought about.
: Provides a vehicle for direct involvement by other
Federal agencies in the Soul City project, possibly
at a greater level than has been the case in the
past.
CON
Need for a Presidential determination and Congressional
authorization and appropriations specifically for ae
SOUlIMCICYmDLO eC.
COSTS TO THE FEDERAL GOVERNMENT*
Sl0.million
Zeid i1oOn
yOemiT lt ion
Accelerated Debentures
Accrued Interest
Acquisition, Development,
Management and Local
Taxes
$82 million - Less proceeds from sale of project land
* Does not include $30 million in grant assistance provided
prior to 1980 nor cost of Treasury borrowings.
36
é rage, a 3
7
o's ~ %
rr A
F
“1 f
ai
errs’. Lovey fosrks he
Saekaie a ae iyas 3
Szh
leroy
ee Pen oe tw ae | iheecl i) actnebhaet & aoa! a: eae -
[HGS 2 ROLTB.0% yoOMes Sane (i tsealzo
te fWODA were: ong
; . >
axe" igiall\s os
ye . | worliin var ee
> im | = q >» a - > - 4 ®
oy. SiG) MSS .as a ES) se ) 7c - ao im. as u i
—-
tes ywasek" 34. Ghed aan bees ea
Opartes
2; eee: ee
oft Ae enc AB
ree hane apse fio8 Ba
p> ff? a> sof
ea ' BASES
‘ = Ape -
, Ss
255 | - motilia sore
sn sepeeipgasiih cae
| a.
& , i
\ : >a a 7
|
Soup th aktlie OCC Beutede Be
As Task Force deliberations progressed, the
Majority of members indicated a growing belief that
Alternative Approach if appeared to offer the best
SO.LULTONmCOMSOULECItTY.S problems.) = Ate chistpoint,
AVCO Community Developers, Inc., a well-known new
community development firm which had been hired by
NCDC to develop financial restructuring plans for
Other Title VII new communities, was asked to evaluate
the Soul City project and the approach favored by the
Task Force to solve the project's financial crisis.
The results of the AVCO evaluation concluded that
the Soul City project is not viable under any reasonable
circumstances. The AVCO report stated that no market
for residential housing exists in Soul City without
commercial and industrial development. Commercial
development can only follow industrial growth and there
is little potential for industrial growth at Soul City.
Reasons given by AVCO are:
5 Lack of adequate employment base. Total
population is low and the number of
unemployed is low.
- Lack of available work force severely
limits industrial marketing efforts.
5 Competing industrial areas nearby are
superior in location, transportation and
utilities.
: Lack of shopping, restaurants, and other
amenities.
: High costs for industrial space, with
little opportunity to reduce such costs.
The AVCO report stated that the maximum amount of
revenues which could be generated by sale of industrial,
commercial and residential land over the next five
years is $95,000 a year.
On the other side of the ledger, proposed selling,
general and administrative expenses for 1979 are $848,000.
This does not include fixed obligations.
37
‘
:
7 Te. *. =
‘i he allot = Re »
oan tae
-
7 if Aa. 7 mw
Paes wert Past
7 ant pes Meee sedi it Co oe
soca esl et po bworp. # eral ORS ‘a eee,
tend fz zehi> of: Spuae wie ae. Ae
2n¥Ge cia? ot .eeatdeve e'Nat
a4 gword~iiew « «On OSeeie |
vi Serie gost Sea ADitiv a2. a8 at vad) ts
. =O8 canog Britta aan. LAF pRAee Ose a:
‘eve of Levan, veh, gedhlavedige won 127 alent x
vet Seoovg® dontdees ad? Sug dyeteug Were ity
pesas seek ~ 2) Soghons eat AVLOs) Ge e208,
fe! anos sereeutewe GOYA ane Te asiaeen. edit
¢ si¢aty toe al gdahoss wily fgom oc
| pe COVA ast. errr te ae
exe coiepodt fedse ‘ebiews 26 Ny
wea fniageptiwt Sous Iatotes
T i? we Lio% 7 ) {iTe'S +t qo, os :
‘evket “Ot Latgeerog. sisthi. _
. te)
rs YA vd revig RRONARE::
wr =
7 sue — : Z
— . a». . a: _* :
pebe to 2XoeS a1 rane
id A A ‘
nL WOi7 tLe eit ie He ‘ Mivh
“a fi. ° » mm “i ” :
* a % es >i ?) i i
‘ ue
as
5 . j ~ aa
Q > * eids Hf eve o x s wie 7
= Ma
i Fi
EAS oigesol ab. wiliegpe fre oy
. edad! Fete Pe
| | , ne
SPUSBAu GOEST ‘ patewods 26 toa0 Wee
7
~#82> torts 7 a
w ,ooeme fépteeehat tek ater aoiB « S
pe sstbar of, ¥e2a wearer siicit Ai
te Enione miriam eke Gate Seles Peegex COVA si
favSai to +feg (ye betagendg e@ Slocs foidw senw
3.23876 ee Rees: bas lata
re ~~
few. Seecacic- re het ety &
* -@%5 =. es be: cKenyene
stiles wide §
rey | id rs
ae a _
cee aye ag
a
AVCO then proposed an annual minimum budget which
included the following:
Salaries is clon) Ke l8)
Minimum Operating Expenses BS7eu0s
Marketing SO eLoo
Fixed Obligations O62 5 2
Total $437,550
Even with this "bare bones" budget, the Soul City
developer would experience a negative cash flow of
$340,000 yearly.
Furthermore, it is AVCO's conclusion that
substantial additional infusions of cash by HUD into
Soul City is not likely to better the situation.
As a result of these findings, AVCO formulated
and analyzed three options which HUD could follow in
terminating involvement with the Soul City project.
A description of each of the three AVCO options,
including an estimate of the cost to HUD, is presented
on the following pages.
38
84 Tare
. » a : i
YE Louse off tonive “sened giet* eid? asie 8
to wolf! dees aVLAped 2 ape beens © Lancer
4a cols yy iones ev ODE «i 34. .eae -
stot UR ved deat Jo erweeptod aelesbae Lest
ot + s $23 Yerjad oF vietil sen ez ¥
op macs GoVA veverhes 2 aenny Yo +iveer ‘* x?’ y ag
2 wOLTe blopo gah tear
3) ; a
-
-
i
WH
sa ‘ Ll i
; an ebete® '
ituairl.qilorai sesinees on: oy
7 hed ‘
4 rae) a a = 2 & a - riwa oa
°
; ‘ i ;
adid diss! bessesgoss nd lvesn bive>
a: i nae ia: a
| ( ; Wes 9
COST TO FEDERAL GOVERNMENT*
SiG million Accelerated Debentures
2 million Accrued Interest
-4 million Foreclosure, Litigation,
Interim Management and
Liquidation Cost
= alt) Sublilaleeye) Receipt from Sale of
Property
Set OmmMi LLOn
* Does not include $30 million in grant assistance provided
prior to 1980 nor cost of Treasury borrowings.
40
ist)
; Can}
,sewinedes beas re Tees’
JBe te G4 | |
feisapicid ,eereolow2ot ian .
ere ene ez zeset
be
16 ofp): sox sq,e0e8 7 >
Yo ges
aq) eaoTwvat”g
Sri i 4 (Pra od =<:
Leawsosak
wy na woklite 9E¢ stulival. 70n @
..
nes
+ “4
.
7
‘cmegt sé Dae
“ae
+ ; a _
iibeuins tis VW ao
si sowtte: Vtuneenct 20 s8Ge- 28 veel oF oo Oe ee
t xi = : ay : Laem a 2 ;
=
AVCO Option II
No further action - "walk away"
ASSUMPTIONS
“ HUD would discontinue its involvement with the
progect..
3 No further HUD grants would be made available to
the project.
: Developer would retain ownership of all properties.
4 Debentures would be accelerated and paid off.
However, Indenture would remain in effect.
PROS
: HUD would not be required to take any overt legal
actions against the Developer, i.e., foreclosure.
HUD would merely defend limited litigation, if
Te,occurs.
: Absent foreclosure, HUD would require only
limited use of North Carolina counsel and any
litigation could be handled by the Federal
Government, presumably by the Justice Department.
: All HUD options to fund non-obligatory costs such
as Parks and Recreation Association subsidies,
purchase of water, etc. would be preserved.
: Fixed liquidation costs would be eliminated.
A HUD would not have to go through the protracted,
involved liquidation process.
5 The ultimate resolution of the Developer's status
would be left to the bankruptcy court in North
Carolina.
: The option of foreclosure and liquidation at some
future point would still be available.
41
is | :
ats islw sopaeviowns Bok evaisvaeonisb BL
—e
~ , at etal 0
wv slielevenpben se bivow esaete Cun vaciraet
= 7. orn
aaiezoqetqg ite 0 q2degiwt: dbades, Aigo veqoleved.
tite Sosa bes fe jomtechs 6d Bblusw ceteris tilne os Lain
tes ie ot abades Bisow siwanebrd Stoo | ne
ie ue sade ;
eoel store (te Shee of Haaeepes et ton blow SUH ar a
iuoloeyey .,eli' ,2seoleved Bhs eeqtepe ‘eo lsoe iii
Lg Ad spins! Dedamdi baeteh ylexet bivow Gus AO
(esunno Shy 2
| riuges' Slaw (eh. ,emricloete® Jsaeacn 7
rin Boe SencieD. aie =D deroKk So eas bedimiig -- Jag
5 ay a Head eé Bines noisagisit ip
.oa8 4180 esideot ato ud Videeeeetq .Jaemitevep ae
ie
) “)- ae
five @nec> yiotepiidecom Baek oe. easicgo age’ £4 <4 me
eoifhicace, sofas! eoeeh. sokeeesees On4 23284 265.07 ee
x ye SiG. 1 SLOW See ~eReae 23 eestoieg «
Sésanimife ad Siu Baeed Weidedivpll Sexnkt or
Gettetrotg ad dovgsds ep on teva soa bivow Gum | os
aa ‘weaa PORIGh! tuipit Seviowak
» Fl -_
suetgae a'savrtevad edt 20m tv a ecacizig eat. —
Se40r ol sre aegis 62 3301 ed prep Law
pe -P | ay
ry a
-sudt
emia th notrabignlt bn a
.afdatlave a
CONS
: Possible public perception of "giving away"
multi-million dollar asset.
: Possible public perception of HUD reneging on
commitment.
COST TO FEDERAL GOVERNMENT*
$10 Mie Lon
2 million
eon
Sele ml On
Accelerated Debentures
Accrued Interest
Legal Costs
* Does not include $30 million in grant assistance provided
prior to 1980 nor cost of Treasury borrowings.
42
ey =utcedes Seta te Tene
sgezeenl Seusood
ageon lapel!
*
pop: og sores el eee, 9
ae ya Wort!
foe
sarap ak motilim O8# obptont
‘od vnageRt fe saed ton ‘oges
AVGOnOpti one ler
Three-Year Limited Funding
ASSUMPTIONS
: HUD funding of one $850,000 industrial building.
: HUD funding of operating deficit for three years
at $340,000 per year.
: Decreased land values when HUD's limited commitment
became public knowledge.
; Second industrial building financed privately--
NOGEDYAHUD:
: Fach industrial building employs 35 people and
25 percent purchase homes in Soul City.
: Six lot sales a year to persons not employed in
SOULwC LUV.
. Residential lot sales average $3,500 per lot.
PRO
4 Allows project to be marketed after all utilities
are in place.
CONS
; Inevitable disclosure of short-term commitment
DYVEHUD.
: HighecostetoO HUD.
: Probable failure after three years resulting in
again being faced with foreclosure or "walk away"
Option.
43
” ft
pe a
seibiiue tshereobat 000.0898 ene se wie
‘oe sets age siphteb apunatesithlin rot ‘ees
’ . ¥ Asy 19¢ 90,08
nang tesa bot intl. .e*O0R adv coulse baal Seers i, omy
| .epbealwoud vil es,
| 7 ‘eee a 7 Ms
ries @vitg barmsnit palbliad tx teteubal skeeaee ee re i
-CUs yet -e ae
ra
ne aiqoee. tb wyo.aes pashiltud féekadechaz dont a ae:
.vgld igo af geced s¢adotug snaoaagied v
>
| cate
yo toh eoonyeq oF IeAy 6 eolae tol xt3: ‘* a
yeaa tuoe
Te | 3 . fh epecevs esilaz 20a falijnedi sen’ . -
bot Spe nasi betedten e@ ag Seetoxd ewotls neh F
soetlgq af- ete. in
+nanmctiomog mned-Pteda to ezvyveoloalsd aldesivant” <0 i;
ame yh
ms pasrds es ete0ey ootd sath waits rye
“vaes afew” xo secicate2 datw beoet wera :
a a ,
COSTS TO FEDERAL GOVERNMENT*
S20 Maeeeor Accelerated Debentures
Z Moe Or Accrued Interest
Net Operating and
Liquidation
Pearl On Deficit
Se Shey Tf Tel hake ie} eh Total
* Does not include $30 million in grant assistance provided
prior to 1980 nor cost of Treasury borrowings.
44
veneaed het ee ey eet
“ars! o@,)7°8S4
Oni sa “ay *eh
3 Z
23
luavor
a 2. ; |
ote whuiout Fox ‘ge * fy!
S202 son O8eL od. 10588 =
.
a
RECOMMENDATIONS
The members of the Soul City Task Force, ata
meeting on June 22, 1979, voted to recommend to the
Secretary for her consideration the following:
1. The Task Force accepts in principle the report
by AVCO Community Developers, Inc., including the finding
trace ooul City is not) viable.
2. At a meeting on April 27, 1979, the Task Force
reached an informal consensus opposing foreclosure as a
workout solution. In light of the AVCO report, it seems
that foreclosure must be considered, but only as an
Soueon Of last resort.
3. The Task Force recommends that HUD move to
acquire the property of the Soul City project with a
deed in lieu of foreclosure as the preferred means.
The Task Force also approved the following
resolution:
It is resolved that the recommendations
of the Task Force not be construed as an
adverse reflection on the capability of
the Soul City Developer.
45
UNIVERSITY OF N.C. AT CHAPEL HILL
|
FOR USE ONLY IN
THE NORTH CAROLINA COLLECTION
a
i
i
pare eee
ecanbras
rptese
ies
relare ae