An Oxford-based real estate developer has backed out of a contract to develop the Burns Bottom project after having the property under contract for approximately seven months.
In an interview with The Dispatch last week, Columbus Redevelopment Authority board member Chris Chain confirmed the board had been under contract with developer John Patrick Ferguson from February until September for a project valued at $30 million.
The deal reportedly included nearly the entire five-block Burns Bottom project area.
Ferguson, who has completed real estate development projects in Oxford and in Florida and owns the former Omnova property in Columbus, did not respond to calls or messages made by The Dispatch by presstime.
While CRA board attorney Jeff Turnage would not confirm the buyer’s identity, he did confirm that after initially putting the property under contract in February, the buyer asked for only one extension for further due diligence. The buyer backed out of the deal before the deadline, thus his earnest money was refunded to him, said Turnage, who declined to disclose the amount of earnest money specified by the contract.
After the secondary period of due diligence, it was discovered construction costs were higher than anticipated and that the houses within the project would have to be sold at $200 per square foot, or near $450,000, roughly $100,000 more than the board expected.
“We’re kind of shifting and looking at reducing the size of the houses a little bit right now to see if we can’t make that happen to shift it back to where it’s between $350,000 and $400,000,” Chain said. “Because we think that’s a place where we can sell a bunch of houses.”
Finding the pricing sweet spot
CRA President Marthalie Porter said lowering the price will be helpful when it comes time to sell houses.
“In the city, the housing inventories are down,” Porter said. “We’re trying to offer more housing opportunities in a range that Realtors we’ve spoken with said is needed.”
According to data released by Greater Golden Triangle Realtors, there have been 294 homes sold in Lowndes County from January to June 2023 at a median price of $187,500. By comparison, it is $295,000 in Oktibbeha County.
Kenny Frye, owner of Homes by Frye, a housing development company in Lowndes County, said he typically builds homes to sell at around $100 to $120 per square foot, but even that would be a tough sell in city limits.
“You’re lucky to get $120 per foot on a property in Columbus, and you can’t even build a house for $120 per foot right now,” Frye said.
Frye added that large projects like Burns Bottom have become cumbersome for developers as costs for building materials have risen.
“It’s going to take a special person to come in there and do that development,” Frye said. “If you sell those houses at $350,000, that’s like $36 million. That $36 million sounds like a lot, but it may be nothing. You might be working for free.”
Chris Clardy, owner of Clardy Home Development, said the uneven terrain for the project is another factor driving the cost of construction.
“As far as building costs, as a developer, one of the biggest things that I’ve got to watch is upfront costs,” Clardy said. “As far as what those are, uneven ground or terrain is what jumps out at me. (The CRA) doing some of that pre-developing like dirt work, I think would make it more attractive to developers.”
Moving forward with infrastructure prep
During its Wednesday meeting, the CRA board voted to hire Golden Triangle Planning and Development District to advertise bids for an engineering firm to conduct a floodplain and environmental study before it begins $6 million worth of road, water, sewer and broadband work.
The CRA, which was established in 2014 to encourage real estate development in the city’s urban renewal zone, is up for $2.2 million in the federal Transportation, Housing and Urban Development appropriations bill for the project, but it has not yet been approved by the Senate. That money would complement $3 million already appropriated by the state for infrastructure. The parcels that make up Burns Bottom were acquired using $3.2 million in bonds issued by the city.
Studies of the impact of the development — which would be conducted by the eventually-hired engineering firm — will need to be approved by both the Federal Emergency Management Agency and the Environmental Protection Agency.
“(GTPDD) does a good bit of (work) under federal procurement laws, and the (CRA) board is concerned with if we get federal dollars, we ought to do the procurement of engineering services in a way that keeps us legal from a federal standpoint,” Turnage said.
Chain said that if that federal funding comes to fruition, CRA could put out bids for infrastructure-related dirt work in spring 2024.
Exploring other developer options
In the meantime, Chain said the CRA is considering other developer prospects. He is meeting with a developer interested in taking over the entire project this week, though he would not disclose any details about them.
“I have a meeting with him tomorrow,” Chain said Wednesday.
Chain added the board is open to working with developers interested in only certain parts of the property. Chain added that Ferguson could come back at a later date.
“We want to put it out as RFPs to many developers,” Chain said. “If somebody wants to take a section, they can make a section and do it. We can break this (project) apart (into tracts).”
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Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 30 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.
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