The builders of a $3.8 million subdivision of turreted $250,000 homes facing Rock Creek Park have filed a bankruptcy petition, the first high-priced District real estate venture to do so in recent years.
Documents filed in U.S. Bankruptcy Court revealed that an investment branch of the D.C. government, the District of Columbia Development Corp., was one of the principal lenders to the project.
The builders -- Bobby T. Boyd, until recently the owner-operator of the W. H. Bone restaurant in Southwest Washington; John A. Jackson of Silver Spring, and Thomas M. Williams -- filed a debtor's petition April 8 seeking protection from their creditors while they reschedule debts and financing.
W. H. Bone & Co. Inc. filed corporate bankruptcy reorganization documents Monday.
Boyd, his partners and their lawyer could not be reached for comment. Joseph D. Jackson, president of the D.C. Development Corp., also could not be reached.
"I don't know what happened. I guess the high interest rates took their toll," said James B. Brockett, president of the Bank of Columbia and one of several lenders on the project at 6040 Oregon Ave. NW on the western boundary of Rock Creek Park.
"They weren't able to meet the terms of the loan we had made," said Frederick B. Abramson, an associate law partner in the firm of Sachs, Greenebaum & Tayler who also sits on the board of the D.C. government's housing investment corporation.
More than that, however, Brockett said "it seemed to me that there was a lack of proper supervision to stay in there and see that it [the project] was done -- nobody was paying attention to the store."
Brockett said the project began to crumble in January when "construction ground to a stop. We kept watch, but obviously [the builders] had stopped paying [bills], and everything stopped."
Next, Brockett said, the main construction lender, Standard Federal Savings of Gaithersburg, filed notice that it was foreclosing on the project in early March.
As the leading lender, Standard had first rights to sell off the property to satisfy the builder's debt. Since there were at least three other lenders, Brockett said, the only way they could protect to Standard to pay off Standard's interest in five partly completely houses in the subdivision.
"So we've now got three units and they're 20 percent complete. It's a beautiful project and a fine area and we've got to get the doggone thing done," Brockett said.
The District lending corporation, which had made a $250,000 loan to the builders, did not submit a bid on the houses, Brockett said. "They did not come out to bid to protect their loans," he said.
The project was begun last spring by Boyd, Jackson & Williams Investment Syndicate. Fifteen of the graceful homes were scheduled to be built in the development called Oregon Knolls.
Construction financing was figured at $175,000 per house, said Brockett, whose Bank of Columbia held a second trust on three of the houses and has now assumed ownership. Another lender, John Hanson Savings & Loan Inc. of Forestville, has taken over ownership of the other two partially-built homes, Brockett said.
Presumably, if creditors can agree to new terms with the partnership, the subdivision may be completed. In the absence of an agreement, the creditors could seek to force the partnership into full bankruptcy, in which case the creditors could foreclose and attempt to find a developer capable of finishing the project.
D.C. Housing Director Robert L. Moore said he was not familiar with the project or the loan from the District corporation.
The D.C. Development Corp. was created by the city government to build low- and moderate-income housing as well as encourage economic development.
The mayor appoints the board members and the budget comes largely from federal grant funds. The company that actually made the $250,000 loan to Boyd, Jackson and Williams is a subsidiary of the agency and is called the D.C. Investment Co.
Abramson, who sits on the corporation's board, said the investment company board members are drawn from the parent corporation's board. Jackson, who is president of D.C.D.C., is also president of the investment company, records show.
Morever, the investment company is licensed to receive funds from the U.S. Small Business Administration.
The $250,000 loan from the D.C. corporation amounted to a third trust on the 15-lot site, according to Brockett, meaning the agency stands third in line for debt collecting purposes.
Under the loan agreement between the D.C. Investment Co. and Boyd, Jackson and Williams, the investment company was given the option to buy 30 percent of the stock of Boyd's partnership. It was not known whether the option was exercised.
The partnership agreement shows that Boyd owns 40 percent of the syndicate.
Other limited partners included prominent criminal lawyer William A. Borders Jr., physician Neville Padmore and Michael Sattelmajer.