The developers who two years ago seemed among Atlantic Beach's brightest hopes for redevelopment are now threatened with foreclosure on their beachfront properties, the latest in a public string of financial woes for the company.
Atlantic Beach Oceanfront and Seventh Street Properties, two companies run by brothers Matt and Frank "Buddy" Gadams, control almost an entire block of the town's beachscape, but were put on notice of impending proceedings Tuesday for a $9.5 million mortgage from 2006.
In June, an investigation by The Sun News found that the two companies owed the town $50,000 in unpaid, delinquent property taxes. Meanwhile, a downtown condominium tower begun by Buddy Gadams in Norfolk, Va., is mired in its own financial troubles.
"I hate to see anybody get foreclosed on," said Atlantic Beach Town Councilman Donnell Thompson. "But many times, someone's loss is someone else's fortune. If they can't get it worked out, certainly it's beachfront land, and very, very valuable."
The Gadamses did not return a call for comment Wednesday.
In 2006, the Gadams brothers signed a $9,560,000 mortgage with a group of South Florida lenders, including Coconut Grove Bank and Mellon United National Bank, according to records at the Horry County courthouse. Seann Tzouvelekas, the Greenville-based attorney for the lenders, declined to discuss details of the mortgage or the upcoming foreclosure action, but said the law gives lenders 20 days to begin foreclosure.
When the Gadams brothers, then known as Marathon Development, announced their purchase of the Atlantic Beach property in 2005, they were hailed as part of a vanguard seeking to revitalize the struggling town and praised for their historic renovations in coastal Virginia. No one developer controls all of an oceanfront block in Atlantic Beach, but Marathon assembled one of the largest collections of properties on the northern side of the beach.
Troubling signs for the project have been building through the year, as another Marathon project, the $180 million Granby Tower luxury condominium in Norfolk, fell victim to financial woes. Originally slated to be finished this year, the project remains a fenced-in lot, contractors say they haven't been paid and individual condo buyers are demanding refunds, according to articles in the Virginian-Pilot.
The company also neglected to pay its 2008 property taxes to Atlantic Beach, a sum of $50,000 for the 10 parcels it owns.
Mike Kelly, a member of one of the town's founding families that owns several parcels on the southern corner of the beach, lamented the news of the filing against Marathon.
"They had some promising ideas that would have been an asset to the community," Kelly said. "But they know their business. They just might be able to pull out of it."
Interim Town Manager Charles Williams said other developers have been inquiring about the beachfront land.
"I hope Marathon will be able to move their project along, but if not, there's substantial interest in the property," Williams said.
Thompson said he has known the Gadams brothers for several years through his own contracting business, but never had any formal dealings with them. The developers had been struggling recently to make the project work, Thompson said, but he was surprised to hear of Tuesday's filing.
"I wouldn't count the Marathon group out," Thompson said.