Saying goodbye to $200K: Letter to the Editor/response from City of Wilmington

In the mid 1980s a senior/handicapped housing developer under the Quaker rubric needed a cash injection to complete construction of the “Friendly Center” building on Prairie Avenue that abuts the Quaker and Prairie View apartment buildings. The City of Wilmington loaned the developer sufficient money from its loan fund to complete construction. A commercial bank held the mortgage and had, what is known as “first position” on the property should a foreclosure ever occur. The city held second position on the mortgage.

In the early years of operation, Friendly Center prospered and netted a substantial profit. Loan repayments and property taxes were made in a timely manner.

For some unexplained reasons in the mid 1990-2010 time frame, hard times befell the enterprise. Property taxes went unpaid as did the first and second position mortgage holders.

This past summer the situation had deteriorated to the point that a foreclosure action was taken and the property was auctioned off. The bank recouped at least some of its money from the sale when they bought and resold the property to a new investor. The tax lien was also cleared.

The accumulated principal and interest due the city at the time of the recent sale was around $200,000. The city has surrendered its claim for the money using some unknown legal reasoning. An attorney gave me an opinion that debt obligation goes with the property and is not canceled by a change in ownership. Very similar to tax liens.

There are many aspiring small businesses that could use a “bridge loan” to get started but the $200,000 is not available and may never be. Several local businesses have borrowed and repaid similar loans. Were they foolish to do so?

Note: A similar situation is brewing in the Sugartree corridor and involves the DWIC as debtor.

Paul Hunter


City responds

Editor’s Note: Below is the response by the City of Wilmington from Executive Assistant to the Mayor Marian Miller. The letter to which she refers is online at

I’ve participated in extensive conversation and public records requests with Paul Hunter regarding his concerns and his understanding of the information pertaining to the UDAG loan with the Friendly Center. So many in fact, that to dispel the continued concern and with permission from our Law Director, I requested Buckley, Miller, Wright, and Raizk to research the property and provide a letter to the City confirming the events with this property. I’ve attached the letter from the legal counsel clarifying the property status, previously provided to Mr. Hunter.

In short, the property was auctioned due to foreclosure proceedings and did not sell for enough to cover the cost of the first position debt holder, leaving no money to pay the second position debt holder, the City of Wilmington. The lien amount on the property was for the original loan amount but the remaining pay off balance was just shy of $200,000. I can find no record where the city “surrendered claim” to the debt. The only way to do so is through council action, which was never taken.

While I appreciate the stewardship Mr. Hunter provides over the UDAG loan fund, now known as Revolving Loan Funds (RLF), the City must trust the guidance received from its own legal counsel. It is the City’s understanding it has no remaining claim to the outstanding lien. If the opportunity arose for the City to pursue recovery of funds or the City received additional guidance from the Law Director, I am confident the City would pursue all avenues.

While the loss of the money from the Friendly Center loan is significant and disappointing, there is $340,000 remaining in the UDAG/Revolving Loan Fund for aspiring small businesses to use/apply to receive. Additionally, there are hundreds of thousands of dollars in UDAG/RLF loans dispersed that are being repaid, replenishing the fund. Council is eager and willing to review loan applications for the remaining funds. If there is a business or non-profit seeking more information or an application regarding this funding opportunity, please contact the Mayor’s Office at 937-382-5458.

To address Mr. Hunter’s concern regarding the Sugartree corridor and the properties financed through the DWCIC, as a member of DWCIC, it is my understanding the DWCIC is holding on to properties to reduce the number of property owners should a downtown developer pursue opportunities on Sugartree Street. For development purposes, the fewer the property owners, the better. This is a strategic decision of the DWCIC. This decision was presented and approved by council.

In closing, I continue to appreciate Mr. Hunter’s oversight of government activities and actions. As a city and part of administration, we welcome and encourage conversation. If there are remaining unanswered questions, anyone is welcome to inquire or request access to public records. We are happy to accommodate.