Current Situation
Dream Finders Homes fell out of contract on the Nowell Creek property yesterday. The $16M purchase price is no longer on the table. When we listed the raw land with a broker in April 2025, we received zero offers — the $8M+ infrastructure requirement (especially the bridge) makes this a difficult sale as raw land. However, we retain significant permitting progress: BZA approval, fire department access, wetland permits, and bridge design — work representing years of effort and hundreds of thousands of dollars.
Dec '26
Wetland survey expires
$0
Current income from land
How Options Are Scored — From SCT's Perspective
Each option is rated 1–10 across six dimensions weighted to reflect SCT Properties' priorities as a passive capital partner, not an active developer.
Value of SCT's share25%
Likelihood it actually happens20%
Protection of land investment20%
Personal liability exposure15%
Effort required from SCT10%
Timeline to income or liquidity10%
Option 1 — Recommended
Recommended
Develop as Partners — HUD 2-Phase Plan
SCT Properties contributes the land as equity into two new LLCs (one per phase). Alex manages the full development using HUD 221(d)(4) financing — a 40-year, non-recourse government mortgage that covers 85-87% of costs. The land covers the remaining equity requirement. Zero cash investment from SCT. Phase 1 is 107 townhomes (80% market-rate, 20% affordable). Phase 2 is 93 luxury waterfront townhomes with no infrastructure cost. Alex hires an experienced development manager (Glenn Maddux / Black Mesa Partners or equivalent) to handle day-to-day execution.
$90–180K
Skatell predev loan (60%)
$257K/yr
SCT's P1 cash flow
$17.4M+
SCT's P2 share (for-sale)
What SCT is asked to do: (1) Fund 60% of predevelopment costs ($90–180K) as a priority-return loan — repaid first from HUD loan closing proceeds, before any developer fees or distributions. John E. Taylor III funds the remaining 40%. (2) Contribute the land as equity into new LLCs (no additional cash). (3) Sign loan documents as an LLC member. SCT is not a personal guarantor — the HUD loan is non-recourse. SCT has no operational responsibilities. Alex and the hired development manager handle everything.
Option 2 — Entitle & Sell
Alternative
Entitle the DFH 167-Unit Plan, Then Sell Entitled Land
Invest $200-400K in entitlement costs (civil engineering, architecture, TRC submittals, permitting) to take the existing DFH 167-unit plan through full approvals. Entitled land with an approved site plan is worth significantly more than raw land. Then sell to a builder who can start construction immediately.
$100–200K
SCT's share of costs
$9.6–11.5M
SCT's sale proceeds
$20–24M
Potential sale price
What SCT is asked to do: Contribute approximately $100-200K toward entitlement costs (SCT's share). Wait 12-18 months for entitlements to complete. Then agree to sell. No operational involvement. The risk is that entitled land still may not attract a buyer at target price due to infrastructure costs.
Option 3 — JV with Outside Developer
Alternative
Sell Partial Interest to Capitalized HUD Developer
Find a well-capitalized developer experienced with HUD 221(d)(4) projects. They take controlling interest in Phase 1 and run the development. SCT and TS DI contribute the land and retain a minority carried interest in Phase 1, plus full ownership of the Phase 2 waterfront parcel. Less financial upside, but professional execution and minimal involvement.
$4–7M
Est. P1 value to SCT
P2 retained
Waterfront parcel
What SCT is asked to do: Agree to contribute land to a JV with the outside developer. Accept a smaller ownership percentage in exchange for professional execution. The difficulty is finding this developer — it's a very specific type of partner.
Option 4 — Re-Engage DFH (Conditional)
Conditional
Re-Engage Dream Finders Homes — With Deposits Up Front
DFH (Michael Condon) has expressed interest in re-engaging after defaulting on the contract. If we re-enter negotiations, the condition is that DFH must immediately fund all missed deposits plus the upcoming $350K second deposit before we sign a new agreement — demonstrating they are serious this time. The original PSA had a $600K total deposit schedule ($50K + $350K + $100K + $100K) with deposits becoming non-refundable after the inspection period. The sale price remains $15M (early close) to $16M. However, this is still a long contingent contract with closing tied to permit approvals (originally September 2027), and DFH has already proven unreliable.
~$7.2M
SCT's share at $15M
$600K
Non-refundable deposits
2–3+ years
Realistic timeline
What SCT is asked to do: Agree to re-enter a PSA with DFH under stricter terms. No cash from SCT. The key difference from last time: DFH must put all deposits up front (including the $350K second deposit) before we execute a new contract, so they have real money at risk from day one. However, this remains a long contingent contract — the land is tied up for 2+ years while DFH works through approvals, and they've already demonstrated a willingness to default. DFH has already broken one contract with us.
Option 5 — Sell Outright to New Buyer
Challenging
Sell to New Buyer at $16M (If Buyer Found)
Attempt to sell the entire property for the DFH contract price of $16M or similar. This is not a clean, quick sale. Because the site requires permits, bridge approval, and infrastructure, any serious buyer will insist on a long inspection period and closing conditions tied to governmental approvals — just as DFH did with a contract that ran through September 2027. The land sits tied up under contract for years while the buyer works through approvals, and the buyer can terminate if permits aren't obtained. Meanwhile, SCT cannot pursue other options. We already listed with a broker in April 2025 and received zero offers.
~$7.7M
SCT's sale proceeds
2–3+ years
Realistic timeline
0 offers
April 2025 result
What SCT is asked to do: Agree to list/sell and then wait. But the DFH experience illustrates the problem: even with a signed contract, the closing was contingent on permit approvals with a September 2027 deadline — nearly two years out. Any future buyer will demand the same structure. The land is tied up under contract while the buyer controls the timeline, and they can walk away if approvals don't come through. This is not a quick cash exit — it's years of waiting with no guarantee of closing, during which we cannot pursue other options.
Options 6–7 — Not Recommended
Not Recommended
MSP 425-Unit Apartment Plan (to HUD or conventional)
Pursue the larger MSP plan with 320+ apartments over concrete parking podium. Hard costs alone are ~$98M. This would require finding $15M+ in outside equity beyond the land, and MSP spent three years on this approach with limited progress. The project's scale exceeds our current team's proven capacity.
Why it's not recommended for SCT: Much higher complexity and capital requirements. Three years with MSP produced minimal progress. The $11.4M concrete parking podium alone costs more than the entire infrastructure budget for the townhome plan. SCT's land equity may not cover the equity gap, potentially requiring cash contributions or additional equity dilution.
Not Recommended
Partner with Outside Developer (Repeat MSP Experience)
Find another development partner to take the project through entitlements and build, similar to the MSP arrangement. The problem: we tried this for three years and it produced very little progress. DFH also fell through. Two failed partnerships suggest the issue is structural — the project is too complex for partners who don't control the land.
Why it's not recommended for SCT: We've already tried this approach twice (MSP for 3 years, DFH). Each attempt consumed years without producing results. Meanwhile, permits depreciate and the land generates no income. The definition of insanity applies.
Side-by-Side — SCT Properties' Share
| Option |
Score |
Cash from SCT |
SCT's Total Value |
Personal Liability |
SCT Effort |
Timeline |
| 1. Develop (HUD) ★ |
8.5 |
$90–180K loan (repaid first) |
$17.4M+ (P1+P2) |
None (non-recourse) |
Passive |
Loan repaid at closing; P1 CF yr 3–4 |
| 2. Entitle & Sell |
6.5 |
$100–200K |
$9.6–11.5M |
None |
Minimal |
12–18 months |
| 3. JV w/ Developer |
6.2 |
$0 |
$4–7M + P2 share |
None |
None |
18–24 months |
| 4. Re-Engage DFH |
5.8 |
$0 |
~$7.2M |
None |
None |
2–3+ yrs (contingent contract) |
| 5. Sell to New Buyer |
5.4 |
$0 |
~$7.7M |
None |
None |
2–3+ yrs (contingent contract) |
| 6. MSP 425-Unit Plan |
4.1 |
TBD — may need cash |
Higher if it works |
Possible |
Low |
3–5+ years |
| 7. New Partner (MSP repeat) |
3.8 |
$0 |
Unknown |
Depends on partner |
Low |
Unknown |
Recommendation for SCT Properties
Option 1 is the strongest path for SCT Properties. Here is why it protects your interests:
The predevelopment loan is repaid first. The $150–300K in pre-HUD costs are split between John E. Taylor III (40%) and Janie & Tony (60%), structured as priority-return loans — the very first money repaid from HUD loan closing proceeds, before any developer fees, distributions, or other payments to anyone. This is not at-risk equity; it is a short-term bridge that gets reimbursed from a $42.8M+ HUD-approved development budget. Even if the HUD path doesn't work out, the predevelopment work (updated architecture, engineering, permit renewals) makes the land more valuable and saleable under any alternative option.
No personal liability beyond the predevelopment loan. HUD 221(d)(4) loans are non-recourse — the government mortgage is secured by the property, not by any personal guarantees from SCT's members. If the project were to fail (which the 1.20x debt service coverage ratio makes unlikely), the lender's recourse is against the property, not against Janie or Tony personally. The maximum out-of-pocket exposure for the Skatells is the 60% predevelopment share ($90–180K), which is repaid at HUD closing.
No operational burden. Alex manages the development. He is hiring an experienced development manager to handle day-to-day execution. SCT's role is limited to contributing the land and approving major decisions as an LLC member.
SCT retains 48% of a $42.8M+ project. That's roughly $20.5M in total value across both phases — compared to ~$7.7M from a straight sale. And a "straight sale" isn't really straightforward: the DFH contract had a September 2027 closing date contingent on permit approvals. Any future buyer would demand the same multi-year contingent structure. A sale takes just as long as developing but produces a fraction of the value. Even accounting for the $90–180K predevelopment loan, the development path creates roughly 2.7× more value for SCT.
The infrastructure arbitrage protects Phase 2. Phase 1's HUD loan pays for the $8M bridge and infrastructure. Phase 2 — the waterfront, which is the most valuable part of the site — inherits that infrastructure at zero cost. SCT's 48% of the Phase 2 for-sale profit alone could be worth $17.4M.
⚠ Time-sensitive: The wetland survey expires December 2026. If we don't move into an active HUD process this year, we risk losing the permitting progress that represents years of work and significant expense. This deadline applies to all options — the permits depreciate regardless of which path we choose.
Proposed Next Steps (If SCT Agrees)
- Align on the HUD 2-phase plan — Confirm SCT's willingness to contribute land as equity
- Meet with Glenn Maddux / Black Mesa Partners — Evaluate as development manager (Alex leads this)
- Reengage Berkadia (Jimbo Tanner) — MAP lender consultation on current HUD rates and feasibility
- Confirm permit expiration dates — Build a countdown calendar for all active permits
- Subdivide into 2 parcels — Required to keep Phase 2 legally separate from HUD encumbrances
- Engage Brian Collie — Structure the new LLCs and operating agreements
Predevelopment Funding Request
The Ask
To pursue the recommended path (HUD 221(d)(4) development), there are upfront costs required before the HUD loan closes. These include architecture, civil engineering updates, MAP lender engagement, legal entity formation, SC Housing consultation, and related professional fees. These predevelopment costs are funded as a priority-return loan to the development entity — repaid first from HUD closing proceeds.
$150–300K
Total predev costs
First money out
Repayment priority
At HUD closing
When repaid
12–18 mo
Expected timeline
John E. Taylor III — 40% of Predev
Path A — Stay In
$60–120K
Predev loan repaid at HUD closing. Retains 40% of SCT's 48% ownership through both phases.
Path B — Buyout at Closing
$2.88M
Predev loan repaid plus full buyout of his 40% interest at HUD closing. Clean exit at DFH contract price.
Buyout calculation: 40% of SCT's 48% = 19.2% of the property. At the DFH contract price of $15M, that equals $2,880,000 — paid from HUD loan proceeds at closing. John E. receives a fair exit at a price both parties already agreed to, and the Skatells consolidate full ownership of SCT Properties going forward.
Janie & Tony Skatell — 60% of Predev
$90–180K
Predevelopment loan — repaid first at HUD closing
If John E. elects the buyout, the Skatells' effective ownership of the project increases from 60% of 48% to 100% of 48% — positioning the family for the full upside of both phases without a third-party partner in the land entity.
How repayment works: When the HUD 221(d)(4) loan closes, predevelopment costs are reimbursable from the loan proceeds as part of the approved development budget (soft costs). Each party's predevelopment advance is repaid first — before any developer fees, distributions, or other payments — directly from the HUD closing. This is structured as a short-term loan to the development LLC, not an equity contribution, so it does not affect ownership percentages.
If HUD doesn't close: The predevelopment work (updated plans, engineering, permits) adds value to the land regardless. This work makes the property more saleable under any of the alternative options. The advances would be repaid from the proceeds of any sale or alternative transaction. In a worst case, each party's exposure is limited to their predevelopment loan amount — no further obligations.