Retail space owners face money woes

SOCIAL CIRCLE -- Times are tough for the Blue Willow Village, but owner Louis Van Dyke believes he can avoid a May foreclosure.

According to foreclosure notices posted in the Walton Tribune newspaper, Van Dyke and his wife, Billie Van Dyke, have defaulted on a $2.875 million loan to Wachovia Bank, which has since merged with Wells Fargo Bank, for the Blue Willow Village. The Blue Willow Village is a retail complex of about 7.1 acres attached to the Blue Willow Inn Restaurant in Social Circle. The Blue Willow Village property is slated to be put up for public auction May 4.

Van Dyke said the actual loan to Wells Fargo is closer to $2.2 million. The remaining balance includes construction loans. However, Van Dyke said, he had secured about $800,000 in low-interest loans from the Downtown Development Authority of Social Circle and the OneGeorgia Authority in 2007. He is working to restructure that loan as well.

Also facing foreclosure is the Magnolia Hall, a special events venue that is likewise owned by the Van Dykes, located across Ga. Highway 11 from the Blue Willow Inn. Wells Fargo also holds the note on that property in the amount of $490,000.

Van Dyke said Magnolia Hall is included in the foreclosure notices even though it is current on all its mortgage payments because the bank no longer sees the property as stable. He said the special events venue has been for sale for about two years.

Even with the May 4 foreclosure date looming, Van Dyke remains confident that he will be able to restructure his loans with the bank before that time.

"Prior to the foreclosure notices being published in the paper, we were in negotiation with Wachovia/Wells Fargo in reference to restructuring the mortgages," Van Dyke said Monday. "I believe we are going to come up with a restructuring before the auction date."

In the event the Van Dykes are unable to restructure the loans in time, he said he will likely file bankruptcy to reorganize the debts.

"If all else fails prior to the May date, we will be taking whatever action is necessary to avoid foreclosure, including a reorganization," Van Dyke Said. "I never dreamed my wife and I would ever do this, but sometimes it becomes a necessity."

The Van Dykes opened the Blue Willow Village in October 2008, which was just about the time the banking industry began to plummet. The Village was designed to expand the appeal of the renowned Blue Willow Inn Restaurant by offering a mix of retail shops and, at one time, a religious-themed museum. At the time the Downtown Development Authority and OneGeorgia announced their loans for the Van Dykes' project in 2007, the Georgia Department of Economic Development projected the Blue Willow Village would bring 90 jobs, 150,000 new visitors and more than $14 million in tourism to Walton and surrounding counties. Those projections proved to be too optimistic.

"Every unit was pre-leased within the Village before we opened, but the majority of those tenants came to us and said they would be unable to weather the serious downturn in economy," Van Dyke said. "They told us they wouldn't be able to hold to their pre-lease agreement."

He said he allowed those tenants to back out and offered to talk with them again when the economy rebounded.

"It might not have been the smartest business decision to make, but I have to operate with some level of morality," Van Dyke said.

The Village is home to Winking Willow, a shop specializing in embroidered gifts; Do Over, a children's consignment store; Village Treasures, an antique shop; and Lou's Soda Fountain and Grille, a 1950s-style restaurant.

The bottom line, Van Dyke said, is the Village did not have enough tenants to help carry the debt load.

A second wave of bad news hit the Van Dykes in November when the mortgage payments on the Blue Willow Village doubled.

"We were unaware that was going to happen, and that was the end of our ability to make our payments," Van Dyke said.

Through it all, he said, the Blue Willow Inn Restaurant has remained profitable. But due to the fact the restaurant has been leveraged by the Village, it will also be affected by the resolution of the debt.

"We're going on our 20th year next year, and we want our customers to know that we're going to be here," Van Dyke said. "It's been a challenge ever since the Village opened. We've seen a pick up in business this year, and we saw a 4 percent increase in the restaurant business last year. Now we are trying to put all our debt in a situation where we can properly take care of it."