A New York real estate company is going after some of the last scraps of imprisoned local developer Billy G. Jefferson’s former property empire.
True North Management, which last year purchased Jefferson’s Tobacco Factory Lofts out of foreclosure, filed a lawsuit this month in Richmond Circuit Court to force seven of his leftover Manchester properties to auction. The potential sale, True North argues, would allow it to regain some of the $11.4 million it is owed on a defaulted loan from one of Jefferson’s former LLCs.
Jefferson developed the Tobacco Factory with Justin French, another notorious imprisoned Richmond developer, using historic tax credits in 2003. Both men are now serving sentences of 20 years and 16 years, respectively, for historic tax credit fraud.
True North took ownership of the Tobacco Factory property at 700 Stockton St., now rebranded as the Lofts at Commerce, after initially purchasing a $25 million note secured by the 329,000-square-foot apartment complex. It purchased the loan from U.S. Bank, the original lender on the project that also forced the foreclosure.
The Tobacco Factory yielded a value on paper of $15.5 million when True North won it during the foreclosure auction. That figure was credited to the balance of the $25 million note, but the company claims it is still owed $11.4 million, including accrued interest.
True North also inherited liens from U.S. Bank on seven small properties around the Tobacco Factory that Jefferson owned through his now defunct TABAC LC. The lawsuit argues that those seven properties – six parking lots and one 0.37-acre undeveloped lot – could be sold and True North’s liens would allow it to collect the proceeds.
The seven parcels were most recently assessed by the city at a combined $545,000.
True North filed the lawsuit through the property’s ownership entity TNREF III TLJ LLC. The defendants are TABAC LC and Jefferson personally. The case was filed Oct. 20, and a response has not yet been entered.
Attorneys Robert Westermann and Franklin Cragle of Hirschler Fleischer are representing TNREF III TLJ. Neither returned requests for comment, nor did True North.
While those leftover properties may move toward their first appearance on the auction block, one of the last substantial pieces of Jefferson’s holdings is headed for foreclosure for a third time.
The 95-unit Parachute Factory Apartments at 300 Decatur St. is scheduled to be auctioned off at 11 a.m. on Nov. 5 on the steps of the Richmond Circuit Court building after failed auction attempts in May and October.
The trustee handling the Parachute Factory auction is Russell Drazin of law firm Pardo & Drazin. He declined to comment when the second auction was called off and did not return requests for comment on the most recently scheduled auction.
Parachute Factory is another project developed by both Jefferson and French. The Jefferson-controlled Parachute Factory LC defaulted on its $15.2 million loan two years ago. The note is also held by U.S. Bank, which also forced the foreclosure of Jefferson’s River City Renaissance portfolio.
The most recent city assessment values the 75,000-square-foot property at $10.6 million. That’s down more than $3 million since 2014.
Jefferson was most recently serving his time in a low-security federal prison in Yazoo City, Mississippi. He attempted to appeal the sentence, but that request was denied.
TheParachute Factory may be an ideal candidate for redevelopment using the 2nd tax credit abatement program. This would be a win-win for the City.