A little more than a week after announcing an "indefinite" construction delay at its Hickory Chase development in Hilliard, an Erickson Retirement Communities spokesman announced the project is in foreclosure.

In a letter to Hilliard Mayor Don Schonhardt dated July 2, Erickson spokesman Steven Montgomery said Erickson has been unsuccessful in resolving issues with Key Bank, the lender for the project.

"We have been informed by the lender for our Hickory Chase project that despite efforts to resolve financial issues, the lender has commenced a foreclosure proceeding that will result in us not being able to open Hickory Chase and end our management of the property in Hilliard," Montgomery wrote.

Montgomery assured Schonhardt that prospective residents who have made financial commitments to the development will be protected.

"As always, during these difficult economic times, Erickson's first priority is to prospective residents," Montgomery wrote. "The accounts holding our customers' deposits and other fees are not affected by this legal action.

"Erickson is committed to assisting prospective residents by providing full refunds and consulting with residents and families on alternative living options. Prospective residents will receive 100 percent refunds of deposits and other fees paid. Erickson has begun processing refunds and plans to have all monies returned in July."

Hilliard officials said the foreclosure action filed against the project does not jeopardize the financial stability of the city.

"The city will suffer no residual financial damage as a result of the foreclosure and, in fact, even the unfinished project has resulted in $17-million in improvements to Britton Parkway, Anson Drive and Leap Road," Schonhardt said.

Schonhardt and city council President Brett Sciotto said their immediate concern is to assure proper maintenance of the Hickory Chase buildings and grounds. They have asked law director Pam Fox to communicate that message to the appropriate parties.

"During this transition period, we will insist the property be kept up to code," Schonhardt said.

Schonhardt and Sciotto said the conservative approach taken by the city has paid dividends in what they called an "unfortunate turn of events."

"While we are disappointed that the project has been halted, we continue to believe in the concept," Sciotto said. He added that he hopes another buyer will step forward to complete the project.

"This setback doesn't diminish the viability of providing quality housing and health care opportunities for the growing number of retiring baby boomers," Sciotto said. "The vision made sense under Erickson and it will make sense under another developer."

Hilliard finance director Michelle Kelly-Underwood said the current city budget does not presume additional tax revenues from Erickson and that all public improvements required to be built have been or are being constructed with funding that is not an obligation of the city.

"We weren't counting money from Erickson until Erickson was built, and this unfortunate development shows the wisdom of taking that conservative approach," Kelly-
Underwood said. She noted that the biggest consequence of the foreclosure might be foregoing some special capital construction projects that the city was hoping to fund with increased revenues from development adjacent to Hickory Chase.

"But we won't see a direct negative impact on the quality of our basic city services," she said.

City officials said their main concern is assuring that money will be refunded to senior citizens who invested in Hickory Chase.

Schonhardt called the foreclosure proceedings against Erickson and the Hickory Chase development indicative of what is happening "in this most challenging economy."

"We have been so fortunate here in Hilliard," he said. "We have created so much economic development in our community in recent years, it was, I suppose, inevitable that something like this would happen. It is a lesson that reminds us that as good as things have been in Hilliard, we are not immune to the raging economic downturn that is affecting the whole of the U.S. economy."

Schonhardt said his administration intends to assist Key Bank in finding a suitable developer for the project.

"In the best of all worlds, we hope one day to look back on this episode and write it off as a step in the process of bringing quality senior housing to Hilliard," Schonhardt said. "The foreclosure does not mean a foreclosure on what we still deem as a strong and viable concept for the future of our community."