The Noisette Development Slams Headfirst into Greed and Personal Motive!

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The Noisette Development Slams Headfirst into Greed and Personal Motive!
By: Jon Dougal - Tuesday, November 15, 2005
Source: Various

New urbanism seems to have the endorsement of many municipalities across the country. Indeed the concept has been used in China for 100’s of years and in Eurpoe since the castle’s reigned. The US is just now realizing the benefits of community oriented development as opposed to sprawl. Retiring “baby boomers” and empty nesters are interested because of their penchant for downsizing, more play and travel and the younger family nesters are interested because to the feeling of belonging and a-nuclear family support along with the feelings of perceived safety.

Enter Greed!
So with all the benefits of “new Urbanism” what could stop it? Greed and politics as intertwined as they can get! Case in-point – the Development of a blighted and brownfield closed Navy yard in Charleston, South Carolina.

John Knott, a visionary developer of sustainable communities, took on the responsibility for developing the 3000 acre property in partnership with the City of North Charleston. After 3 years and countless millions of dollars of investment the property has appreciated and shown not only the local community but the international community what new urbanism can contribute to cities by way of appreciated property values and citizens involved in their own community destiny.

Now that the development has shown what can be accomplished and the benefits that cross-pollinate all urban environments, former “naysayers” want their piece of the action and profits.

In many corporate environments when an ambitious underling wants to gain a better position, they first set out to discredit the person residing in the position they want to fill. It appears that a similar scenario is taking place with Regards to the Noisette development of this former Navy Base.

Has a crime occurred? Readers of the local newspaper might be led to think so. The Post and Courier Newspaper has reported on a four-month long investigation of the Noisette Co. and its president and CEO, John Knott. Like countless reporters since Woodward and Bernstein looking for some crime this paper has looked at all of Knott’s personal life as well as his business dealings looking for dirt and reporting the various dealings as if there was some crime committed not admitted.

The ethics of John Knott speak for themselves. In order to pay past debt he sold his house, as any one of us has had to do when things go bad and you have your personal worth as collateral.

Checking out Knott’s background is one thing, but we might ask what is the “Hidden Agenda” here? . Four months is a long time and a lot of energy to spend investigating somebody who has never been suspected of doing anything illegal.

In fact, the Post and Courier piece fails to pin any illegal activities on Knott. Instead, the story says Knott’s business background is strewn with lawsuits and unfinished projects.

Certainly Knott ran into debt problems and failed projects resulting from the savings and loan debacle of the 1980s. A lot of developers did. However, instead of declaring bankruptcy, Knott paid his debts, in part by selling his house. That’s character.

“Noisette is not about me,” Knott said during a press conference July 5 that repudiated the Post and Courier piece. “It’s never been about me.”

Instead, the 3,000 acres project is about a team of Noisette employees and urban redevelopment experts committed to transforming North Charleston into the “Great American City.”

Our readers entering into any aspects of urban development may gain some insight into what roadside bombs may be waiting your transit into this arena of popularity through digestion of the following background articles on the Noisette community development.

Noisette's Good Report Card

When the extraordinarily ambitious plan for the renewal of North Charleston was unveiled more than three years ago, our editorial headline at the time said it could be a dream come true for the city. We haven't changed our minds.

The key visionaries -- officials of the Noisette Co. and North Charleston Mayor Keith Summey -- conducted a briefing last week that amounted to a checklist of promises made and kept. They are outlined in large part on our Commentary page today by John L. Knott Jr., the chief executive officer of the Noisette Co. They range from the completion of a master plan for a 3,000-acre redevelopment project, the largest ever attempted in an American city, to the preparatory work for a new riverfront park on the former Navy Base, the core of the redevelopment project.

There's no question there have been and continue to be some frustrating delays in the transfer of base property that have stalled some of the Noisette efforts. While much of the work to date has been on paper, including such key accomplishments as zoning changes, there also has been substantial legwork in the community. There is no doubt that the redevelopment plans already have spurred new investment in the city and increased property values.

This huge project is notable for Mr. Knott's all-encompassing approach to redevelopment. In order to turn a city around, he noted, all the societal issues must be addressed, from crime to education to the economy to the environment. If the dream comes true, the city will be a showplace for 21st century architecture and such additions as art galleries, museums, new parks, a botanical garden, new businesses and thousands of new housing units that will have the density to support mass transit. Known for his environmentally sensitive approach to development, Mr. Knott says there is intense interest in the project from developers around the country and abroad.

His fervor is matched if not exceeded by Mayor Summey, who told the gathering last week that nothing short of death or his removal from office was going to stop his work on the project. That's the kind of commitment that turns dreams into reality.

Many have questioned why the Noisette Company would invest millions of dollars and three years in the 3,000-acre Noisette area, when its economic return only comes from the 350-acre Navy Base property.

It is because we believe that a rising tide floats all boats. When considering the ongoing impact of the Noisette Project in North Charleston, perhaps this statement was never more valid. When the Noisette Company announced the 3,000-acre urban redevelopment project with the City of North Charleston in March 2001, it was clear that Noisette would be pivotally different than conventional real estate projects that cleared farmlands for cookie-cutter suburbs.

Noisette is based on a burgeoning development philosophy called sustainability, the core principles of which are the "triple bottom line" -- a concept based on the belief that sustainable cities are socially just, environmentally responsible, and economically prosperous. The values of sustainable growth champion our common humanity, emphasizing health, efficiency, durability and comfort in community design.

Never before in the history of urban revitalization in the United States has there been a unique partnership like the one that exists between the City of North Charleston and Noisette Company. With Noisette, the city is collaborating on a comprehensive plan to develop a diverse, interconnected network of neighborhoods, businesses, parks, retail centers, and environmentally-friendly businesses, integrating the redevelopment with adjacent communities. In its initial stages, Noisette has been focused on developing the means to revitalize and regenerate North Charleston.

From 1998 through 2001, Mayor Keith Summey and his staff identified a list of North Charleston's most blighted areas -- the GARCO site, Century Oaks, North Park Village and Calhoun Homes, and the former Navy Base -- which were primary targets for redevelopment through a community driven master planning process, represented in Noisette's 15-point Community Development Scope articulating the goals of the project.

In 2001, roughly 13,000 people were living in the footprint of the Noisette redevelopment district, a number that is 16 percent of the city's total population.

Approximately 400 acres of the former Navy Base will be developed by the Noisette Company, while the remaining 2,600 acres remain the responsibility of the city. Overall, Noisette contains most of the original municipal boundaries for the city's 1972 incorporation.

Of North Charleston's 58-square mile area, Noisette comprises 4.5 square miles. Compared to the area south of the Crosstown in peninsula Charleston, Noisette is two thirds again as large in total land area. The initial stages of the Noisette Project have contributed to profound change in North Charleston. Just consider:

-- Real Estate Values: According to a survey of the Multiple Listing Service by John Bourne Real Estate, the average square foot cost for a home in vicinity of the Park Circle neighborhood has increased from $54 in 2001 to $97 in 2004. Demand for homes in the Noisette District has generated a market turnaround of less than 30 days from the date properties are placed on the market.

-- Community Involvement Model: The Noisette Community Master Plan was delivered to City Council in December 2003, the final product of a process that witnessed community participation unprecedented in the Lowcountry. Noisette officials met with nearly 4,000 people in 100-plus sessions, with public feedback integrated into the master plan.

The master plan preview at the North Charleston Performing Arts Center in November 2003 lured more than 600 attendees. Overall, the master plan process entailed an investment in excess of $2 million by the Noisette Company, at no cost to the taxpayer.

-- Riverfront Park: South of Noisette Creek, Phase One of the Riverfront Park project is underway with completion set for a community July 4th celebration in 2005.

The $5 million project design has been approved by the city, with a creek-side performance pavilion which doubles as a covered activity space, a large public green for recreation, and a hiking/biking trail connecting the community to the Cooper River. In addition, the Navy Base Memorial design has been approved, and pending city financing, it will be constructed at the same time the park is built.

-- East Montague Corridor: The city approved a projected $2.6 million streetscape project for East Montague Avenue. On the main retail district, new businesses have relocated to East Montague with such recent additions as Park Circle Grill, Leydic Glass Design Studio, Blooming Idiots garden center, and the SoCa and Bella Bella day spas.

-- Schools: A major component of the master plan is the sustainable redevelopment of schools. Seven of the 14 elementary, middle and high schools have received in excess of $45 million in reinvestment funds by the Charleston County School District. The new North Charleston Elementary at Noisette is South Carolina's first school to register with the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program.

The city and Noisette have agreed that 25 percent of the off-base Tax Increment Financing will be dedicated to the area's 14 public schools, transforming them into more sustainable learning environments.

-- Horizon Village: The U.S. Department of Housing and Urban Development Hope VI grant project at North Park Village hails the construction of a $35 million project with a total of 900 units, including 600 affordable, and 300 market-rate units. About 28 acres of open space will be maintained, including seven acres of wetlands adjoining Noisette Preserve.

-- Century Oaks:Under a contract, Noisette is acting as the City of North Charleston's agent in their redevelopment of the 55-acre Century Oaks site. The new development will focus on the retention of grand oak trees in the midst of a new traditional neighborhood. The Noisette Quality Home Standard will set standards for this model residential neighborhood. Land development activity at Century Oaks is expected is begin in the second quarter of 2005, with models under construction throughout the summer.

-- Hunley Maritime Museum: The Noisette Company design and development team donated $155,000 of professional services to the City's Hunley Museum proposal in 2002, helping the city win approval as the permanent site for the H.L. Hunley submarine.

Located on the Cooper River, plans for this $40 million facility will be developed by Noisette's world class design team in 2005, including architects Burt Hill Kosar Rittelmann and BNIM, cultural site specialists Lord Cultural Resources, and world renowned museum exhibit designers Ralph Appelbaum Associates.

-- Sustainable Partners: Fisher Recycling recently relocated to Noisette, and is collaborating to develop new uses for recyclable waste, including a toxic-free, eco-friendly fertilizer from restaurant by-products, and wood palettes for paneling, flooring, furniture and other wood products.

Last September, the Noisette Company announced the opening of the Noisette Urban Alliance Studio, which has seen significant use by the community.

Part of the international 15-member Noisette Urban Alliance corporate partnership, the studio is designed to promote community participation in healthy, sustainable home building practices throughout the Charleston metro area.

-- Base Redevelopment: Plans for the Noisette River Center will be in full swing in 2005, including the rehabilitation of current structures into a blend of service, and retail businesses.

Already 375,000 square feet of office and warehouse space have been released. Planning is underway for the Storehouse Row redevelopment, including four historic buildings, creating work-live residential lofts, office, retail, artist's galleries, and a master artisan's center, along with an outdoor plaza and green roof gardens.

The city's approval of the Planned Development District for River Center in November enables Phase One redevelopment to begin.

Phase One will encompass one million square feet of retail and commercial space, and 2,000 housing units.

At this point, we at the Noisette Company would like to thank the citizens of North Charleston, City Council, and Mayor Keith Summey for engaging in this unparalleled partnership effort, which has profound implications for communities across the nation.

"Indeed, the Noisette Community has a buoyant future. "John L. Knott Jr. is the CEO of the Noisette Company, LLC.

Can The Noisette Co. Get The Job Done?
Published on 07/03/05, From the “Post and Courier” Regional Business Journal

Bulldozers shoved mounds of mud in the driving rain last week as workers scrambled to get North Charleston's new $6 million Riverfront Park ready for its grand opening.

The scene offered little comfort to former City Councilman A.C. Mitchum.

To Mitchum, the last-minute push to meet a deadline was yet another problem the city has been forced to deal with since turning redevelopment of the former Charleston Naval Base — the city's dream for revitalizing its urban core — to a developer whose record it never thoroughly examined.

In 2002, on the eve of the city's deal to sell 320 acres of the former base to the Noisette Co., Mitchum asked fellow council members and the mayor to hire an outside company to do a background check on Noisette CEO John L. Knott Jr. and other key players.

The city never followed Mitchum's advice.

Instead, it relied almost entirely on Knott's national reputation for developing Dewees Island, a resort getaway north of Charleston lauded for its environmentally sensitive restrictions. The city's confidence was bolstered by Knott's resume, which listed scores of national awards and projects ranging from the restoration of Baltimore's Inner Harbor to environmental planning for Mepkin Abbey in Moncks Corner.

Now, a four-month investigation by The Post and Courier, involving more than 70 interviews and a review of hundreds of pages of records in Maryland and South Carolina, reveals what's missing from Knott's resume: that companies he created in the late 1980s and early 1990s left a trail of unpaid debts, lawsuits and unfinished projects.

Records also show that, as a result of one of the failed real estate deals, Knott lost his seven-bedroom, 5,000-square-foot Maryland home to foreclosure.

In shrugging off Mitchum's concerns, the City Council instead opted for a no-bid deal that required no down payment from Noisette and no mortgage payments on the land deal for five years.

Beyond his reputation, the city was sold on Knott's vision to transform Noisette's portion of the base into a community of thousands of homes, offices and shops.

The riverfront park is scheduled to open Monday. But four years after the deal was announced — and two years since Noisette took title to the land — there has been little other new construction at the base. The Noisette Co. is almost $24 million in debt, including about $8 million it still owes the city in the $9.6 million land sale.

The newspaper's investigation found that, like many developers in the high-stakes real estate market of the late 1980s, Knott's companies borrowed heavily to finance projects just as the savings and loan debacle unfolded, costing taxpayers about $125 billion dollars in a federal bailout.

Knott's deals, like others at the time, saw carefully choreographed financing collapse when the S&L industry suddenly went under.

In a review of Knott's dealings over the years, the newspaper found:

-- One of Knott's companies was a developer of a townhouse community in suburban Washington, D.C., that collapsed after it missed a payment to the bank. The multimillion-dollar development resulted in a foreclosure and a tangled web of lawsuits between Knott, the bank and property owners.

-- Another Knott company saw the collapse of its single-family home development in the same suburban county around the same time, a project that also resulted in foreclosure. The project triggered more than a dozen lawsuits from vendors, ranging from unpaid concrete workers and roofers to the financiers.

-- In South Carolina, Knott provided financial backing for a limited partnership that tried to develop 12 condominiums on Wild Dunes starting in 1988 but managed to build only four. Failure to pay taxes on three units caused the county to seize and sell the units through its delinquent tax office in 1993. Banks initiated foreclosure proceeding about the same time on two of the project's loans.

Though he said he can't recall some details of past projects, Knott blames much of his past difficulties on the savings and loan meltdown. He also said he paid off most of his debts at great personal expense and does not believe his past affects his ability to redevelop the part of the base his company bought.

What's more, he said that Noisette so far has met its contractual obligations to North Charleston. He blamed most of the project's delay on the federal government's tardiness in transferring portions of the land that is to be redeveloped by Noisette.

"I am proud of all of my work accomplished with others over a 40-year career," he said in a written statement. "I have been involved in literally thousands of projects, and I am proud of each one."

"My career has been marked by innovation and experimentation, in addition to a strong sense of community investment," he said. "Along the way, I have experienced both success and failure."

Attention has focused on Knott's track record in light of growing concerns expressed by some City Council members over the Noisette Co.'s mounting debt.

North Charleston and most local and state governments rely on a competitive process when it comes to picking what companies get multimillion-dollar projects. But when it came to Noisette, North Charleston Mayor Keith Summey said the city felt safe in its choice.

BORROW NOW, PAY LATER
Knott, 58, is the grandson of famed Maryland developer Henry A. Knott and was raised in a construction dynasty that helped transform Baltimore's Inner Harbor from an industrial hub to a tourism Mecca.

From early childhood, Knott watched and worked in his family's business. He polished his education working with visionary developer James W. Rouse, who in the 1960s created the idyllic city of Columbia, Md., where residents live in villages, share vast open spaces and emphasize community and nature.

By the mid-1970s, Knott was anxious to go out on his own. He relocated to Washington, D.C., where, according to his resume, he began restoring older buildings, including the Julius Hobson Plaza, the Saxony Cooperative Apartments and the Albemarle Condominiums. Within a few years, builders across the country began raking in big money by constructing new office parks, subdivisions and strip malls. Tax codes at the time allowed developers to write off large portions of their debt, creating incentives that lured more builders.

In 1986, hoping to profit from this construction boom, Knott turned his attention to new development, teaming up with Charles V. Phillips Jr. to form Phillips & Knott Community Developers Inc. The start-up company, with about a half-dozen employees, took on new residential development projects in Prince George's County, an eastern suburb of the capital. Later that year, the company launched two projects within five months of each other: a single-family home development called Carroll at Maryvale and a townhouse development called Capital Knolls.

By then, however, Congress had begun closing loopholes in the federal tax code that had helped spawn much of the development boom. Simultaneously, lending institutions nationwide, which had fueled risky construction loans throughout the 1980s, began to collapse, creating a domino effect that became the savings and loan crisis. Knott's projects, which involved multimillion-dollar loans, were part of the crash.

Steve Mann, a finance professor at the University of South Carolina's Moore School of Business, said businesses that failed tended to be over-leveraged and risky. Builders who survived, he said, were the ones who had cash reserves and weren't as heavily dependent on lenders. "The motto of the times was borrow now, pay back later. Developers were loading up on easy credit," Mann said. "The edgy deals didn't make it."

Susan Matlick, who served as executive director of Phillips & Knott Community Developers until 1989, said in hindsight, the company should have stopped building about the same year it began its projects to avoid the looming savings and loan crisis. "They were overextended at a time when everything was coming to a screeching halt," she said of Phillips and Knott's business. "It was a bad time."

The unraveling of the Capital Knolls project began when the partnership missed at least one of its monthly interest payments in the spring of 1990. That prompted the National Bank of Washington to shut off the project's funds and send a letter urging the company to pay the overdue amount. Within a few months, the Federal Deposit Insurance Corp. took over the bank, sending Knott a formal notice of default.

By then, five months had passed and the project had fallen apart, despite Knott's effort's to persuade the bank to resume its financial support of the development.

Knott said he doesn't remember many of the details, but blamed the project's collapse on the bank for cutting off his loan. In a letter at the time to a prospective buyer in Capital Knolls, Knott apologized for not being able to complete the project. The letter was included in a court case in which the prospective buyer sued to recover a $2,000 deposit.

"It is obvious that due to the situation that FDIC has created we will not be able to complete these units at all," Knott wrote in December 1990. "We are sorry that we will be unable to deliver this unit and express our best wishes as you look for a home elsewhere."

Federal Financial Co., which took over the loan from the FDIC and foreclosed on the property, sued Knott in 1996 to recover up to $5 million in unpaid loans that he had guaranteed unconditionally on behalf of the Capital Knolls project.

Knott won that case in federal court, arguing the bank had failed to properly notify him that he had defaulted on the loan payment before shutting off his credit. That decision was upheld on appeal.

As with many unsuccessful ventures, other lawsuits emerged from the failed project, including several involving the original landowners. One of those was Gladys V. Little, who sued and won a $111,419 judgment against Knott and his company, the docket shows. Little said she never got the money she was owed.

According to court records, the company was hit with a total of $214,866 in judgments to Little and other landowners. Donald Messenger, an attorney for the landowners, said his clients were never paid. Messenger said he has contacted the court to have records pulled from storage to see whether he can seek payment now for Little and his other clients.

As Capital Knolls collapsed, Phillips & Knott's other project, Carroll at Maryvale, also was besieged with court actions. Early indications of problems came in the form of liens for unpaid roofing, siding, storm drainage and earth-moving work beginning in 1989. Those early suits graduated into legal actions by the company's lenders.

Records show that Knott's companies tried to pay off debts, including deeding property to cover expenses. But with legal actions piling up — at least 13 in state court — Knott admitted his company was financially strapped. "I did not have the money either to pay the alleged obligation or to assert the significant defense that I felt existed," Knott testified in an affidavit in one case.

Despite that, Knott said every effort was made to satisfy debts. "We chose to use our resources to fund solutions versus funding attorneys and litigation expenses," Knott wrote in a statement. "Most legitimate and performing creditors were satisfied, in some cases at great personal expense."

Records and interviews show the financial collapse of his companies spared virtually no one or institution involved:

-- Chuck Cross, owner of C.J. Cross and Associates Inc., the mortgage company that secured a loan for Carroll at Maryvale, said the project was foreclosed upon. Court dockets show that C.J. Cross and Associates and Old Stone Bank of Rhode Island won a $1 million judgment against Carroll at Maryvale in October 1991. Cross said the money wasn't paid. "We foreclosed," Cross said. "We finished the unbuilt houses and sold the rest to another developer."

-- Maryland building supply firm MSI Inc. also won a judgment against Carroll at Maryvale, Phillips & Knott Community Developers and Knott in 1990. Six years later, the company persuaded a South Carolina judge to order Knott to pay $64,284 in outstanding bills and legal fees. MSI officials said the debt remains unpaid.

-- Abend Brothers won a $59,751 judgment in 1992 against Carroll at Maryvale and Phillips & Knott Community Developers, dockets show, for failing to pay for grading and site-preparation work. Daniel J. Mellin, the attorney who represented Abend Brothers, said that judgment was not paid. Neither Knott nor his public relations managers responded to questions about specific debts that were owed from Maryland projects.

In 1991, Maryland records show, Phillips & Knott Community Developers forfeited the company's charter, followed less than a year later by the Capital Knolls and Carroll at Maryvale limited partnerships. Phillips declined to comment. Knott's attorney at the time, Robert O. Johnston, said in an e-mail that Knott deserves credit for not trying to avoid his debts by filing for bankruptcy.

Knott said that despite the difficulties, he is proud that neither he nor his companies filed for bankruptcy. He said he did his best to make things right.

"Any debts that were owed were paid. I can tell you that," he said. "We did everything we could to our clients and our projects. That ended up costing me personally and our family millions of dollars out of our own pockets."

While Knott avoided bankruptcy, Montgomery County, Md., court records show he lost his 5,000-square-foot, seven bedroom Potomac home to foreclosure. A lawyer's letter included in the 97-page court file told the Knotts their house was to be sold May 22, 1991 to the highest bidder.

WILD DUNES
With his Potomac home in foreclosure and his Maryland businesses closing, Knott moved to Charleston. In the Lowcountry, court records show, Knott provided the financial backing for Linkside III Limited Partnership to develop 12 condominiums — three buildings, each with four units — near the Wild Dunes resort's golf course.

One of the three buildings was built. Records show the partnership, which borrowed about $1 million through three mortgages, defaulted on loan payments by the early 1990s. That prompted NationsBank, now Bank of America, to foreclose on one loan, seeking $447,393. The judge in the case ordered some of the units sold on the courthouse steps in October 1993.

The sale never took place. Other buyers stepped in to buy the properties.

Court records also show that in the same period, the Resolution Trust Corp., the agency created to clean up the savings and loan mess, began foreclosure proceedings against other Linkside properties after the partnership defaulted on a $314,000 loan. The foreclosure was dropped in December 1994. Less than a month later, records show, the RTC sold Linkside's mortgage to a Delaware investment group.

Banks weren't alone in trying to recover debts stemming from the Linkside project. Records show the partnership failed to pay property taxes in 1990 and 1991 on three of the unbuilt units. In July 1992, Charleston County sold the properties to the Forfeited Land Commission for $933 each. After the partnership failed to pay the back taxes during the one-year window granted under the law, the county's seizure of the properties was finalized in 1993. The county then sold the units to other investors.

Around the same time, Knott stopped making payments on $12,673 in furniture he bought in 1991.

The furniture company, Tapestry Interiors, sued to recover either the money or repossess the bed, tables and other furniture bought by Knott.

The two parties reached a settlement in 1993 in which Knott agreed to pay $10,400 in six monthly installments. Records show Tapestry Interiors returned to court to compel Knott to live up to that deal. Knott said the issue involved a dispute with an interior decorator over what was owed. He said it was settled for an amount that he agreed was owed.

Knott said Linkside was not his project and he didn't play an active role in it. But records show he personally guaranteed a $500,000 loan for the project in August 1989.

He said he was certain the project's finances were in order. "I can tell you right now we've never had any judgments, liens or anything like that on Linkside," he said.

Presented with court filings and property records that contradicted him, Knott responded that a settlement agreement had been reached that prevented him from discussing it. "Linkside has no connection with my business career," he said in a written statement. "I do not think this is a legitimate area of exploration for an article describing my projects."

IN ITS OWN HANDS

About the same time Linkside was starting up, Knott was hired as the developer of Dewees Island, a teardrop shaped, low-density development just north of Wild Dunes. The island, accessible only by boat and featuring dirt paths that residents traverse with golf carts, now has about 54 homes and just under 100 vacant lots. Bill Savage, one of the early backers of Dewees, met Knott in Maryland and was instrumental in bringing him on as the island's developer. He said he knew of Knott's financial difficulties in Maryland but was confident he could handle the job.

Dewees thrust Knott into the national spotlight of environmental development, including the use of shredded denim for insulation. But one of the island's key environmental features, its self-contained septic system, which is the responsibility of Dewees Utility Company, was swamped by a heavy rain in 2002, flushing 200,000 gallons of partially treated waste and rainwater into the surrounding waters. That triggered a state investigation that found that 23 of 51 septic tanks on the island needed repair. The state fined the island's utility company $7,000.

Despite that setback, Dewees is widely viewed as a beacon for environmentally friendly development. That success brought Knott awards from development and environmental groups. It also launched him on a career as a frequently requested speaker on environmental development. With a growing reputation, Knott has been hired as a consultant for projects across the country, including The University of Texas Health Science Center and locally at Mepkin Abbey, where he helped improve the environmental heating and cooling efficiency of the monastery's buildings.

While working at Dewees, Knott was introduced to North Charleston City Councilman Kurt Taylor, whose sister is married to Knott's lawyer, Andy Gowder. Taylor introduced Knott to Mayor Summey. Early discussions for the Noisette project centered on revitalizing the city's Olde Village area, a several-block stretch of East Montague Avenue. Eventually, discussions evolved to include a portion of the Navy base.

Knott wanted to apply the Dewees philosophy to the century-old Navy base, converting the largely industrial wasteland to a new city center. Mayor Summey said Knott's vision differed from other developers, who thought the base should continue on as an industrial area.

Caught up in the initial enthusiasm over Knott's proposal, council members never looked beyond his work at Dewees, disregarding former Councilman Mitchum's suggestion to check him out before signing a deal.

"I think this is a bit insulting to John Knott," Councilman Taylor said at the time in response to Mitchum's concerns.

Taylor, in a recent written statement, said the city became comfortable with Knott during four years of private meetings about developing the area. Although city officials have long described the relationship as a joint public-private partnership, Taylor recently described it as just a land sale and said the city didn't have to ask for other bids as long as it got fair market value for the land.

Summey said even if Noisette were to run into problems and find itself unable to finish the base redevelopment, the city is protected. He also said other developers are waiting to move in should Noisette falter. "We've been a winner out of the Noisette deal," Summey said. "Noisette's future is in its own hands."

Yet if Noisette were to pull out or default on its loans, there's no guarantee North Charleston wouldn't be dragged into potentially costly and lengthy legal procedures to regain title to base property. Noisette has used some base property as collateral to get bank loans to pay for its operations.

That concerns some city leaders, who question the slow pace of the redevelopment. "Noisette is mortgaged to the hilt," said Councilman Bob King. "I want to see some completed projects. I want to see some things get done over there."

While Mitchum's warning four years ago went unheeded, one expert said the city should have done its due diligence.

Charlie Tyer, a University of South Carolina government professor, said elected officials have a responsibility to protect municipal assets. That includes checking out potential private-sector partners.

"You would think that would be a no-brainer," he said of researching the background of developers. "It is very important that these decisions be made with as much transparency as possible. Somebody has to play the role of guardian, watchdog."

1990 : COLLAPSE
Maryland: Failure to make an interest payment derails townhouse development.

1991 : FORECLOSURE
Maryland: Knott loses his 5,000- square -foot home at public auction.

1993 : TAX SALE
South Carolina : Charleston County seizes three Isle of Palms properties for failure to pay taxes in a project financed by Knott.

1996 : JUDGEMENT
Maryland: A South Carolina judge orders Knott to pay a $64,000 debt. That debt and others remain unpaid.

Post and Courier Special Projects Editor Douglas Pardue and Librarian Libby Wallace contributed to this report. Contact reporter James Scott at 937-5549 or jscott@ postandcourier.com. Contact reporter Robert Behre at 937- 5571 or rbehre@postandcourier.com.

In 2003, North Charleston signed a deal that put John Knott in the driver's seat of the city's most ambitious redevelopment project. Two years later, with his company $23.5 million in debt, the city faces a new question:

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