The Decision by Baty Development Group LLC to file for Bankruptcy Dec. 30 was Made to Stop pending Foreclosure Proceedings by US Bank

The developer of The Row at 31st condominiums has filed for bankruptcy protectionThe decision by Baty Development Group LLC to file for bankruptcy Dec. 30 was made to stop pending foreclosure proceedings by US Bank, the construction lender for the project, says founder Phillip Baty.

"There is still equity in the project and that is why we are moving through chapter 11 instead of chapter 7," he says.

The 18-unit project is within 90 days of completion and six owners already have taken occupancy. But cost overruns and construction delays contributed to disputes late last year between Baty Development, general contractor RCR Building Corp. and architect Hotchkiss Architects.

The project's total cost was originally about $5 million. As work progressed, Baty incurred an estimated 10 percent in cost overruns from several parties. Baty says some of the overruns were the result of changes he initiated, while others came from the general contractor or homeowners wanting to make modifications.

"These disputes and the resulting cash flow difficulties faced by Baty Development led US Bank to declare a default under the construction loan documents in mid-November," according to a statement by Baty's attorney Beth Dunning.

Baty says emerging from bankruptcy will depend in part on the sale of remaining units. A reorganization plan is almost ready to be filed.

Interest in the condos has remained strong despite some units effectively being sold twice due to the construction delays. The remaining condos range in price from $385,000 to $465,000.

"They were running at least a year or more later than they were supposed to," says Shirley Zeitlin, founder of Shirley Zeitlin & Co., the firm marketing The Row at 31st. "It's been a difficult situation because it has been one of the best projects we've been involved with."

The Row at 31st received financing in late 2001 and was announced close to the beginning of a condo construction trend that has since picked up steam. Where options were limited a few years ago, buyers can now shop a variety of price points and styles.

Among the high-profile projects finished or under construction are Row 8.9N in Germantown, Bristol on Broadway in the Vanderbilt area, and Tony Giarratana's Viridian downtown. And the developers of The Adelicia, an 18-story development near Music Row, recently received zoning approval for their project.

Baty designed The Row at 31st to reflect the architecture and style of townhomes built around 1910. The building's features resemble the brownstone townhomes built in Chicago and Boston.

"The design is exciting," says Zeitlin. "Nashville hasn't had that urban brownstone architecture."

The Row at 31st is Baty's first development. It hasn't gone as expected, but Baty says he's learning an expensive lesson and hopes to work on future projects once this one is behind him.

"Right now, I can't see past finishing this project," he says. "But I want to keep building."