Tough Times for Town Fathers

Leading Businesses Fall, and Life Gets Lean in Loganville
By GARY FIELDS

LOGANVILLE, Georgia -- Builder Tommy DeMilio and banker Stanley Kelley had planned to create a four-acre park for this city of 9,500 residents. It's a quarter finished and won't likely be completed. Mr. DeMilio's construction business has dried up. Mr. Kelley's bank failed in November.

Maxie Price, a Chevrolet dealer whose lot is two miles away from the scuttled park project, is cutting his local donations by at least a third. His car sales are down to about 30 a month -- well below the hundred or so he moved during better times.

Business leaders like Messrs. DeMilio, Kelley and Price have long been pillars of this once-thriving Georgia town. Each year, they contributed millions for parks, buildings, classroom books, even a gymnasium and a church. In the process, they acted as a safety net for everything from the local schools to the Chamber of Commerce.

Now, with the credit crisis causing the traditional support systems to crumble, life in Loganville is harder on just about everybody. "I've lost 80% of my net worth in this downturn and since I put it all back in my company, I'm not floating in cash," says Darrell McWaters, president of Meridian Homes USA Inc., a big homebuilder and another of the area's major donors. "We've had to cut out everything."

The situation in Loganville, located about 35 miles from Atlanta, mirrors what's happening in many small communities across the country. Stalwarts of these often-patriarchal areas are falling, changing the civic landscape while leaving financial and social commitments behind.

"Every small and medium-size town is going through this. Even in New York City there are certain people who help more than others and are involved in more civic giving and volunteer work than others," says Steven Dandaneau, sociology professor at the University of Tennessee and author of "A Town Abandoned: Flint, Michigan Confronts Deindustrialization." "The smaller the community, the bigger the effect," he says.

From Loganville to towns like Sanderson, Texas, and Loup City, Neb., local officials are grappling with the loss of revenue and civic participation from banks that have closed, as well as businesses ranging from car dealerships to local power companies that have either closed or are struggling.

Loganville, incorporated in 1887, has little industry to attract workers to the area. In recent years, building became the dominant field as the population grew by more than 60%. When home sales slowed in 2007, construction largely halted, hurting everyone from bankers to electricians and plumbers, says Angela Yarman, director of the United Way of Walton County. "It goes on and on when building is at the top of the food chain of an economy," says Ms. Yarman, whose group supports 11 county agencies and organizations such as the Girl Scouts.

Betty McCullers says the change can best be seen through declining membership at the city's chamber of commerce. The Chamber, which sits across from a shuttered real-estate brokerage, has had the number of its dues-paying members fall to 180 from 300 businesses a year ago. Many have closed their doors and others have simply stopped paying dues because they don't have the money. The situation is so dire that Ms. McCullers, the chamber's 76-year-old president, has not taken a salary this year. The combination of lost businesses, declining revenue from taxes and local patronage "all happening at the same time has been devastating," she says.

Thus far, the town has few visible markers of poverty or distress; there are no streets lined with vacant or boarded-up homes. But other, telltale signs of trouble abound.

Swaths of real-estate developments are in stand-still mode, their white plumbing pipes poking out of the barren earth like tombstones. More than than 100 pages of foreclosure notices fill The Walton Tribune and the Gwinnett Daily Post, the local newspapers named for the two counties that Loganville straddles. By January, unemployment in Walton hit the 10% mark. At one area elementary school, the proportion of free- and reduced- lunch students has risen to 43% over the past two years, up from 24%.

As longtime patrons of their community, Mr. DeMilio, 48, and Mr. Kelley, 68, had ambitious plans for their park. They envisioned walking trails, an outdoor basketball court as well as playground and exercise equipment. Driving by the site in his SUV recently, Mr. DeMilio looked dejected. Only a few climbing and jungle-gym sets are in place. The recreation center isn't likely to be finished this year, if ever, "unless something turns around," Mr. DeMilio says."I feel like we failed the community."

Owner of the Wayne Thomas Group, Mr. DeMilio is a transplanted New Yorker who made a name here as a builder and developer. Today, his problems are twofold. Few new homes are being sold, which has killed most revenue from that end of his business. At the same time, he can't collect on agreements he has made to sell land to other builders because their credit has been frozen. "I can't go after them, they don't have the money," he says.

At the height of the building boom, his company, which offered free lunch and gym memberships to employees, had 62 people on the payroll and about 450 subcontractors. He's now down to about 100 people. "I'm operating month to month now," he says.

Over the years, Stanley Kelley had become known for his education-related largesse. In 2007, when he still presided as owner of The Community Bank of Loganville, he wrote a $17,000 check to pay for teachers to work overtime at the high school in an attempt to curb dropout rates. After the child of a bank employee died from heart disease, Mr. Kelley's response was to buy defibrillators, costing $1,200 apiece, for 13 area schools. When the Loganville Elementary School principal started a reading program, Mr. Kelley -- who sat on the school's council -- bought books for all 600 students. Mr. Kelley's four-branch bank outfit also funded a $5,000 scholarship for a student to attend Georgia Tech, his father's alma mater.

A tall man with basset-hound eyes, Mr. Kelley, 68, is reluctant to take much credit for his charitable deeds. So others elaborate for him. When the Chamber needed money for postage and operating expenses, he paid them. When the Chamber needed computers, he bought those too. "I didn't worry," about budget shortfalls, says Chamber President Ms. McCullers. "He was there as a backstop."

Mr. Kelley's father had co-founded Community Bank in 1946. Mr. Kelley became chairman of the board in 1997. He did not live like a wealthy man. His home was $200,000 when he bought it 12 years ago and he drives his late mother's 11-year-old car. "We were heavily concentrated in lending to developers and builders. We were riding the tidal wave of development coming out of Atlanta," he says. "I was just walking on the wave."

He says he didn't realize business was so poor until bank examiners showed up late last year. That was shortly after the bank's third-quarter report to regulators showed that nearly 40% of its loans, most of which were for home construction, were delinquent or uncollectible. The big hit came when two big developers he was financing sought bankruptcy protection. "It was the first time it occurred to me we might not be able to recover," Mr. Kelley says.

The government's Federal Deposit Insurance Corp. took over the bank, which had total assets of $681 million and deposits of $611million. The FDIC sold the bank, along with some of its assets and deposits, to Community Bank to Bank of Essex, Tappahannock, Va.

Since then, Mr. Kelley's wife, who has never worked outside the home, has returned to school in hopes of earning a teaching certificate.

At the car dealership that Mr. Price co-owns with his brother, the parking lot seems empty behind him as he sits with his back to the window. The Prices have been in the car business in Loganville since the 1950s.

Vehicles are turned lengthwise along the highway so passersby can't tell that the lot behind them has little inventory. Recently, the car count was about 270. In good times there would have been three times that amount. "I'm trying to wrestle this thing," says Mr. Price, 49 years old, adding that a nearly 70% drop in average monthly new car sales is "a lot to wrestle."

In tough times past, his own safety net has been Corvettes, which sold regularly. "Usually the person who buys Corvettes and other high-end models, that person is okay, even in the last downturn," he says. "But not this time."

Mr. Price estimates the dealership donated about $50,000 a year to various local causes in the past. That won't happen this year. He's anticipating cutting charitable donations by at least a third.

Mr. Dandaneau, the sociology professor, says it's hard for communities who rely so heavily on a few well-off members to adjust to tough times. "The only way to avoid being impacted by the difficulties of those community leaders at a time like this is not to be dependent on them in the first place -- and that's not possible," he says.

The Walton County Recreation Department, is one of the many local outfits in town trying to fill the void, having received contributions from each of Messrs. Price, Kelley and DeMilio. Director Jody Johnson, says the department is holding yard sales and selling barbecue dinners -- going back to old-style fundraising rather than look to struggling businesses and individuals.

Others are stepping up, too. Last fall, the local school district nearly canceled its annual banquet honoring the teacher and support staffer of the year. Robert Boss, commander of the American Legion post, allowed the banquet to be held there. Another local, Jerry West, a retired Delta mechanic and owner of Wild West Bar B Q, donated the food.

On the desk of Mr. Boss is a six-inch stack of fresh requests for assistance. They cover everything from residents' unpaid electrical bills to pleas for help in securing rooms for the homeless at a local hotel. Mr. Boss, a 77 year old with a proud, weathered face, gives first dibs to families and the unemployed. "You do it because it's the right thing to do," he says.

As many residents are learning first-hand, even the smallest of gestures make a difference now. At Loganville High, Principal Nathan Franklin keeps donated snacks at the school's health clinic. Often his students eat lunch at 11:30 a.m. By 2:30 p.m. they are hungry and "they know they are not going home to anything" in terms of food, says the principal. "These are high-school kids and some of them don't have 40 cents for a bag of chips."

There's less to do about other problems. One recent afternoon, Mr. Franklin stopped to talk to a student and learned that the boy was preparing to walk home from soccer practice. It is a five-mile trek. "His mother is working extra hours at her job" to make ends meet and can't pick him up, Mr. Franklin says. "She told him if he wants to play he will have to walk."

Some charities are busy changing their solicitation strategies -- casting a wider net. At local branch of the United Way, for instance, the new mantra is to "go wider rather than deeper," says Ms. Yarman, the director. "Now instead of going to one person, you go to three people and get smaller donations."

Shepherd's Staff Ministries, one of the organizations United Way helps, has seen its individual and church donations inch up just enough to continue giving food boxes to impoverished residents. Essex, the new bank in town, also has picked up where Community Bank left off, contributing to various causes.

Outside the small parking area is full as a steady flow of cars come in, pick up small boxes of food and leave. "We've seen more and more people who have lost their jobs coming in," said the executive director Joe Johnson. "At the same time it's amazing. We've seen so many people contribute. We might be able to swing this."