New owners of the high-end Balsam Mountain Preserve development aren’t daunted by the choppy waters of Western North Carolina’s real estate landscape.

Despite the still tepid demand for pricey second homes in the mountains, they say they have charted a course that will bring the beleaguered development out on the other side of the storm still raging across the rest of the region.

The 4,400-acre mega-development — one of the region’s few mountainside golf developments that can rightfully carry that tag line — has its share of battle scars. It’s been through foreclosure, repossessed by investors, hawked to the lowest bidder, babysat by an out-of-state caretaker, then put up for sale.

Now, a rescue of Balsam Mountain Preserve has come full circle. Two wealthy homeowners in the development teamed up to buy the development for $6 million — a fraction of what it was once worth.

If there’s ever a development where millionaire homeowners could emerge from the ranks to become the owners, it’s Balsam Mountain Preserve. Harry Avant of Louisiana and David Carlile of Texas knew each other previously from the oil and gas industry, even before buying their respective property in Balsam Mountain Preserve several years ago.

They have hired two former members of the Balsam sales team to come back and run the place. Jimmy McDonnell and Bruce Fine both worked together at Balsam Mountain Preserve under the original owners and developers.

“We know the owners, we know the property, we know the employees, we know the project, we know the market,” Fine said of their return, this time as president and vice president.

The hunt for solid ground in today’s new real estate landscape is more than just a financial deal for the new team.

“If there wasn’t a significant upside from a financial and business perspective we probably wouldn’t have done it. These guys are not a nonprofit entity,” Fine said. “But to save a place that you really have an emotional connection to, and it could be a good business decision at the same time, is a win-win overall.”

For the past 18 months, Balsam Mountain Preserve has been in limbo. The former owners defaulted on $19 million in debt and went into in foreclosure. The development landed in the hands of a private equity firm that immediately began looking to unload it.

So what, exactly, did Avant and Carlile get for their $6 million purchase of Balsam Mountain Preserve?

For starters, they own a really, really nice Arnold Palmer golf course. All the amenities, from the swimming pool to tennis courts to clubhouse to riding stables, are also included.

But as for what’s marketable — the pieces of the development that are worth something — there are about 130 to 150 home sites left to sell off.

Only one lot has sold in Balsam Mountain Preserve this year, however.

“2011 was kind of a lost year for Balsam. It was for sale and people knew it was for sale,” Fine said.

Despite the unimpressive showing, the new team isn’t fretting over whether Balsam Mountain Preserve will make it. Optimism over the new owners is already fueling sales, Fine said. There are two contracts pending — one on a new lot and one on an existing lot being resold by a property owner.

“We have more activity in the week we have owned this place than we’d had all year,” Fine said early last month. “People are moving forward now because it is stable. They like the story about the homeowners who have joined together and bought the place.”

Few golf course developments can claim to have that bumpy road behind them.

“Every other one has the loom of foreclosure and takeover,” McDonnell said.

Fine said few are going to emerge as intact as Balsam.

“There are so many communities in the mountains that have nothing there other than a front entrance and some renderings on paper.  Those are the places that have fallen off the end of the earth,” Fine said.

At Balsam Mountain Preserve, there is enough “critical mass” already in play, Fine said. The golf course is finished, the swimming pool has water, a restaurant and clubhouse are functioning. Roads actually lead to the lots — a novelty compared to some subdivisions that lack even that bare essential.

Most importantly, though, are the 70 homes on the ground and another 110 property owners of lots. Too many subdivisions in the mountains are empty ghost towns, and just like no one wants to eat in an empty restaurant, no one wants to be the first to build — not when it’s such a buyer’s market. And that’s why homes on the ground are an important part of Balsam’s critical mass.

 

Nowhere to go but up

As the rest of the nation plunged into a recession in 2008, WNC seemed insulated from the real estate crash — its quality of life, desirable views and retirement reputation helped it hang on.

But by the end of that year, the economy finally caught up with the region — and with Balsam Mountain Preserve. Lot sales simply evaporated.

With no cash coming in, the former developers Chaffin and Light, a highly reputable company known for massive eco-developments from South Carolina’s coast to Colorado, defaulted on its $19 million loan.

Chaffin had bargained hard for a work out, hoping to get an extension or refinance on the outstanding debt. Meanwhile, property owners at Balsam made a bid to save their own development from foreclosure. They raised $8 million and explored forming their own LLC to bail out Balsam Mountain Preserve and own the development themselves.

But the private equity firm, TriLyn, was unwilling to negotiate for anything less than a full payoff of the $19 million owed.

Marc Antoncic, the managing partner of the firm, arguably was in a tough spot. He was supposed to be earning investors a return on their money — not losing their money. So he had a choice. Cut his losses, take what he could get and get out — even if it meant selling Balsam at a rather substantial loss.

His other choice was to step in to the developer’s shoes himself, hoping to turn it around.

“You can’t rescue everything, but you can’t just sit back and hope it goes away,” Antoncic said in an interview 18 months ago, shortly after his take over. “If you bail today, you lose all that. We would turn over a good asset to someone else.”

In hindsight, it now seems he made the wrong choice.

He didn’t turn it around, and only got $6 million for the development in the end.

“Literally every deal they had on the table, whether it was Jim Chaffin or the homeowners, everyone of those was better than what they ultimately got,” Fine said.

“They had some great opportunities in front of them they chose not to take,” McDonnell agreed.

Homeowners, for their part, are optimistic for the first time since 2009 when Balsam Mountains Preserve headed down the path to foreclosure.

“Ever since then Balsam has been in a real state of uncertainty,” Fine said.

What would happen to the golf course had been one of their biggest fears. Well-groomed fairways with that perfect phosphorescent green hue come at a steep price. The golf course had been losing $1 million a year. The original developers, Chaffin and Light, were underwriting the cost of the golf course operations. Picking up that price tag is part of what sunk the developers.

After foreclosure, homeowners had to pony up the money to operate the course.

 

A new model

There are only a handful of developments in WNC in the same league as Balsam Mountain Preserve: of a similar acreage, prestige, price range and quality. And they too are seeing a comeback, suggesting the market has at long last bottomed out, Fine said.

“Prices are lower compared to where they were at in 2006, but they are coming back,” Fine said. “It sounds cliché-ish, but for someone who wants to be here this is when people want to strike. We aren’t at the bottom anymore.”

That financial strategy is part of Fine’s sales pitch. But the other part is far more emotional.

“The person who is waiting for the bottom is putting off living their life,” Fine said.

Indeed, the pent-up demand is why Fine has such a rosy outlook for 2012.

“The dynamic is people have put their plans on hold for anywhere from three to four years,” Fine said. “I’ve been sitting on the sidelines, I’m not any younger, I’m not any healthier, my grandkids are getting older.”

And that reality could drastically change the real estate paradigm in WNC. Before, baby boomers looked for lots to build their dream home on. But building a house — from deciding on a layout for the master walk-in closet to choosing the color of granite for the kitchen counter — can take two to three years. These days, prospective buyers want to get on with it — and perhaps spare their marriage the strain of a custom-built house — even if it means they won’t be picking out their own light fixtures or tile floor design.

“People want something they can move into,” Fine said. “In conjunction with that dynamic, people are also no longer buying what they can afford, they are buying less than they can afford in a lot of cases.”

People used to buy at the upper end of their limit — assuming that real estate would always be worth more next year anyway. But with appreciation less of a sure bet these days, second-home buyers are rethinking.

“Seriously, do I need 6,000 square feet in retirement? That’s how affluent people are thinking today,” Fine said.

Which means Balsam Mountain Preserve must retool its model — as with the rest of WNC’s developers.

“It is not going to be all about 2-acre single family home sites,” Fine said. “If you sit around and wait for individual home site buyers to come visit you one at a time, it will be years and years and years before you sell through all your availability.”

What’s in Balsam Mountain Preserve’s cards now would have been borderline blasphemy several years ago: smaller lots, pre-built homes, and even perhaps townhomes.

“Balsam has never had that, ever,” Fine said.

There are about 35 lots in the current phase of the development already platted and ready to sell. Another 100 or so are in the works, and will like take the form of smaller, more closely spaced lots rather than larger, spread-out ones. And, they could be sold with homes already on them rather than empty lots.

As a development, Balsam Mountain Preserve doesn’t particularly want to get into the spec home business. Developers generally sell lots, builders build homes.

But that’s where Balsam Mountain Preserve once again hopes to tap its unique base of homeowners.

Homeowners, eager to see their own community succeed, may actually finance construction of model homes by a builder. The homeowner would theoretically be helping out the builder they used and liked when building their own home, make a little money and help land new neighbors to keep Balsam Mountain Preserve stable.

“The developers who can facilitate these alliances between people who can finance — i.e., non-banks — and the builders, those are the communities that are really going to thrive in this segment,” Fine said.

Jackson County’s subdivision ordinance is destined for more tweaking by the planning board.

The planning board spent several months revising the county’s four-year-old subdivision ordinance before sending the recommended changes along to county commissioners for approval this week. Commissioners promptly sent the revised ordinance back to the planning board for more review, but not before some speakers expressed their vehement displeasure with the proposed changes. Others said during a public hearing that they, however, believed commissioners were on the right track to “streamline” the rules.

Not all the commissioners are convinced the ordinance needs changing.

“This puts the developer first, and the potential homeowner and environment second,” Commissioner Joe Cowan said, adding that he hated “to see this watered down with one fell swoop.”

While some of the proposed changes are more favorable to developers, others are more strict. Other changes are aimed at simplifying the language, such as stipulating that road building follows state standards instead of dictating those standards verbatim, as done in the current ordinance. Cullowhee resident Roy Osborn said some of the changes make sense but cautioned that he believes Planner Gerald Green’s expressed desire to “balance the needs of developers, future subdivision property owners, the environment and the citizens of Jackson County” is mistaken in its emphasis: leave out the developers, Osborn said, and the planner’s got it about right.

“This structure better prioritizes ‘needs’ from the global to the individual perspective,” he said.

Additionally, Osborn suggested adding language requiring engineers and land surveyors to provide “rigorous cost estimates” of surety bond amounts. This, he said, would help ensure that planned roads are completed if the developer defaults. He also said that if initially approved design thresholds are exceeded, such as increased slope or lessened roadway width, then a “certified roadway design professional” should be involved in a variance review.

But, Roger Clapp of the Watershed Association of the Tuckasegee River said with just a few adjustments, he could support the proposed ordinance changes.

“It is rural mountain roads that supply mud to the streams, first and foremost,” Clapp told commissioners.

And, in fact, he said, the ordinance changes proposed by Green and the planning board would largely help the environment. They would do that by reducing the footprints of roads — which would only have to be 14-feet wide instead of 18 feet.

“A smaller footprint means less construction work, thus it’s cheaper. And also less impact, which is good for the environment,” Clapp said.

On the other hand, Clapp said his conservation group would like to see the maximum slope for roads stay at 18 instead of 20 percent and an added stipulation for road maintenance agreements for small subdivisions.

“With that said, the Watershed Authority supports the bill because it does provide a step forward in environmental protection,” Clapp said.

Commissioners offered little input on the changes, but Commissioner Chairman Jack Debnam questioned why the county planner is the only one with authority to enforce the regulations and suggested giving additional county staff that authority as well.

Bryson City leaders will turn to residents to help solve their own disagreements over the severity of proposed appearance standards for new development downtown.

Town leaders will host a public hearing on the ordinance, which would stipulate aesthetic standards such as architecture, building materials and landscaping, for the town. A majority of the regulations, however, apply only to the downtown area.

Bryson City does not have any guidelines for new commercial or residential buildings downtown — it’s anything goes right now. But the town began looking at adopting some standards after a building that clashed with the town’s quaint appearance served as a wake-up call.

The planning board spent three years drafting proposed regulations, but when they were presented to the town aldermen, they didn’t get a particularly warm welcome. Mayor Brad Walker believes the public does want them, however.

“There are a lot of people fighting for this,” Walker said. “I haven’t heard any negativity (about the standards) except from the board.”

The board of alderman, which have final say over whether the ordinance is passed, decided to hold a hearing to gauge public sentiment.

Alderman Jim Gribble said that the town does need some standards but described the proposed guidelines as “pretty restrictive” and “over and above what I would desire.”

Aldermen Kate Welch and Tom Reidmiller declined to comment on the standards until after the public hearing. Alderman Stephanie Treadway did not return calls for comment.

People began lobbying for some official appearance or building standards, in part, because of a tan metal structure erected on Main Street in 2006.

“We don’t have that much land anymore, and we have to take care of our land,” said Walker.

At the time, residents and business owners expressed their dislike for the building, saying it clashed with the character of Bryson City’s historic downtown.

But, landowner Tom Hurley was well within his right to build it, Walker said.

“We didn’t have any ordinances to stop that,” he said. “We decided that we didn’t want that to happen anymore.”

For a while, local shopkeepers and the Chamber of Commerce have worried that new businesses would not fall in line with the unofficial standards of the town, said Karen Proctor Wilmot, executive director of the Swain County Chamber of Commerce.

“We do feel that it is important” to have standards in place, she said. “The code was kind of designed around what the town already looks like.”

The town’s Main Street is characterized by its brick façades and small local shops. Without any regulations, property owners could install large, obtrusive signs or paint their buildings neon green.

“It’s probably a good thing to have some sort of codes to regulate,” said Town Manager Larry Callicutt. The standards are “not real restrictive,” he said.

The planning board has worked on the land use regulations for about three years.

The standards are similar to those of other town’s, Walker said.

“We didn’t want to reinvent the wheel,” he said.

Town leaders are waiting to hear feedback from residents and business owners before making any possible changes.

“They should be the ones having most of the input,” Callicutt said, adding that there is nothing in the ordinance that would prevent the town from passing some version of it.

 

Want to weigh in?

What: Public hearing about proposed Bryson City land use standards

When: Nov. 21 at 6 p.m.

Where: Swain County administration building.

 

What the proposed standards say

Although most town leaders agree Bryson City needs guidelines to regulate the appearance of new commercial development, they cannot agree on whether the proposed standards are too strict.

Here are some highlights of the 27-page draft under consideration:

• Builders are prohibited from using synthetic stucco, preformed metal siding, vinyl siding, artificial brick and exposed or painted concrete blocks.

• At least 75 percent of a storefront’s façade should be glass windows and/or door. The windows must be at least 10 feet tall and no more than three feet above the sidewalk.

• A building’s main entrance should face the adjacent street.

• Sidewalks shall have an at least five foot “clear zone.” Light poles, bicycle parking, trash cans, plants and benches are permitted between the clear zone and the curb.

• Mobile homes or trailer parks are not permitted in the central business district, but public institutions and commercial or industrial businesses may be allowed in the area pending review by the board of alderman.

• Buildings in the central business district may have a front porch, stoop or awning with a minimum depth of eight feet, a balcony with a minimum depth of six feet or a bay window with a minimum depth of four feet.

The disembodied voice crackled through the walkie-talkie: “I’ve got someone who wants to buy two lots, cash deal.”

“Sell ‘em,” L.C. Jones urged, seemingly to himself, but his response included Michelle Masta, a passenger in the backseat of his big, eggshell-colored Ford King Ranch 4X4. The radio was tuned to the NASCAR station; the volume turned off. No one in the truck was interested in listening to races on this day, not with land to sell and money to make. Masta, dressed in French jeans and heels, serves as Jones’ right-hand woman on the development, The Ridges. The development is better known as Wildflower, the Macon County subdivision’s original name. The Ridges is made up of about 500 acres of Wildflower’s original 2,200; just fewer than 100 lots were being offered through this one-day extravaganza last Saturday (Oct. 1).

Masta, who lives most of the time in Atlanta, dreams one day of permanently moving to this region with her daughter and, perhaps, gardening organically and caretaking hives of honeybees. Masta won’t buy land in this high-elevation development for that future homestead, however. She’s got a piece of nice bottomland in mind, down in one of the valleys far below.

Jones was casually attired in Levi jeans and tennis shoes. The Cullowhee native doesn’t happily sport a suit and tie, not even at an event such as this. Jones doesn’t look or talk much like a land developer. In fact, the paving company owner comes across as a man who would be perfectly comfortable operating a backhoe.

On this project, however, Jones isn’t the backhoe operator — he’s the boss, along with a couple of investors out of Atlanta. The Ridges marks Jones’ second housing development in a year in Macon County. Other developers in Western North Carolina and across the nation have seen business grind to a halt because of the crippled housing market. Jones, owner of Black Bear Paving in Franklin, has instead discovered seemingly endless financial opportunities.  

The walkie-talkie crackled. Sam Pinner of Southland Marketing & Development, based in Knoxville, Tenn., was on the other end. Jones hired the former University of Tennessee football player turned time-share seller turned real-estate developer turned real-estate marketer to oversee the sales event.

Pinner has 60 to 65 sales reps spread across the 500 or so acres of The Ridges.

Jones and his investors recently purchased the development for a cool $1 million, an amount they anticipate recouping easily. BB&T was eager to get the property off its books after foreclosing on the former developer of Wildflower after that company failed to make payments. BB&T was owed $1.9 million on the property when the bank foreclosed.

“Just say, ‘Yes, that’s a deal,’” Pinner instructed the sales rep via the walkie-talkie. Like Jones, Pinner needed to hear nothing more than the word “cash” to welcome the buyer to a seat at the table.

Jones’ plan is to generate “life” into the subdivision by selling lots that were previously priced at highs of $100,000 to $300,000 for $14,000 to $30,000. Higher-priced lots were available, too, but even they weren’t priced anywhere near those heyday numbers of the real-estate boom, when scenes like the one that took place in The Ridges last weekend were commonplace.

Jones slashed the prices in The Ridges with one purpose in mind: to sell as many lots as possible, as quickly as possible. He and his investors anticipate developing more lots in the subdivision. They’ll sell those at higher prices, but the asking price on these is what the depressed market will bear, Jones said.

Jones believes he can command higher prices later if he can convince people that The Ridges is a viable, happening development with an on-site, caring developer. This is the first step in his many-stepped plan for The Ridges, and for other abandoned developments in WNC that he might take on. Jones is currently checking out another development in the Asheville area. He is a man who envisions dollar signs where others see vast money pits.

Jones and his investors can take their pick: the region’s landscape is littered with these tombstones of the once prosperous, or preposterous, WNC real-estate scene.

The selling in The Ridges started just after 9 a.m. The first lot sold in two minutes. Eight lots had sold in 10 minutes, nine lots in 12 minutes, 12 lots in 20 minutes, 21 lots in an hour. Thirty-one lots were sold by 11 a.m. A prior advertising blitz targeting Florida, Georgia, Alabama and other states paid off. Jones was having a very good day; indeed, by day’s end he’d unloaded 43 lots — 18 of them cash payments.

 

Truth will out

Wildflower was conceived and launched during the height of the housing boom. Riding the crest of the towering Cowee mountain range on the Macon-Jackson county lines, the development boasts truly spectacular views from its vantage point of more than 3,600 feet.

Turkeys and whitetail deer are everyday sightings, red-tailed hawks soar over the ridges to survey the valleys below. There are walking trails, a fancy clubhouse with a pool and small fitness center, water and sewer already in place at the house sites. There are even some lots with foundations on them, abandoned unfinished as previous owners’ dreams crumbled in the face of financial realities.

The previous developer, Ultima Carolina in Atlanta, sold more than 160 lots in Wildflower before the company went belly up. The largely out-of-state buyers were primarily looking to “flip” the properties they bought, selling for  higher prices than they paid.

Wildflower’s promising beginning foundered on an out-of-control, plummeting market and a hastily designed, poorly executed development — at least in parts of Wildflower. How much, exactly, of the development is ill-built sparks heated debate in Macon County.

The very name Wildflower, for those weary of WNC’s historic abusive cycles of land speculation at the expense of public safety and environmental stewardship, has served in recent years as the region’s worst-case, best-known example. What’s unarguable is that a few years ago there was a landslide in Wildflower. It was about one-half acre in size. Today that landslide serves as an illustrative example of what happens when roads are cut in defiance of a mountain’s grain.

The culprit road was built during dry weather. Then wetter weather came, those snows and cold rains that distinguish winters in these southern mountains. Freezing and thawing, freezing and thawing, with temperatures climbing from single-digit numbers into the 60s and 70s, only to drop back to single digits, over and over again.

So-called “wet” springs soon bubbled where the road overlaid. The springs most likely triggered that massive flow of mud and debris. The landslide raised fears — some say the inevitability — that a developer who could build one road like that might well have cut all of Wildflower’s many roads with a similar lack of respect for the mountains. If that’s true, anybody building here, and those living below, are at risk.

Macon County knows those dangers better than most mountain communities. In September 2004, a naturally occurring landslide originating in the Fishhawk mountains buried a small residential community below. Five people died in Peeks Creek, a tragedy of such proportions that state legislators, in response, funded a project to map these mountains, once and for all, for landslide potential.

Republican legislators, taking control of the state Senate and House last November for the first time in more than a century, have eliminated funding for more maps, with only Macon, Henderson, Buncombe and Watauga completed. North Carolina leaders were responding to real estate agents, builders, surveyors and laborers who called foul, plus a state that was facing huge economic shortfalls. Working men and women said the landslide hazard maps, coupled with the recession, hindered their abilities to make livings, unnecessarily scaring people out of buying real estate here.

Wildflower, however, was mapped for its landslide risk before the state halted the project. Red, the universal signal for stop/danger, colors the steep mountain ranges where Wildflower was built and The Ridges has since emerged.

Map opponents say state geologists greatly exaggerated the dangers of building in areas such as this.

Only time, as it’s said, will tell.

 

Toxic brew

Add over-inflated land prices, under-funded buyers and loosely regulated loaning institutions to the development’s problems. These semi-natural and manmade elements combined into a toxic brew, and Wildflower, literally and metaphorically, wilted and died.

More than half those who bought the original lots in Wildflower went into foreclosure. Some because of an inability to make payments on their lots; others who found themselves upside down on a mortgage, owing more than the lot was worth and opting to let banks take over.

A local financial institution, Macon Bank, filed two civil suits claiming that it had been duped into making questionable loans in excess of $3.5 million to people buying some of those lots.

Macon Bank sued Beverly-Hanks Mortgage Services of Asheville and two of its brokers for, among other allegations, financial wrongdoing, defying bank instructions and setting up an interest cash-back scheme for borrowers. Additionally, the bank sued the lawyer handling property closings at Wildflower, the lawyer’s title guaranty company and five property owners. The lawsuits are wending through Macon County’s court system.

Allan Burkett and Sandra Wilkinson of Newnan, Ga., aren’t aware of The Ridges’ past history; it’s not clear they’d care if they were. They had just agreed to buy lot 142 for $19,900. Wilkinson sported a medallion on her neck that indicated they’d made the purchase.

The pair’s sales rep, Dusten Tipton of Knoxville, Tenn., had whisked them back into the clubhouse where the deals were being finalized. Burkett and Wilkinson seemed weary, a bit overwhelmed by the engineered giddy atmosphere of the sales event. Burkett was wearing a poorly fitted winter coat he’d bought locally the night before, shocked into the purchase by a sudden drop in temperatures from the 80s to the 40s as the first cold-front of autumn moved through the region.

After plunking the requisite 20 percent down that closed the lot deal, Burkett and Wilkinson were fed barbecue sandwiches and handed endless cups of sweet iced tea. They were told they could take a helicopter ride to view their new property. Wilkinson got to keep the medallion, a prize to take home as a reminder of the couple’s mountain dream.

“This is just like going to the county fair for the first time,” Wilkinson said.

“It’s exhilarating,” Burkett added.

An informal survey of the people buying the lots — most, if not all, were from Southeast states other than North Carolina — seemed to prove a point that Jones and Masta were eager to make. The days of “flipping” properties seem gone. The buyers are predominantly people who want to build houses in Macon County and live in the area either on a seasonal basis or after retirement.

At Diamond Falls Estates, the other development in Macon County under Jones and Masta’s management, 64 lots closed out of 80 being marketed on a one-day sales event last year.

“We already have 12 new houses being built now,” Masta said of Diamond Falls. “And that’s creating jobs in the area for local builders and contractors. Those weren’t speculator people who wanted to flip it in two months. Those were real people wanting to build real houses.”

It also shows that there is still a demand for mountain real estate when the price is right — a price that is far lower than days gone by.

Wilkinson and Burkett hope to build in a year or two. They bought for the view, to get a site ready-made with an existing foundation, and because they felt they’d gotten a great deal — a once-in-a-lifetime opportunity, a not-to-be-missed chance to own a little piece of WNC.

 

Real estate experts react to Macon sale

The one-day land rush on cheap lots in The Ridges might be a sign of the times: not a real estate turn around per se, but an eagerness by banks to off-load foreclosed property, even if it means taking a loss.

“I think this is the beginning of a new trend,” said Bob Holt, real estate instructor for Southwestern Community College in Franklin and Sylva. “I think the banks are deciding, ‘I would rather take less and be done with it than hang on another year or two or three or four. To get rid of these they are going to get rid of them at rock bottom prices.’”

People buying the failed developments can in turn sell lots so cheaply that prospective lot buyers — who have otherwise proved elusive in the mountains lately — come knocking once more, witnessed by the droves of buyers lured by the fire sale at The Ridges in Macon County last weekend.

“I think we probably will see more of the fire sales,” Holt said. “I think we have waited and waited and waited and waited, and some people are saying it has got to have bottomed out now so it is going to turn around.”

Holt doesn’t think it has, however.

Some banks are attempting to sell the lots themselves, making a foray into the real estate business rather than off-load the property to a middle man. In Cashiers this spring, the bank that had foreclosed on one development orchestrated a one-day fire sale of lots. At Balsam Mountain Preserve, the lender who foreclosed on the property has stepped in as the property manager attempting to see the development through.

Peggy Patterson, who has sold real estate in Macon County for four decades, doesn’t see a return of the market at this juncture.

“I don’t think it is rebounding at all,” Patterson said. “If anything, it seems a little worse.”

When Mountain Projects came calling on Sylva leaders earlier this year because the group wanted to build five affordably priced homes within the town’s limits, commissioners found themselves in the uncomfortable position of having to deny the request.

The problem? A town law written just after World War II requiring almost a half acre of land per each house built. Mountain Projects, a regional community-action agency, missed the mark by a few thousand feet.

For its part, Mountain Projects was stymied by rules, too. The group was trying to meet its own mandated requirements that it build at least five houses, or not build them at all.

The situation underscored the need to reconsider the town’s minimum-lot requirements and make them less burdensome, Sylva Commissioner Christina Matheson said this week.

Sylva’s requirement for an almost half-acre lot per house was twice the required yard as mandated for homes in Canton, and 50 percent more than in Maggie Valley.

“We were probably the most restrictive municipality in the entire area, as far as the lot requirements go,” Matheson said. “Requiring that much property to construct a house makes it almost unaffordable. Particularly for families and elderly people.”

Requirements for nearly a half-acre per new house first surfaced as a hot-button issue here in late 2008, when Planner Jim Aust resigned. He said town leaders — by way of refusing to change Sylva’s excessive lot-size requirements — were preventing affordable housing from ever being built. Aust publicly accused Mayor Maurice Moody of wanting only $500,000 houses in the town he oversees.

The town’s decision to lighten up when it comes to mandating how much land a person must own before building a house came by unanimous board vote. The ‘yes’ votes included those of Commissioners Harold Hensley and Ray Lewis, both subjects of Aust’s “I’m-going-to-quit because what’s-the-point-in-trying-anymore” ire. Moody didn’t get to vote, because the mayor only votes if there is a split decision by the board.

These are the reasons most towns — including Sylva now, too — generally allow smaller lots:   

• They keep the costs of building roads and water and sewer lines lower because the infrastructure doesn’t have to be extended so far.

• More homes per acre reduces land costs, helping to keep the building — and selling — price of houses down.

• Intensified density in towns reduces urban sprawl from encroaching on the countryside.

“The (new) lot sizes are more in line with other similar communities, and will offer more housing options for residents,” Town Commissioner Stacy Knotts said.

Matheson did not know if Mountain Projects might be interested in revisiting its affordable-housing proposal. She did say town leaders hope the less restrictive requirement stimulates development and growth in Sylva.

When Aust quit, he said just 78 dwelling units had been built in the town in a seven-year span.

The town law, said Matheson — a former assistant district attorney — was “clearly designed to limit growth.”

 

New Sylva Minimum Lot-Size Requirements:

• R-1 went from 20,000 square feet to 17,500 square feet.  

• R-1A and R-1B stayed at 17,500 square feet.

• R-2 changed from 17,500 to 12,500 square feet, with duplexes at 17,500 square feet.

• R-3 went from 17,500 square feet to 8,000 square feet, with duplexes at 13,000 square feet. Also in R-3, multi-family developments (more than two units) minimum-lot size increases by 5,000 square feet for each additional unit.

• B-1 stays the same with no lot-size requirements.

• B-2 and B-3 changes from 17,500 square feet to 8,000 square feet, and increases to 13,000 square feet for duplexes and 5,000 square feet for each additional structure in multi-family developments.  

• G-1 did not previously have requirements, and now has a minimum lot-size requirement of 12,500 square feet and 17,500 square feet for duplexes.

• Professional Business District stays the same at 10,000 square feet, and I-1 changes from 17,500 square feet to 8,000 square feet with a 13,000 square-foot requirement for duplexes, and 5,000 square feet for each additional structure for multifamily.

SOURCE: Town of Sylva

Canton aldermen are embarking on an ambitious quest to identify long-term goals and strategies that will shape the town in years to come.

“You’ve got to have a plan, and this is the plan for the future of Canton,” said Alderman Ed Underwood.

Each alderman came up with their own list of priorities for the town. They brought those lists to the table at a meeting on Tuesday (Jan.12).

At the outset, it seems all five town leaders meet eye-to-eye on most of their priorities. The top priority appears to be upgrading the sewer line to accommodate commercial development around the I-40 interchange at exit 31 and along Champion Drive. For now, the heavily used sewer line is hitting maximum capacity.

According to a 2008 estimate, the extensive sewer expansion project would cost about $1.2 million. The town has attempted landing grants but has yet to secure any.

Town leaders plan on meeting every Tuesday to discuss the nitty-gritty of each item now that they have a master list in tow. Other common threads between their lists include:

• Repairing the town swimming pool.

• Annexing West Canton and other areas if feasible.

• Eliminating potholes and pave streets/sidewalks.

• Economic development/promote downtown.

• Seeking grants where possible.

Mayor Pat Smathers already published his 17-point vision in a local newspaper prior to last year’s election, encouraging voters to choose candidates who would cooperate with him to implement his goals.

The unilateral move drew criticism from some candidates, who insisted that residents and other aldermen also have input in a long-term vision.

Shortly after the election, Smathers succumbed, asking aldermen to come up with their own wishlists.

A few of the aldermen came up with original ideas not found on any other list.

Flynn said he wanted the town to begin back tax collections and start tearing down condemned houses littered across town.

Currently, the Town of Canton partners with Haywood County to collect taxes. According to Flynn, those who have paid their county taxes, but fail to pay the town, fall off the radar.

Flynn suggests breaking off the county partnership to start collecting its own taxes.

“I know there are some that are perfectly capable of paying but don’t,” said Flynn. “Tax collections would take very little resources.”

Flynn also wants to develop a plan of attack for dealing with condemned houses, which downgrade the neighborhood’s property values.

“It’s just unsightly,” said Flynn. “It’s open to vermins [sic] and rats.”

Underwood came up with the idea of using prison crews for projects then discovered that the state program that loans inmates to municipalities has fallen by the wayside due to the statewide budget crunch.

At a time when Waynesville’s appearance standards are under scrutiny for being too strict, three proposed developments cruised past the town’s Community Appearance Commission.

Last week, the advisory board approved the Noland Retail Center and Holland Car Wash, both on South Main Street near Wal-Mart, and a new Verizon Wireless store on Russ Avenue.

Such smooth sailing for these three projects seems incongruous with claims that the standards are potentially driving developers away.

But there are easy explanations for why these projects passed the community appearance board relatively quickly, said Daniel Hyatt, landscape architect and project manager for the Noland Retail Center and Holland Car Wash.

According to Hyatt, developers who hire local designers are generally familiar with the types of developments the town desires. They can draft a site plan that meets the standards without revisiting the drawing board multiple times. The retail center and the car wash proved that by passing the appearance board on their first try.

But that approval alone is insufficient to begin building, as the appearance board serves only in an advisory capacity.

“Make no mistake, we still have a sizeable amount of work to do on both of these projects to make the letter of the ordinance,” said Hyatt, who recused himself as chairman of the community appearance board to present the two projects.

Corporate developers usually come to the table with the same site plans they’ve used time and again. These are the developers who are less likely to bend to the will of the town.

“When they come into a community like Waynesville that has fairly restrictive design requirements, then they have a lot of difficulty,” said Hyatt. “It gives them a lot of heartburn.”

None of the three projects will have to come back to the board unless there’s a drastic change in the site plan, Hickox said.

 

Scrutinizing the standards

While the design standards promote pedestrian usage, they don’t take into account auto-centric businesses, like drive-thrus, car washes and pay-at-the-pump gas stations.

The town’s standards push parking lots to the side or rear of buildings rather than in front — a move aimed at creating a more appealing streetscape where attractive building facades, instead of asphalt, take center stage. But some businesses were left out.

“Nobody thought when they put the land development standards in, how are we going to make a gas station work under these,” said Hickox.

The steering committee that’s reviewing the land development standards has also placed the appearance commission under the microscope.

Since the standards went into effect in 2003, the appearance board has sometimes been stymied because it can only make recommendations to developers, not demands.

The other obstacle in the commission’s path is that it is the first stop in the permit chain, very early on in the process.

“At which time, a lot of the details aren’t really worked out,” said Hyatt.

Developers can only paint pictures with broad brushstrokes for the appearance board. For example, they can only point out where the large trees or small trees might go, not provide details like the genus and species of every plant.

As the steering committee works to improve the standards and take these concerns into account, the public is invited to take part.

Anyone can get involved in the process by crafting and presenting a well-thought amendment, Hickox said.

Hyatt himself appreciates the chance to work on the standards before they are vetted by the public, town board and town staff.

“It’s nice to be clued in on the front of this discussion,” said Hyatt.

In 2005, two investment partners from Atlanta broke ground on a massive project on the slopes of Cowee Mountain in north Macon County with hopes of creating a new paradigm for mountainside development in Western North Carolina.

However, four years later, the road system is plagued by landslides, many of the lots are in foreclosure and only two homes have actually been built on the 2,500-acre development.

When a mid-November rain storm dumped three inches in Macon County, Thompson Road, a key road through the development, gave way, triggering a landslide, burying a home site below under a half-acre of debris. More significantly, the slide raises questions about the stability of the remaining 30 miles of roads in the development. After the slide, Macon County Emergency Services Director Warren Cabe contacted the North Carolina Geological Survey to ascertain if the road collapse posed a threat to property owners down slope from the Wildflower development.

“After we noticed there was a slide there, we notified property owners in the valley just so they could know what was going on above them,” Cabe said. “We wanted them to hear it from us instead of reading it in the newspaper.”

The study conducted by North Carolina Department of Environment and Natural Resources Senior Geologist Rick Wooten concluded that the area affected by the slide was still unstable.

“The lowermost portion of the deposit spilled over a steep road cut for a driveway above Thompson Road. Large trees, many with root balls still attached, were pushed over, snapped off, and partially buried by debris flow material in the toe area,” the report read. “Unstable embankment material remains below the eastward and westward extensions of the main scarp. This unstable material will probably continue to move.”

 

Geologist vs. developer

The report and a subsequent mapping effort undertaken by state geologists and Macon County’s GIS mapping team also showed that the road system in Wildflower was compromised to some degree in more than 20 separate locations.

Wooten’s team recommended that landowners below Wildflower be notified of the risk of future slides and suggested that other roads in Wildflower would likely continue to move.

“The other failure areas along the Wildflower development road network have the potential for continued movement, especially associated with heavy rainfall events,” the report said.

After four years in business, the 250-lot development boasts only two finished homes and with a number of its home sites already in foreclosure, the last thing it needs is a major issue with its road system.

Brian Garner, general manager of Wildflower, said the failure of Thompson Road was an isolated incident that resulted from the emergence of a wet spring.

Garner said Wildflower would hire a geo-technical engineer to evaluate the situation as well as take additional measures to prevent erosion in the future. He said the road failure occurred on a portion of the property that had yet to be developed, so it didn’t pose a risk to the investments of property owners in Wildflower.

When asked whether he thought the roads in the rest of the development were sound, Garner pointed to the fact that the county’s erosion control department had signed off on them.

“I asked the county that and the county said they were originally put in according to the guidelines,” Garner said.

 

Development without regulation

When Atlanta-based developer Robert Ullmann unveiled his vision for Wildflower through his company Ultima Carolina LLC four years ago, he promised a full-service, upscale residential community.

“There’s a reason people are drawn to these mountains,” said Ullman in Wildflower’s press materials. “The wrong kind of development can destroy that; the right kind can help to preserve it. This is not just about higher elevations. It’s also about higher standards.”

Right from the start, though, the development faced opposition from local residents who felt it would strain the county’s resources and ruin Cowee Mountain. Ullman appeared alongside Stacy Guffey, the county’s planning director at the time, in a public meeting to make his case.

“You are not going to avoid development, and you are not going to completely prohibit development,” Ullman told the crowd. “If you think Macon County won’t change, I can assure you it will.”

Ullman said the best people could hope for was to pass some land-use regulations to prevent irresponsible developers from ruining the mountains.

“He did make the point at that meeting that the county was wide open,” Guffey said. “And that if we had had rules, he would have abided by them.”

While that conversation seems prescient now, the fact remains that when Wildflower went through its initial permitting process the county didn’t have subdivision or steep slope ordinances. Cowee Mountain is a steep area covered with colluvial soil that is essentially low-density rock and soil debris, and prone to instability.

In order to build a road system, Wildflower had to comply with the county’s erosion control ordinance, and the county signed off on a series of erosion control plans for various parts of the road system. The erosion ordinance was narrowly tailored to keep muddy runoff out of creeks but didn’t deal with underlying road construction methods.

Guffey claims stability problems with the road system were already evident at the time, but the county lacked regulations to do anything about it.

“The truth is that when I worked for the county, a lot of us knew there would be problems with those roads,” Guffey said. “It’s really one of the reasons we felt such urgency to create a subdivision ordinance.”

Macon County now has a subdivision ordinance that includes road standards and a surety bond to guarantee that developers meet those standards, allowing the county to bill a developer if it has to go in and repair shoddy work. A committee is also currently in the process of drafting a steep slope ordinance that would create standards for soil compaction, cut and fill slopes, and road grades.

Guffey, who works as a consultant now, addressed the slope development committee on the implications Wildflower’s road failure has on the county at a meeting last week. His message was clear.

“It’s a private property but when you see it overlaid on a potential landslide map... if the potential is there it’s there,” Guffey said. “There’s not just one slide, there’s a number of them. What will they do to the streams that run down through there onto other peoples’ properties?”

 

Damage control

Macon County’s environmental services supervisor Matt Mason has the responsibility of enforcing the county’s erosion control ordinance. Mason succeeded Josh Ward, who had the position when Wildflower first applied for building permits.

Mason said the county signed off on Wildflower’s land disturbance permits in phases, each of which required erosion control plans for roads and home sites in the development.

According to Mason the county still has access to close to $80,000 that Ultima set aside in a surety bond to guarantee Wildflower’s erosion control measures. The county has informed Ullman that he’s responsible for correcting the damage caused when a road collapse triggered a landslide.

“I’ve actually talked to the owner and we’re requiring him to hire an engineer to submit a report on how to stabilize the road and he’s willing to do that,” Mason said. “If not then it could be a problem.”

Mason said the county still has the authority to enforce the erosion control ordinance because the project is still open, but he said Wildflower is not currently in violation of the ordinance.

“They’re not in violation. We’ve not fined them. We sent out a letter informing them it needs to be corrected,” Mason said.

Mason said he has spent the last year trying to re-draft the county’s soil and erosion ordinance to include soil compacting standards, but the revised ordinance is still in the review process. For now, he said, the county’s position with Wildflower is limited to enforcing the ordinance that was in place when the development filed its paperwork.

“If we had had a subdivision ordinance or a steep slope ordinance in place, we could have done it differently,” Mason said. “We want to have safe and smart development, and the bottom line is that costs a bit of money.”

Perhaps the most disturbing part of Wildlower’s road issues is that some of the compromised roadways are actually driveways serving home sites that have already been sold. The owners are now responsible for the maintenance of those driveways, without which the home sites are worth next to nothing.

At a county meeting in November, county commissioners asked planning director Jack Morgan whether Wildflower had filed for bankruptcy, raising concerns about the project’s financial viability going forward.

Brian Garner, the project’s general manager, said he could not elaborate on Wildflower’s financial situation.

“As far as I know we’re still doing what we need to do,” Garner said. “We’re still on the ground running.”

Robert Ullman, the developer, did not respond to requests for comment.

Guffey said the county has cause to worry if Wildflower goes under.

“One of the fears is if it’s in foreclosure, who pays for that damage?” Guffey said.

When the 3,500-acre Legasus development won exemptions from Jackson County’s development regulations two years ago, it raised the hackles of residents in the Tuckasegee community who claimed the hard-fought growth protections they ardently supported had failed when needed the most.

Now the disgruntled residents have raised the rallying cry again, this time contending that the mega development should be stripped of its vested rights after selling off portions of the land, whether through foreclosure or a voluntary move to raise cash and pay off debt.

“There are so many questions that have come up recently with foreclosures and land sales that totally change the dynamics of what the county granted Legasus vested rights for,” said Thomas Crowe, a member of the United Neighbors of Tuckaseigee.

Vested rights are an exemption intended to protect developers caught mid-stream by new ordinances. When Jackson’s new ordinances came along two years ago, Legasus argued they’d already spent a great deal designing a master plan and marketing the development to prospective buyers and should be allowed to proceed. Jackson County ultimately awarded vested rights to every developer that applied for them.

The Legasus development once called for 1,800 lots on 3,500 acres between Tuckasegee and Glenville spanning five separate tracts. With lot sales falling short of expectations, the company has had to sell off portions — including part of the proposed golf course. It is unclear whether new property owners will join forces with Legasus to carry out the existing development plan or will do their own thing.

“The question arises exactly what kind of rights do the new owners have? Can they come in under the auspices of the vested rights granted to Legasus initially?” Crowe asked. “We want to be on the front end of this new situation.”

A community forum on the issue of vested rights will be held at 7 p.m. Tuesday, Sept. 2, and will aim to answer these questions. Attorney DJ Gerken with the Southern Environmental Law Center will give a presentation and lead the discussion. The forum has been organized by the Western North Carolina Alliance and the United Neighbors of Tuckasegee.

“Those of us in the community as well as the county political leaders need to come up to speed on the whole issue of vested rights because of all the high-end developments here in Jackson County and in particular the Legasus development,” Crowe said.

When Art Pohl moved to Jackson County from Florida 10 years ago, he imagined a golden retirement filled with lazy days of playing golf. But after a few years of living the dream life, his wife wondered just how much golf one man could play.

“I was up here playing golf and enjoying myself and my wife said, ‘You are too young to do nothing. Why don’t you do something?’” recalled Pohl, 61.

Pohl, a residential developer and contractor by trade, had certainly come to the right place to dabble in his former profession. As he contemplated a return to the industry, he studied the housing market in Jackson County and saw plenty of gated mountain subdivisions catering to second-home owners and retirees.

What the county lacked, however, was housing geared toward the professional class who want to live close to the amenities of town. Sylva has seen almost zero growth in its housing stock over the past decade, with development instead focused on the surrounding countryside and mountaintops.

When shopping for land, Pohl stumbled onto the perfect setting for a town home development: a 19-acre tract tucked into a hillside close to downtown Sylva and off Savannah Drive. He created a master plan to build 32 townhomes on the tract. Three years later, the first four units of Laurel Ridge Town Homes have been finished and will hit the market this month.

“I’ve done something here that I hope will spark the town into thinking we need more housing to attract professional people to Sylva,” Pohl said. “I am trying to hit a market of people who don’t want to maintain yards, who want granite countertops and nice hardwood floors. They want a step up at an affordable price.”

At $299,000, the townhomes don’t exactly qualify as affordable housing. But they are at least more affordable than much of what’s on the market.

“They can enjoy this,” Pohl said as he spread his arms, “for what you would pay in the upscale developments for just a lot.”

Although the development is a 15-minute walk from downtown, it has the feel of a private mountain retreat. The townhomes overlook a forested hillside with long-range views peaking through the summer tree canopy. Pohl has set aside 11 acres of the 19-acre tract to be permanently protected.

“The open space gives you the big yard, gives you the view, gives you everything you might want with a five-acre lot but with none of the maintenance and none of the cost. All this is free,” Pohl said, gesturing to the protected forested hillside off a back deck.

Pohl is among the growing number of developers capitalizing on the concept of “cluster development.” Rather than slicing and dicing a tract of land into evenly distributed lots, the new paradigm calls for denser housing concentrated in one area with the rest left relatively undisturbed.

The property was originally zoned for one-acre lots. Pohl faced an uphill battle to get town approval of the denser town home development. Given the steep terrain, carving out one-acre lots across the tract would have required a major cut-and-fill operation and a series of retaining walls and new roads.

“It would have decimated the hillside and the lots would have been so expensive,” Pohl said.

The town ultimately viewed a cluster townhome development as the better option and approved his plan, albeit by a split vote of the town board.

“I took a hell of a gamble that I could go to the town and convince them that they needed it,” Pohl said. “I had some sleepless nights.”

During the year-long process, Pohl found an important ally in former town planner Jim Aust, a major advocate for increasing Sylva’s housing stock and for the cluster development concept.

When Pohl embarked on his development plan, the building boom was in full swing. But three years later, as his first four townhomes hit the market, times are different indeed.

“If the economy would have been where it was three years ago, they would be gone by now,” Pohl said.

Nonetheless, between professors at Western Carolina University and Southwestern Community College — not to mention the standard professional fare of doctors, lawyers, and bankers — Pohl sees plenty of demand for the moderately priced yet posh townhomes. Pohl also sees the townhomes appealing to retirees who don’t want to live in a gated subdivision but rather an in-town neighborhood.

Pohl doesn’t plan on starting to build the next units until the current ones are sold, which he thinks will be snatched up in a few months. Despite his wranglings with the town and the economic downturn, Pohl doesn’t regret coming out of retirement.

“I have absolutely loved this and can’t wait to start the second building. It has given me direction and given me a purpose in life again,” Pohl said. “I love building.”

An open house at the Laurel Ridge Town Homes will be held from 10 a.m. to 2 p.m. on Saturday, Aug. 18. laurelridgetownhomes.com or 828.506.6641.

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