Affluent property owners in Balsam Mountain Preserve have raised commitments of $16.3 million in an effort to stave off foreclosure of the development by lenders.
Balsam Mountain Preserve, a mega development on 4,400 acres in Jackson County, owes nearly $20 million to lenders, who initiated foreclosure proceedings earlier this month. A hearing on whether the foreclosure can proceed was scheduled for Wednesday, Oct. 28.
Dave Walters, one of the property owners leading the effort to raise capital, hopes they will get a seat at the table in the dialogue between the lender and Balsam Mountain Preserve.
“We hoped to raise enough capital that would create an environment the lender would want to have serious dialogue with us during this process,” Walters said. “We have a very active and very intelligent and very vested and worldly group of property owners who are engaged and will remain so.”
Ideally, property owners hope to step into the shoes of the lender and get in control of their own destiny, Walters said. Commitments have been raised from 65 property owners — more than a third of the total property owners within the development.
“I think that is indicative of the overwhelming love for the place and the desire to keep the lifestyle what we hoped it would be,” Walters said.
Property owners would rather keep Balsam Mountain Preserve’s parent company Chaffin Light on board as the developers rather than an unknown player, Walter said.
“The ultimate goal has always been to keep the Balsam in Balsam,” Walters said “Balsam Mountain Preserve is a very unique place.”
Lots in Balsam Mountain Preserve have averaged $500,000. The grounds are rife with multi-millionaires and corporate executives who bought into the culture the upscale development embodies: top-notch amenities, an environmental ethos, strict covenants and a woodland estate setting. The conservation ethic is particularly important to property owners, Walters said.
“Nobody knows what a new owner or someone who took over would do,” said Nancy Seidensticker, a homeowner in the development. “It is a little frightening. We don’t want it change. We like it the way it is.”
Balsam Mountain Preserve has been in default of a $19.8 million loan since January, trying the patience of TriLyn, a private equity real estate investment firm based in Connecticut. The property owners knew a foreclosure was in the cards since May and have been working on a plan since then.
They created an LLC, wrote an investment prospectus and solicited pledges from property owners. The deal is twofold, mirroring the two major pieces of equity within the development.
One fund, called the Balsam Mountain Sustainability Plan, would be collateralized with the unsold lots that are still in the developers’ hands — approximately 120 lots. The current developers would remain on board as operators and pay back the loan from property owners through lot sales. So far, $8 million has been raised through that fund.
A second fund, called the Amenity Purchase Plan, would be collateralized through the amenities, including an Arnold Palmer golf course, riding stables, dining hall, pool, tennis courts, pavilion and backcountry camp. The amenities have been shut down for now.
“The amenities are a very large part of keeping the Balsam in Balsam,” Walters said.
Property owners buying into the fund would own the amenities and make money back over time through memberships and any profits off their operation.
Property owners are not willing to take a second position to the current lenders, Walter said. The property owners have fallen a few million short of being able to pay the lender off in full, however. Whether the lenders are willing to take what they can get and walk away, or whether they would prefer to move forward with foreclosure in hopes of eventually making all their money back, is not known.
“In today’s market, it is all about the money,” Walters said. “That is the position the lender has taken since day one. They have a right, it is their money.”