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Wednesday, 20 May 2009 17:12

Ghost Town withdraws loan request

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By Becky Johnson & Julia Merchant

A surprising turn of events caused the Maggie Valley town board to call off its vote on whether to loan the struggling Ghost Town in the Sky amusement park $200,000.

Moments before aldermen were to cast their votes at a special called meeting Monday (May 18) — and after it became apparent the request was going to be turned down — Ghost Town President Steve Shiver stood up and told the board he didn’t need the town’s money. Shiver said a private business owner in the room, who did not want to be named, had stepped up with an offer of financial aid to help get the park open.

The board then rescinded its motion to vote on the matter.

Prior to Shiver’s announcement, the board had held an hour-long public comment session and was prepared to vote. After the public comment session, each board member stated their position.

Mayor Roger McElroy said he supported loaning the park the money. Alderman Colin Edwards in a last-minute decision asked to be recused from the vote. Alderwoman Saralyn Price said she was not willing to risk taxpayer money to provide the loan, a stance that aldermen Mark DeMeola and Phil Aldridge agreed with.

It became obvious that the loan would not be approved as the majority of the board members stated their positions against it.

Shiver would not speak to The Smoky Mountain News after the meeting. According to previous statements to this newspaper and other media, Ghost Town is still scheduled to open Friday, May 22, just in time for the Memorial Day weekend.

 

Public weighs in

The question of whether to loan Ghost Town $200,000 in taxpayer money proved to be a heated issue for residents and business owners in the town.

Two packed public hearings and dozens of written comments submitted to the town preceded the would-be vote.

Those who were against the loan fear Ghost Town will go under and the taxpayers will lose what they put in.

“It is throwing good money after bad,” said Roger Ferguson, who owns a mobile home park in Maggie Valley. “They owe everybody in the county. How do they expect to pay back Maggie Valley?”

Those in favor of the loan claim that Maggie Valley’s tourism economy hinges on Ghost Town’s success.

“Ghost Town has marketed Maggie Valley for years upon years,” said Joanne Martin, a local restaurant owner. “If we lose Ghost Town, what is Maggie Valley’s brand?”

The controversy has pitted the town’s business operators in the tourism trade against average residents, according to those on both sides.

“Please remember your obligation is not just to the businesses in Maggie, but also to its residents,” town resident Candace Way implored to aldermen Monday night.

Business owner Brenda O’Keefe said the “we” and “them” way of thinking isn’t new to Maggie Valley.

“I hope this will not happen over (the loan),” O’Keefe said. “I don’t want it to be the business people versus the local people.”

Shiver had said the amusement park would open its gates for the season regardless of how the town voted.

“We aren’t here to fold up our tent and walk out if we don’t get a loan from Maggie Valley,” Shiver told the town aldermen, acknowledging their difficult position. “We are committed, and we are not going anywhere.”

While Ghost Town billed its request as a loan, several speakers at the public hearing expressed reservations about the park’s ability to repay it.

“This it is a risky move and we shouldn’t be involved in this,” said Jim Casey, a town resident and voter.

Ron DeSimone, who lives in Brannon Forest, questioned the town’s ability to thoroughly evaluate Ghost Town’s business plan and finances to know whether the loan would have been on solid footing.

The town asked Shiver more than once to provide a business plan showing how the loan could be repaid. But the town was told such a business plan isn’t ready yet, Maggie Valley Town Manager Tim Barth said. Ghost Town has to file a reorganization plan with the bankruptcy court later this summer, but until then, Shiver said the park won’t share it, Barth said.

The information Ghost Town has provided are one-page profit-and-loss summaries from 2007 and 2008.

“We asked for detailed information on revenues and expenditures, and that’s what they sent us,” said Barth. “They haven’t really volunteered anything. We had to ask for what we have received.”

Several speakers at the public comment session said the town should not be in the banking business, especially since Ghost Town has been turned down for a loan from financial institutions.

“Why should a local government lend money to a company that has filed banckruptcy?” asked Phyllis McClure, a property owner in Maggie Valley. “Elected and appointed officials are entrusted to be good stewards of public funds. Those funds should be handled more carefully than our personal funds. They are not ours to give away.”

“Your plan to invest tax money in a high-risk venture that most normal banks won’t touch seems to be a little iffy to me,” said resident Jack Ryan.

 

Tourism driver

Shiver said it is not uncommon for towns and counties to support economic development, whether it is through a revolving loan fund or outright grants to lure industry. In Maggie Valley, where tourism reigns, Ghost Town is proper investment for town tax dollars, he said.

“There is no denying that tourism and vacation home sales are driving your economy,” Shiver said. “There are many hoteliers in the audience and lodging partners that are here that truly depend on that.”

Maggie has a history of investing in its tourism economy, Shiver said, pointing out the town’s purchase in 2002 of the festival grounds. The town has spent more than $500,000 on the purchase, adding amenities and maintenance over the years.

Business owners say Maggie Valley’s tourism economy will wither up without Ghost Town.

“We gotta have it,” said Becky Ramey, owner of Smackers restaurant. “We’ll have a Ghost Town either way — either Ghost Town will open up, or if it doesn’t, Maggie Valley will be a Ghost Town.”

Dave Blankenship, owner of Alamo Motel and Cottages, said his business went up 30 percent in 2007 when Ghost Town reopened after a five-year hiatus.

“If Ghost Town closes, we would risk losing a lot more than ($200,000) for a long time to come,” said Tammy White, owner of the Clarkton Motel. White pointed out that the theme park draws in 130,000 visitors a year who then stay in the hotels and motels in the area. The local lodging facilities would have a hard time pulling in those numbers on their own.

 

Not on my dime

If Ghost Town is so important to the businesses in the Valley, let them put up the money, some speakers suggested.

“Maybe these businesses could form an alliance and lend the money to Ghost Town,” McClure said. McClure said residential property owners won’t see a direct benefit, yet will shoulder an increased tax burden if the loan isn’t paid back.

Dave Blankenship at the Alamo Motel argued that the money split among the town’s taxpayers doesn’t amount to much. The town has 1,600 individual taxpayers on its rolls. The loan is equivalent to just $125 a person.

“That ain’t nothing. You spend that going out to a good dinner somewhere,” Blankenship said.

Speakers in the “no” camp said the town would be better served to spend its economic development dollars elsewhere.

“If the town wants to increase the climate for business, there are certainly other things you can do that would be much more effective and less risky. I think this is very risky,” said DeSimone.

Roger Ferguson agreed the money could be put to a better use.

“If you have $200,000, put it in a trust fund for the kids of the Valley so they can go to college and don’t have to scratch and claw like a lot of us do,” Ferguson said. “Set up a scholarship fund so those who have the desire can get beyond what we have here.”

 

Support from within

Employees of Ghost Town joined business owners in speaking up for the loan.

“This is how I feed my family. I think we deserve a chance to prove ourselves,” said Michael Howard, the maintenance manager at the theme park. “You won’t find a group of harder working people in the county. I work my heart out at it every week.”

Howard said the park is on the right road and can pull through.

“We’ve gone through lows and we’ve gone through highs,” said Howard. “We are making strides in any and every way we can to support our community.”

Randy Bryant, an employee of Ghost Town, said he believes in Ghost Town so much he put $250,000 into the park since it filed bankruptcy.

“I took my hard-earned money, my retirement money, and invested it in Ghost Town because I love Maggie Valley,” Bryant said. “I put my money into that park to get it open this year so we can try to get everybody that’s owed that money you are talking about paid back. Without it being open, there is no way those people can ever get paid back.”

A gunfighter at Ghost Town who goes by Preacher said the theme park is a labor of love for many employees.

“There is a great number of us up there who aren’t on the clock,” Preacher said of the push to get the park ready for opening day.

Many local people have invested personal money in Ghost Town. Among them are Austin Pendley of Maggie Mountaineer Crafts, Brenda O’Keefe of Joey’s Pancake House, and Alaska Pressley, according to Shiver.

Verlin Edwards, a speaker in the “no” camp, said the investors should pony up the money themselves.

“I know they can dig a little deeper and come up with their $200,000,” Edwards said.

Shiver has said previously, however, that the investors are tapped out. They have already poured their savings and assets into the park to get it this far.

In the first two weeks after filing bankruptcy, Shiver paid $23,000 to a company he owns, Global Management Services, according to bankruptcy filings. That’s in addition to a salary of $1,600 that went straight to Shiver.

Ghost Town has to file quarterly financial reports with the bankruptcy court. The first quarter filing only contained financial transactions for a two-week period from when the company filed for bankruptcy in mid-March to the end of that month.

 

Going through the process

The town held two public hearings on the Ghost Town loan, although not by design. The town initially announced it would hold a public hearing on Thursday, May 14. The town had to run a legal notice in the newspaper at least two weeks before a public hearing, per state law.

There was a glitch in the notice being printed in The Mountaineer, forcing the town to push back the date of the “official” public hearing until Monday, May 18. Since May 14 had already been widely circulated among town residents as the date of the hearing, however, the town kept it on the calendar as well — thus the two public hearings.

The first public hearing drew a crowd of about 75, while the second public hearing drew a slightly smaller crowd.

 

Why the need for a loan?

Ghost Town filed for Chapter 11 bankruptcy in mid-March. It has a mortgage of $9.5 million and outstanding bills of $2.5 million. Many locals are among the 200 companies owed money, including electricians, building supply stores, marketing outlets and suppliers of T-shirts and souvenirs.

The iconic park is deeply engrained in the collective memory of Haywood County, both as an economic driver since its debut in the 1960s and a family past-time holding fond memories through the generations.

But when new owners bought the aging park in 2007 from its long-time owner and founder, they inherited a crumbling and jerry-rigged infrastructure. It required far more of a capital investment than they bargained for. Coupled with the economic downturn and credit crunch, the park was forced into bankruptcy, according to Ghost Town CEO Steve Shiver.

 

Maggie flush with extra cash?

Ghost Town CEO Steve Shiver argued that town has the money readily available for a loan, pointing to its substantial fund balance. Shiver said the town has plenty to spare without affecting residents’ property tax rate.

The fund balance, equivalent to the town’s savings account, is 51 percent of its general budget. Maggie Valley’s fund balance is actually below the state average of 64 percent for towns of its size.

“I am not saying our fund balance is in bad shape, but it is not where the average town is at,” Town Manager Tim Barth said. “Over time, I think we need to work toward getting our fund balance up so we are much closer to the average.”

Shiver said Maggie has far more than the 8 percent fund balance required of local governments by the state. But Barth explained that the 8 percent minimum fund balance is geared toward larger governments.

“If you have a $100 million budget, 8 percent of that is $8 million,” Barth said. But for Maggie, with a general budget of $2.5 million, reserves of 8 percent would be a mere $200,000.

The fund balance is the town’s fall back for emergencies, should a storm wreak havoc, a road collapse or sewer line explode. Any government needs a certain amount of cash on hand to cover such contingencies. The smaller the town, the larger those savings will appear as a percentage of its overall budget.

The state average for towns with a population between 500 and 1,000 is a fund balance of 86 percent, and 112 percent for towns under 500.

“There’s a reason that it is that way,” Barth said. “The Local Government Commission would not wait until we got to 8 percent until they sent letter and made phone calls and said, ‘What are you doing?’”

Ghost Town owes Maggie Valley $30,000 in back property taxes.

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