Monday, December 13, 2010

Reynolds Blue Ridge: A Hazardous-Land Subdivision

Watauga County Landslide Hazard Maps

These federally-required (FEMA) hazard maps show that significant portions of Watauga County are unstable. The North Carolina Geological Survey has determined that 70% of the region is moderately stable to unstable, with landslides occurring in designated low risk areas.

Rock Instability, Debris Flow Pathways, Stability
Index, Slope Movement/Deposits Hazard Maps

Watauga County Real Estate: Hazardous-Land Disclosure

Since landslides and slope failures are expected to damage homes and Planned Community roads, the North Carolina Real Estate Commission has ruled that landslide maps must be referenced on property listings and in sales contracts.

Watauga County Planning and Inspections provides a link to the hazard maps but Realtors and developers are presently not sharing hazardous-land data with their clients. This is the case for Lubert-Adler Partners, the financier for the Reynolds Blue Ridge endeavor.

Reynolds Blue Ridge Remains a Lubert-Adler Investment

At 5,400-acres, the Reynolds Blue Ridge residential development tract is one of the largest planned communities in Watauga County. Approximately 800-acres of the 6,200-acre subdivision are located in Wilkes County.

When Lubert-Adler and partner Bobby Ginn initiated sales (November 2006) the Ginn-LA joint venture was called Laurelmor.

Plaintiffs in a number of lawsuits allege that the business partners sold questionably-appraised lots and did not disclose that Laurelmor and four other jointly-owned properties were encumbered by $675 million cross-collateralized Credit Suisse liens. Please see Lubert-Adler, The Ginn Development Company et al Charged with Fraud.

In June 2008 Lubert-Adler and the Ginn Development Company defaulted on its obligations. A restructure agreement with the Credit-Suisse lien holders allowed Lubert-Adler Partners to retain control over the Laurelmor project.

Reynolds Capitol Group settled the approximately $30 million Ginn-LA Laurel Creek LTD., LLLP liens in December 2008. New owners were recorded as BR Development Group LLC and Blowing Rock Resort Venture LLC: management is currently provided by Reynolds Signature Communities. The Laurelmor name was retired in September 2009.

Legal Questions re Reynolds Blue Ridge Real Estate Sales

A check of the Reynolds Blue Ridge real estate site finds that the developer is not in compliance with the North Carolina Real Estate Commission’s ruling regarding Western North Carolina landslide hazard map disclosure. Until such time this matter is rectified, purchasers should conduct their own due diligence to assure that building sites are stable.

Although not recommended by the developer, experts advise that all mountain home sites be independently evaluated for slope stability as a condition of contract.

Rendering of a Reynolds Blue Ridge Cottage

Other than taking legal action against the developer for failing to disclose material real estate risk information, those who suffer property damage have no recompense. Homeowners insurance policies do not cover landslide losses.

Reynolds Blue Ridge property owners face another undisclosed financial risk. It is joint ownership of the planned community’s private roads.

This legal obligation emanates from the Subdivision Street Disclosure Statement which all North Carolina planned community property owners are obliged to sign. In essence this legal document states that neither the State nor the county shall be responsible for maintenance and repair of any streets within the subdivision. Developers' use of this standardized conveyance document for hazardous-land subdivision roads is disputable.

Sample Subdivision Street Disclosure Statement

Pursuant to N. C. G. S. Section 136-102.6, ____________ as the Declarant of__________, issues this statement indicating that all of the roads within ____________ Subdivision are private. It is the obligation of _____________ Homeowners' Association, Inc. (hereinafter "Association") to maintain and keep in good repairs all of the private roads in ____________ Subdivision. It is mandatory for all property owners in ___________ to be a member of the Association and the property owners, with the exception of the Declarant, have an obligation to pay assessments to maintain the private roads in ___________ Subdivision in accordance with the recorded Declaration for Planned Community. The Declarant specifically states that streets have not been constructed in such a manner to allow inclusion on the State highway system for maintenance.

Western North Carolina Landslide Hazard Maps

Federal legislation under Robert T. Stafford Disaster Relief and Emergency Assistance Act requires states and counties to comply with natural hazard identification/mitigation/disclosure protocol or risk losing access to disaster emergency funds.

Western North Carolina landslide hazards became a major federal concern after September 2004 rain events triggered slope failures throughout the region. The cost: five lives, extensive property damage and $72 million in federal aid.

Thursday, December 9, 2010

A Look Back to the Arcadia Bluffs Golf Course Landslides

Wikipedia photos of Arcadia Bluffs Golf Course post 1998 landslides

Arcadia Bluffs Golf Course Landslides

This archived Golf Course News article details the costs of building golf courses on landslide-prone ground.

Arcadia Bluffs saga continues
Golf Course News— Nov 2001— Andrew Overbeck
Manistee, Mich.- One of the court battles surrounding the 1998 landslide damage at Arcadia Bluffs Golf Club came to a close, for now, in late August.

The club’s developers, RVP, sued golf course builder Furness Golf Construction for breach of contract and was seeking more than $4 million in repair costs and lost profits as a result of the Sept. 1998 storm that triggered massive landslides, damaging the course and dumping dirt and sand into Lake Michigan.

The seven-week trial wrapped up Aug. 24 with the jury rejecting RVP’s claim that Furness was responsible for the damage. Additionally, the jury ordered RVP to pay more than $500,000 that it still owes Furness. However, according to RVP’s lawyer Craig Lubben, an appeal by the company is likely.


During the trial, RVP asserted that Furness breached its contract by covering all drainage inlets with silt covers during construction, thereby preventing the installed drainage system from handling storm runoff.

Both golf course architect Warren Henderson, formally of Rick Smith Golf Course Design, and former golf course builder Paul Clute testified against Furness.

Henderson testified that he had approved of the inlet treatment, but in hindsight he thought Furness’ negligence caused the damage. Clute testified that if Furness covered the inlet pipes during the construction he should have armored the back side of drainage swale berms with plastic sheeting or concrete.

Furness’ lawyer, Mark Verwys contended that Furness followed standard construction procedures by covering the inlet pipes and that the drainage system designed by Exxel Engineering was deficient.

Following the damage, the Michigan Department of Environment Quality (MDEQ) forced RVP to make improvements to the existing system.

“We did what we were told to do in the field by the engineer and the architect,” said Timothy Furness. “The jury decided that the blame fell on RVP and it’s engineer and architect.”

Furness believes the jury’s decision exonerates his company. “If this had gone against us it would have put us out of business, he said. “But we were always confident that we had done nothing wrong.”


RVP’S lawyer Craig Lubben is planning to file a post trial motion
to have the jury’s finding set aside by the judge.

“The act of God is an affirmative defense which means it has to plead and proved by the party asserting it,” said Lubben. “In this case, they did not plead that act of God was one of their defenses.”

According to Lubben, the next step will be to go back to the judge and ask him to correct mistakes made by the jury. “I anticipate that we will be doing that," he said. “First the judgement has to be entered and then we will file a motion to set it aside. As of now, however, the judgment has not been filed and a hearing date has not been set.”

Lubben said RVP is still intent in recovering repair costs and that it has no intention of paying Furness’ fees.


RVP is also being sued by the MDEQ. The department originally alleged that RVP violated its soil erosion and control permit, but is now seeking damages under a Michigan law that forbids the dumping of toxic substances into Lake Michigan.

Lubben said that case is now in the discovery phase and is scheduled for trial later in the year.

Thursday, December 2, 2010

Lubert-Adler Partners, Ginn Development Company et al Charged with Fraud

Lubert-Adler Partners

Lubert-Adler, a nationally known real estate private equity firm, aligned with Bobby Ginn in 1997 to purchase, promote and sell property in various residential venues. The financial relationship between the two is not publicly acknowledged, but court documents reveal that:
The JV has acquired each of 23 residential resort communities in separate entities, which are owned 80% by the investing Lubert-Adler Fund and 20% by Bobby Ginn. Lubert-Adler provides 100% of the investor capital, and receives a compounded priority return of 10% and its capital back prior to any distribution to Bobby Ginn.
Lubert-Adler began marketing funds to institutional investors in 1997 with the goal “of providing participants with compounded annual returns of 20% (net of all fees and expenses) and an equity multiple of 2x over the life of the Fund.”

Under Scrutiny: June 2006 Credit Suisse Loan Package

In June 2006 Lubert-Adler/Ginn parlayed a deal with Credit Suisse to borrow $675 million. The loan was predicated on the future value (appraisals provided by Cushman & Wakefield) of five Lubert-Adler/Ginn owned, planned or under development, properties. Collateral offered: Laurelmor, Tesoro, Quail West, Hammock Beach River Club and Grand Bahamas-West End (aka Ginn Sur-Mer and Versailles Sur Mer). Legal documents refer to these debt-laden subdivisions as Project Entities. The Credit Suisse/Cushman & Wakefield method of valuation is the subject of several lawsuits.

Lubert-Adler/Ginn: Credit Suisse Loan Default June 2008

Unable to meet debt obligations in June 2008, Lubert-Adler/Ginn entered into a restructure understanding with the Credit Suisse-led lien holders regarding the cross-collateralized projects: Laurelmor was passed to a Lubert-Adler connected entity, Tesoro and Quail West entered Chapter 7 bankruptcy protection, Hammock Beach was removed, and Ginn Sur Mer went into foreclosure.

Drew Dillworth Complaint

Lubert-Adler et al are being sued by Drew Dillworth, the trustee handling the Tesoro and Quail West bankruptcies.

In his complaint, Bankruptcy Trustee Dillworth noted that each of the “Debtors was jointly and severally liable with the Other Project Entities for loan principal and interest totaling $715,986,962.07, with liens on substantially all of their assets, and no hope of recovery.”

Fraudulent Conveyance Claims re Distribution of Credit Suisse Loan Proceeds to Lubert-Adler Funds III and IV Investors and Ginn Clubs and Resorts

Trustee Dillworth alleges that the purpose of the Credit Suisse Loan was:
"The removal of all guarantee exposure to Bobby Ginn, Lubert-Adler Fund III and LA Fund IV” by paying off all existing recourse debt and replacing it with debt that was recourse only at the Project level; and "[The funding of] an immediate dividend" of more than $325,000,000, which would enable (i) "[T]he immediate mitigation of 100% of the capitol risk, through the repayment of all invested equity and bridge fundings," and (ii) "the harvesting of profits” on an “accelerated” basis.
Dillworth offers the following evidence to support his reasoning:
April 24, 2006 draft "Memo" from Lubert-Adler Partners, L. P. to the Lubert-Adler Fund III and IV Advisory Boards

Lubert-Adler Funds III and IV will be asked to "pool" their respective investments in Tesoro, Hammock Beach River Club, Quail West, Laurelmor and Grand-Bahamas-West End (collectively the "Projects" so as to provide Credit Suisse with a package of cross-collateralized assets as security for its loans. However the principal risk of any cross-collateralized financing is that Project A (e.g., Tesoro) though highly successful on its own, could nevertheless be lost to foreclosure in the event that Project B (e.g., Laurelmor) or Project C (e.g., Grand Bahamas-West End do not perform well, thereby causing the Credit Suisse loan to go into default. Lubert-Adler Funds III and IV, and Ginn Clubs and Resorts, have obtained a term sheet from Credit Suisse Securities (USA) LLC, for three facilities totaling $675,000,000. The proceeds of the loans made under the First Lien Facility and the Second Lien Facility, along with cash contributed by the Borrower will be used by Borrower,

1. To repay certain existing indebtedness of Borrower in the approximate amount of $160,000,000 (the "Existing Debt");

2. To fund a one-time distribution in the approximate amount of $333,125,000; and

3. To pay a portion of the development and construction costs associated with the completion of the projects commonly known as Quail West, Tesoro, Hammock Beach River Club, Laurelmor and Grand Bahama (West End), collectively, (the "Projects" ).
Supp. Ex.2 Email Stearns, 4/29/08

Similarly, later that same year, Ginn-La "restructuring" counsel strongly advised against any pre-packaged reorganization plan which did not include a formal "release" broad enough to cover a "fraudulent conveyance claim" relating to the Credit Suisse loan proceeds "dividend." For in counsel's words: (A) the Borrowing Parties were "left insolvent by [the] dividend"; (B) a Trustee would, therefore, have a "fraudulent conveyance claim" with respect to the "dividend";(C) "nonrecourse [does] not mean cannot sue"; and (D) Trustees can "file complaints that are horrible." Supp. Ex. 3 Notes of Telephone Conference, 10/2/08
Parties who owned or were purchasing property in the above named developments were not privy to the risks posed by the cross-collateralized Credit Suisse 2006 lien, subsequent Lubert-Adler/Ginn 2007-2008 defaults/restructures, and the HUD September 2008 suspension. ( HUD suspensions under the Interstate Land Sales Full Disclosure Act prohibit developers from selling lots in their subdivisions for two years.)

Complaint for Avoidance and Recovery of Fraudulent Transfers

Trustee Dillworth in his Second Amended Complaint August 10, 2010 adds Lubert-Adler investors as defendants. The list contains numerous employee retirement plans including Duke University.

Fraudulent Appraisals

The most relevant and common issue in pending lawsuits (Dillworth Complaint and others) is the question of whether appraisals were in compliance with the Financial Institutions Recovery Reform Act. This law was passed in 1989 to correct abusive practices that caused the collapse of the savings and loan industry.

Trustee Dillworth explains:
As a consequence, the Credit Suisse loans did not comply with U.S. banking laws, such as the Financial Institutions Recovery Reform Act of 1989, which provides that, before a regulated financial institution may make or invest in a loan secured by real estate, the loan must be supported by an appraisal reflecting a traditional market valuation of the proposed collateral.
57. To circumvent that requirement, Credit Suisse coordinated the loans through its “Cayman Islands Branch,” an off-shore “affiliate” with no physical presence in the Cayman Islands, and syndicated the loan product to non-regulated entities, such as hedge funds.
On November 9, 2010, Trustee Dillworth was successful in his motion to compel release of Credit Suisse loan documents.

Related Litigation re Credit Suisse and Cushman & Wakefield

Thousands of property owners in four developments are expected to join a $24 billion class-action lawsuit filed against Credit Suisse and appraiser Cushman & Wakefield.

Bloomberg: “Credit Suisse Resort Loans Default From Beverly Hills to Idaho.”
Bloomberg: “Yellowstone Club Bankruptcy Reorganization Overturned”

Related Litigation re Lubert-Adler Partners and Ginn Development Company

In another lawsuit, Case No: 3:09-CV-00446-TJC-HTS, plaintiffs allege that Lubert-Adler and Ginn worked in concert with various Preferred Lenders ( SunTrust, Fifth Third Bankcorp, Ginn Financial Services and Wachovia) to fraudulently inflate property values in nineteen residential communities.

(a) Hammock Beach in Palm Coast, Florida;
(b) Tesoro Preserve in Port St. Lucie, Florida;
(c) Reunion Resort in Orlando, Florida;
(d) Bella Collina in Montverde, Florida;
(e) Yacht Harbor Village at Hammock Beach, in Palm Coast, Florida;
(f) Conservatory at Hammock Beach in Palm Coast, Florida;
(g) Quail West in Naples, Florida;
(h) Cobblestone Park in Blythewood, South Carolina;
(i) The BriarRose in Hancock County, Georgia;
(j) Laurelmor in Boone, North Carolina;
(k) Burke Mountain in East Burke, Vermont;
(l) Ginn Sur Mer, Bahamas;
(m) Mahogany Run in the Virgin Islands;
(n) Tesoro Club;
(o) Tesoro Beach Club;
(p) Admirals Cove Condominiums;
(q) Hammock Beach Club Villas;
(r) Hammock Beach Club; and
(s) The Towers at Hammock Beach

Second Amended Class Action Complaint filed November 5, 2010.

Laurelmor, the North Carolina Lubert-Adler Connection

Lubert-Adler/Ginn purchased the Laurelmor tract in April 2005 for $57 million. On November 11, 2006, the partners commenced sales with lots in the undeveloped subdivision priced from $500,000 to $1.2 million. According to Ginn company spokesman V.P. Bobby Masters, 200 Laurelmor lots had been sold at the time of the June 2008 default.

The Laurelmor liens (approximately $30 million) were settled by Reynolds Capitol Group in December 2008. Deeds show that BR Development Group LLC and Blowing Rock Resort Venture LLC own the Laurelmor project. These specially created entities obscure the fact that Lubert-Adler Partners, Inc. controls the project.

Reynolds Blue Ridge Real Estate

The Laurelmor name was retired in 2009 and replaced with Reynolds Blue Ridge. This unfinished project is currently listed as a Reynolds Signature Communities endeavor with lots priced at $150,000. These valuations are questionable since most of Reynolds Blue Ridge planned building sites (roads and homes) are subject to soil slippage and landslides.

In violation of the May 2010 North Carolina Real Estate Commission material fact ruling, Reynolds Signature Communities has failed to reference Watauga County landslide hazard maps on property listings and in sales contracts.

Watauga County Landslide Hazard Maps—North Carolina Geological Survey

Western North Carolina Fraudulent Appraisal Complaints

Village of Penland—Spruce Pine, North Carolina

The question of fraudulent real estate appraisal practices was pursued by Attorney General Roy Cooper after the FBI opened its Village of Penland investigation. Lots in this proposed subdivision had been appraised and sold for $125,000, whereas tax records showed values of $20,000. Amy Stroupe, a Corporate Investigator for BB&T, was the party responsible for notifying federal authorities of the Village of Penland appraisal irregularities. BB&T fired Ms. Stroupe for her actions.

Lenders involved with the Village of Penland development: Branch Banking & Trust, United Community Bank, Carolina First Bank and First Charter Bank.

In the matter of BB&T, investigators found that... "BB&T was not just a victim of fraud committed by others; it was aiding Peerless (the developer) in committing the fraud." BB&T mortgage losses in the Village of Penland loan portfolio: $20 million. The Village of Penland scheme cost underwriters more than $100 million.

Grey Rock at Lake Lure—Rutherford County, North Carolina

Grey Rock at Lake Lure property owners filed a lawsuit against Land Resource, LLC and various developer-chosen lenders for inflating land values. The subdivision's 900 lots were appraised for $200,000-$700,000. Without regard to hazardous-land conditions, Grey Rock home sites and roads were platted on clearly-identified unstable soils. Banks listed as defendants: Bank of America, Branch Banking & Trust and Wachovia.

Land Resource, LLC filed for bankruptcy protection in 2008.

Leigh Meininger, the trustee handling Land Resource's liquidation proceedings, claims that the company and its subsidiaries grossed $250 million in 2005-2006 but failed to complete promised infrastructure in many of its developments. Court documents note that Bob Ward, founder and president of Land Resource, received $21 million in compensation in 2005.

Trustee Meininger alleges in her October 2010 filing that millions of dollars of company funds were "fraudulently transferred" to J. Robert Ward, his family, various trusts and partners prior to entering bankruptcy protection.

Federal Response

Other than the Village of Penland, there has been no federal effort to examine the evidence of fraud in these cited civil actions.

Wednesday, September 29, 2010

Reynolds Blue Ridge (Lubert-Adler Partnership) Lawsuit Issues

Reynolds Blue Ridge Real Estate

Lubert-Adler Partnership entities (Reynolds Capitol Group)
the Reynolds Blue Ridge real estate development tract. This Watauga/Wilkes Counties, North Carolina 6,200-acre planned residential community was originally called Laurelmor and was part of Lubert-Adler real estate holdings under the Ginn Company name.

Chapter 7 Ginn bankruptcy accommodations resulted in the transfer of the debt-laden Laurelmor project to Reynolds Capitol Group, which is also affiliated with Lubert-Adler.

Lubert-Adler and a number of its related companies are being sued by Drew Dillworth, the trustee handling the Ginn-LA Tesoro and Quail West bankruptcies, for fraudulent business practices. If the allegations are proven, Lubert-Adler will face costly penalties.

Lubert-Adler Legal Liabilities

The following Toby Tobin articles provide a history of the Lubert-Adler/Ginn business relationship, its past profitable multi-entity real estate transactions and property owners complaints.

Tobin article September 20, 2010—“Draft Lubert-Adler Memo Confirms Motives Behind $675M Ginn-LA Loan from Credit Suisse”

Tobin article August 19, 2010—“List of Lubert-Adler Investors Revealed in Dillworth v. Ginn Lawsuit”

Tobin article August 6, 2010—“Reynolds' Downsized Plans for Former Ginn Development in N.C. Signal Changes for Conservatory and Gardens in Palm Coast”

Tobin article July 28, 2010 “Long after Ginn-LA (Tesoro) Bankruptcy, Property Owners are Hounded for Delinquent Club Dues”

Tobin article July 25, 2010—“Lee County, FL - 4,157 Acres Owned by Ginn-LA Naples Ltd. LLLP Headed to Public Auction”

Tobin article July 9, 2010—“Battle Mountain Proposal Shrinks – Developers Remove Golf Course and Hotel”

Tobin article July 7, 2010—“Another Ginn Lawsuit Tossed – Were Plaintiffs Properly Represented?”

Tobin article May 19, 2010—“Bobby Ginn and Lubert-Adler Face Yet another Lawsuit”

Tobin article May 11, 2010—"New Ginn-LA Lawsuit Alleges Fraudulent Transfers – Also Names Lubert-Adler Investors Including Harvard, Princeton, and Yale"

Saturday, September 25, 2010

Reynolds Blue Ridge Landslide Insurance Issues

Watauga County Landslide Hazard Maps

North Carolina Geological Survey

Watauga County Real Estate

Watauga County is one of twenty-one Western North Carolina mountain counties declared landslide-hazardous. As a consequence, the North Carolina General Assembly authorized the Western North Carolina landslide hazard mapping program in 2005. Watauga County planning board members were apprised of hazardous-land conditions in January 2008.

Macon (2006), Watauga (2008) and Buncombe (2009) counties have been surveyed for unstable land conditions. The North Carolina Real Estate Commission has determined that published landslide hazard maps are material facts that must be noted on property listings and in sales contracts.

Reynolds Blue Ridge Real Estate

The Reynolds Blue Ridge 6,200-acre residential project, part of the Reynolds Signature Communities, is located in Watauga and Wilkes counties. Geologic risk data indicates that proposed steep slope home sites and private roads within the Reynolds Blue Ridge subdivision tract are likely to be impacted by damaging earth movement.

In violation of material fact disclosure rules, the principals
(Reynolds Capitol Group and the Lubert-Adler Partnership) providing funding for Reynolds Blue Ridge have declined to reference Watauga County landslide hazard maps on property listings and in promotional material.

Unstable land conditions are significant real estate investment risks: landslide insurance is not purchasable.

Friday, September 17, 2010

Villages of Plott Creek Landslide Issues

Villages of Plott Creek Real Estate

Villages of Plott Creek mountain home sites are advertised as prime real estate investments whereas geologic data shows that land in this steep-slope 1,100-acre subdivision is subject to ground instability.

Haywood County Landslide Hazard Map 2005

Unpublished Haywood County Stability Index Hazard Map.
Risk models show that 49% of Haywood County land is unstable.

Donin Landslide January 7, 2009

Before and after photographs- Donin Landslide
Haywood County, NC—2009 —Asheville Citizen-Times

Following the Donin landslide disaster, Marc Pruett, head of the Haywood County erosion control department, told Vicki Hyatt, editor of The Mountaineer, that there have been landslides above and below the Donin property (Wild Acres neighborhood) as well as across the top of the mountain in the Villages of Plott Creek development. According to Mr. Pruett, the slope failures were triggered when rain soaked unstable soils known as Tuckasegee-Cullasaja complex, (TvE).

Villages of Plott Creek: Financial Concerns

The permit for the Village of Plott Creek Subdivision was granted in 1995. From that time and until 2008, developers were left to their own best judgment on steep slope subdivision placement and design. The 2008 Haywood County slope ordinance was enacted:
In order to provide for the creation of reasonably stable artificial slopes on developed land, the county hereby deems that disturbed land herein identified shall be developed so as to contain graded slopes and fills that will remain stable for a reasonable life span. It is also deemed that land-disturbing activity resulting in the construction of safe, stable properties is an important, valuable economic consideration for property owners, as well as to the citizens of Haywood County.
Although not stated in the above paragraph, steep slope land ownership can be bankrupting. Landslide property loss is not covered by homeowners policies and in the event a subdivision’s private roads are damaged, property owners are obliged to pay for the repairs though special assessments.

For a measure of security, professionals recommend that all steep slope home sites be evaluated for unstable land conditions.

Haywood County Landslides

There are no published photographs of the Villages of Plott Creek landslides but these other Haywood County landslide photos illustrate the risks of building homes and roads on unstable ground.

Photographs Jones'
Landslide Fatality Haywood County, NC 2003—NCGS & The Enterprise Mountaineer

Photograph of Haywood County, NC landslide property damage caused by 2003 spring rains—Story
covered by The Enterprise-Mountaineer.

Photographs Horseshoe Cove Subdivision Landslides- Haywood County, NC
2003 —Pam Williams, Property Owner

Slope Movement Photos Haywood County, NC 2004—NCGS
Landslide Report : "Disappearing Haywood" —The Enterprise-Mountaineer, October 31, 2005.

Photographs Hunters Crossing Subdivision Big-Slow-Moving Landslide— November 2005—NCGS

Photographs Cascades Subdivision Landslide Haywood County, NC 2006—NCGS

Photograph Moody Landslide
Haywood County, NC 2009—
Asheville Citizen-Times

Photographs I-40 Pigeon River Gorge Rockslides— July 1997 /October 2009 —
NCGS & Asheville Citizen-Times

Photos of Ghost Town in the Sky landslide damage Haywood County, NC 2010Asheville Citizen-Times, Flyover video provided by WSPA News

Tuesday, September 14, 2010

“ Buyers simply don’t know to beware” Western North Carolina Mountain Real Estate Landslide Risks

Published Western North Carolina Landslide Hazard Maps

Buncombe, Watauga and Macon County landslide/soil hazard maps illustrate the region’s unstable land conditions. The data collected by the North Carolina Geological Survey shows past slope movement, where landslides are likely to originate, and where these debris flows will travel. Henderson County landslide maps are pending. Jackson County will follow.

Buncombe County Landslide Hazard Maps

Watauga County Landslide Hazard Maps

Macon County Landslide Hazard Maps

Haywood County Landslide Hazard Map

Unpublished Haywood County Stability Index Hazard Map.
Risk models show that 49% of Haywood County land is unstable.

Western North Carolina Mountain Real Estate: Landslides and Slope Failures Expected

Although not recorded on subdivision plats, or referenced on property listings and in real estate contracts all steep slope Western North Carolina building sites are designated unstable. To clarify: steep slope is land on or above a 15% grade. Structures below these defined steep slopes are also at risk.

Western North Carolina mountain real estate home sites are susceptible to earth movement because of geologic features and water-reactive soils. Geologists and engineers urge professional assessment and expert planning when naturally unstable slopes are altered for residential development. These critical recommendations have not been legislated.

Western North Carolina Landslide Insurance: Not Purchasable

Since there is no insurance available in Western North Carolina to cover earth movement property damage, purchasers should condition their contracts on the results of home site stability studies.

Western North Carolina Homeowners’ Associations Privately-Maintained Roads

The absence of landslide insurance is not the only financial issue. Most Western North Carolina mountain subdivision roads are privately owned by homeowners’ associations. In the event these roads are damaged by landslides, property owners are obliged to pay for the cost of repairs through special assessments.

Safe Artificial Slope Construction Act

There have been three legislative efforts to establish a measure of control over steep slope building practices but none have been successful. The importance of the Safe Artificial Slope Construction Act is discussed in the following reprinted article.

Rapp tries to round up support for slope development bill—Smoky Mountain News

Becky Johnson — January 2, 2008
When back-to-back tropical storms hit the mountains with heavy rains in 2004, the saturated soils triggered more than 140 landslides. Some were small, others big, but all pointed to how vulnerable some mountain slopes are to the forces of nature — namely gravity.

It spurred Rep. Ray Rapp to start thinking about a way to make building on steep slopes safer. Rapp, a Democrat who represents Haywood, Madison and Yancey counties in the state House, is pushing for oversight of construction on the steepest of slopes.

Rapp is not a fan of the “caveat emptor” motto that has prevailed in WNC’s development boom. Buyers simply don’t know to beware, he said.

“All they see is a million-dollar view,” Rapp said. “They are looking at the view, not at their feet — and what is under their feet could be highly detrimental to their safety.”

Rapp is fighting an uphill battle, however. The powerful lobbying arms of the Realtors and Home Builders associations are opposed to the safeguards Rapp has proposed.

“Those are very powerful lobbies in Raleigh,” Rapp said. “That really put everybody on the defensive.”

Rapp has failed so far to garner the support he needs for his bill, called the “Safe Artificial Slope Construction Act.” Only four other legislators signed on to the bill — two from the mountains, one from Raleigh and one from Greensboro. Rapp said he needs more support for the bill among mountain legislators before those down east will vote for it.

“They want to see legislators in the mountains get together. If we are at best divided then a number of them will listen to the Realtors and Homebuilders,” Rapp said. “The first thing we have to do is get support across the mountains.”

But it’s proved a tough sell.

“There have been all of these attacks that we are trying to stop development in the mountains,” Rapp said. As a result, support among mountain legislators is mixed, Rapp said.

“We had one mountain legislator who supported it initially, but folks back home got so stirred up that he backed off,” Rapp said.

The bill failed to go before the House of Representatives for a vote in 2007. Instead, it was handed off to the House Committee on Environment and Natural Resources. The committee could kill the bill or send it on to a vote. In doing so, they could leave it as is or change it.

As part of their review of the bill, the committee is holding a public hearing in Asheville on Jan. 10 from 4 to 7 p.m. at the Enka Campus of AB Technical College.

40 percent threshold

The main argument Rapp hears is money. Under his bill, developers would have to solicit an engineer to draw up a slope construction plan when building on slopes greater than 40 percent. The added expense would drive up home costs. On some terrain, it might result in fewer houses.

“The only thing I hear consistently is a concern that it might hurt economic development if there were any limits put on some of this slope development,” Rapp said.

In most mountain counties, developers answer to no one. They don’t have to file a plan with the county before putting in roads and home sites, and no one checks up on their work afterwards. The state bill would force these laissez-faire counties to start monitoring slope construction.

“It’s something that many of the counties have been unwilling to tackle,” Rapp said. “The whole point is to say to the counties, these are the minimum standards that you will be required to adopt.”

Rapp initially wrote the bill to apply to slopes of 25 percent or greater. But in an attempt to curry favor from opponents, the threshold was lowered, so the oversight now only applies to construction on slopes greater than 40 percent. The compromise was unsuccessful in appeasing his opponents, however.


The bill would also require Realtors to disclose whether property is at risk for a landslide. Landslide risk maps are being drawn for all mountain counties by the N.C. Geological Survey. Only six counties have been completed so far, Macon County among them.

In the absence of landslide risk maps, the bill would have required property owners to do their own risk assessment and disclose the results to buyers. The measure would apply only to land with a slope greater than 40 percent.

The real estate lobby was opposed to the idea. Rapp said it would cost roughly $1,200 to $1,400 for a landslide risk assessment for the average property owner.

“The Realtors argued that would drive up the cost so much people won’t buy the land,” Rapp said.

So Rapp compromised. Instead of being forced to do a landslide risk assessment before selling, Realtors could instead disclose that they don’t know whether the property is safe to build on — leaving it up to the buyer at that point to do a risk assessment if they chose.

Rapp believes the extra cost of hiring an engineer to develop a slope construction plan and do a landslide risk assessment are worth it when slopes over 40 percent are involved. Rapp pointed to a Haywood County subdivision called Hunter’s Crossing where the soil beneath the homes slipped, cracking their foundations and rendering the homes unsafe. Insurance doesn’t cover landslides, so the homeowners are stuck paying mortgages on homes they can’t live in.

“If you go to the eight homeowners in Hunter’s Crossing and ask them: ‘It would have cost you $1,400 more to have an engineer’s report on your property. Would you have paid for that?’ the answer is yes, ” Rapp said. “It is one of those penny-wise pound-foolish arguments.”

Besides Rapp, the only two mountain legislators in the House of Representatives who have signed on to the bill are Phil Haire, D-Sylva, and Susan Fisher, D-Asheville. Haire represents Jackson County, Swain County and parts of Macon and Haywood counties. Fisher represents Buncombe County.

Thursday, September 9, 2010

Haywood County Mountain Real Estate: Hunters Crossing Subdivision Landslide

Haywood County Landslide Hazard Map

Unpublished 2005 Haywood County Stability Index Hazard Map.
Risk models show that 49% of Haywood County land is unstable.

Haywood County Mountain Real Estate: Hazardous-Land Disclosure

Although not referenced on property listings and in real estate contracts, Haywood County is one of twenty-one Western North Carolina counties classified landslide-hazardous by federal officials.

Haywood County building sites are unstable because of the region's geologic features and water-reactive soils. When heavy rains are forecast, the National Weather Service issues bulletins advising that landslides and slope failures can be expected.

Hunters Crossing Underground Landslide Waynesville, NC

Photographs Hunters Crossing Subdivision Big-Slow-Moving Landslide—November 2005—NCGS

These archived articles tell the story of the Hunters Crossing landslide.

More homes are sliding off the mountainThe Mountaineer
Jeff Schmerker—November 23, 2005
Elaine Kuhl spent Friday morning packing to leave for a short Thanksgiving vacation.

But when Kuhl returns to Waynesville next week, she won’t be moving back to her home.

The upscale duplex where Kuhl has lived for the past six years is sliding downhill.

Residents on Hunters Crossing Ridge in the Allen Creek area first noticed the ground movement about six weeks ago when cracks appeared in one of the basements.

In October, Jim Crawford, who lives next to Kuhl, moved into a unit across the street. But the sliding intensified last week. Massive cracks appeared in the basement, big enough for sunlight to fall through. The two duplex units appeared to pulling apart at the seams. Fissures spread through the backyard and driveway.

"Oh wow, look at how this has opened up just since yesterday," gasped Gerri Madden as she peered at a quickly-widening crack. “That’s unbelievable.”

Madden and her husband Mark, moved into their new home, which sits a few hundred yards above Kuhl’s unit, just six days ago. “Our home is safe," she said, “but I am not sure about our driveway.”

Inspectors from the town of Waynesville on Thursday told two families they would need to leave their homes and cut off water to all three duplex units.

"This could be short-term," said Greg Shuping, director of Haywood County Emergency Management. “What we are doing is getting the experts out here to look at this.” Richard Wooten, a senior geologist with the North Carolina Geologic Survey, said he’s not sure yet what’s causing the mountain to slide. “We are trying to figure out what areas are moving and how much it’s moving.” Wooten said as he stood by the home’s basement. The county’s soil survey shows the area to be highly susceptible to slope creep, said Marc Pruett, Haywood County’s erosion control officer program director.

“That’s a bad one up there,” said Pruett, who observed the fissures a few weeks ago. “That whole house is just being crunched off that mountain.”

Pruett said the future does not look good for Kuhl’s home.

"Instinct tells me," he said, "that it will continue to be subject to soil creep."

The hillside above the home is laced with tension cracks, Pruett said, which could be allowing water to seep into the ground. Water, which weights 60 pounds per cubic foot, could quickly begin to weigh a slope down.

The slide on Hunters Crossing Ridge is just the latest in a series of slope failures in Haywood County in recent months. In October, Pruett briefed county planners and leaders about the problem—he orchestrated an hour-long slide show featuring image after image of homes, roads, and yards in the process of being torn apart by land slides. Pruett said he felt the situation on Hunters Crossing Ridge was so serious that when he saw children playing in the yard beneath the sliding home, he stopped and warned their parents about the looming threat.

"I felt I would be remiss if we did not stop and tell these people, 'Don’t let these kids play in the backyard,'" he said.

Jeff Coghill, the home’s owner, said he is in contact with oufits that specialize in slope stabilization. On Friday, standing in the cold morning, he pulled out an aerial photograph which showed the duplex he owns and a half-circle of avalanching slope around it. Coghill said the home was built in 1994,though he did not buy it until 2001.

“This was not just some investment we made,” Coghill said. "My wife and I planned to retire here.”

While Crawford’s new unit is not sliding away, the driveway accessing it is. He said he wasn’t sure if it was safe to park there.

Kuhl said with the utilities to her unit turned off for now she’d have to find somewhere else to stay. She’s hoping the disruption doesn’t last very long.

"I’ve been here for six years," she said. "I don’t know what to
Study brings bad newsThe Mountaineer
Vicki Hyatt, Editor—March 20, 2006
An engineering study of a mountainside where home foundations are cracking—a six-unit condominium complex called Hunters Crossing—provided homeowners with no good news.

The slide area, according to a study by Alpha Environmental Sciences Inc., in Waynesville, stretches about 250 feet parallel to Lickstone Road and extends about 300 feet up the hill from the east side of the road. On-site visits showed a number of cracks and vertical cuts in the ground, some of which are near the homes at the top of the failure area, the report stated.

Foundation cracks and wall displacements were found in homes at the top and bottom of the failure zone. New signs of distress continue.

Two 50-foot borings at the top of the failure area never reached rock, though a boring at the slope’s bottom hit rock at 8.5 feet. “Any event that could momentarily reduce the internal soil strength could cause a rotational failure to occur,” the report stated. “The type of events that cause this condition would be the infusion of large amounts of water, either from periods of intense rain or a water line failure. Also, a seismic shock such as the 3.8 magnitude earthquake that occurred on Aug. 25, 2005, two miles southwest of Hot Springs could have caused this change in strength.”

The strength reduction can be permanent or take an extremely long time to return to a balanced point, the report stated.

One treatment would require the removal of homes near Lickstone Road and then constructing a 70-foot berm extending 20 to 30 feet high. If the berm option was chosen, reconstructing home on the slope would not be feasible, the report said.

To attempt to stabilize the slope, anchor tie backs could be drilled into the soil or rock beyond the failure zone. The remedy could cost at least $1 million, the report stated, but it might not work.

The report recommended the homes affected by the slope failure, if they are in a condition to be moved, be relocated.

Greg Shuping, the emergency service director for Haywood County, became involved in the Hunters Crossing issue in late November when the unstable mountain conditions prompted safety concerns for area residents, as well as any emergency services personnel who might be called upon to respond to a disaster.

“My role is to make sure citizens received expedited service and we did,” he said. “We looked at it, called in experts and turned it over to them. That’s the protocol we’re using to give people the information they need.” Shuping said this is the second situation he is aware of where an unstable slope threatened homes. Another occurred when a Maggie Valley area home collapsed, killing one of the homeowners and leaving the other without a spouse or a home.

Citizens need to be aware of changes in and around their home and seek professional advice if they feel they need to, Shuping said.

“If anyone has any questions, they should contact the local planning or erosion control office,” he said. “They should be able to send someone out to give some advice.”

Marc Pruett, the Haywood County erosion control officer, said while it is sad, it is probably the right recommendation to remove the homes in Hunters Crossing.

“I find that sad, but in some ways, expected,” he said. “I feel like, again, there’s a huge amount of development being done in areas where there’s very little subsurface investigation of steep areas possibly with bad soils or bad geology. This is one that has shown itself to us after the fact.”