Reynolds Blue Ridge (Lubert-Adler Partnership) Lawsuit Issues

Reynolds Blue Ridge Real Estate

Lubert-Adler Partnership entities (Reynolds Capitol Group)
own 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"

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.

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 2010—Asheville Citizen-Times, Flyover video provided by WSPA News

“ 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.

Disclosure

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.

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 mountain—The 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
do.”

Study brings bad news—The 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.”

Ghost Town in the Sky—September 2010

Haywood County, North Carolina Landslide Hazard Map

Unpublished 2005 Haywood County Stability Index Hazard Map.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


Ghost Town in the Sky Landslide


Photos of Ghost Town in the Sky landslide damage—Asheville Citizen-Times
Flyover video provided by WSPA News



On February 5, 2010 sections of a Ghost Town in the Sky landslide-prevention wall failed releasing a debris flow that damaged homes and Rich Cove Road.

Since this hazardous-land event, state geologists report that areas adjacent to the slope failure remain at risk and are classified “an imminent threat.” Other than a federal $1.3 million grant, there are no funds available to repair these likely-to-fail slopes. (Ghost Town Partners LLC, the entity responsible for Ghost Town in the Sky business decisions, has been under Chapter 11 bankruptcy protection since March 2009)

Engineers investigating the hazard site have recommended removing the approximately 16,000 tons of loose soil and taking the slope back to its natural contours. This proposal has been blocked by Ghost Town Partners.

It is remarkable that Ghost Town investors have any voice in this matter. The retaining walls at issue (cost $600,000) were constructed in 2007-2008 without permit and required inspection. In March 2009, the date of Ghost Town Partners, LLC bankruptcy filing, company officials were notified by a contract engineer that the “ MSE wall is not functioning as intended at this time and structural failure of the wall is possible if not replaced.” (Pat Burgin, Engineer-Ghost Town in the Sky Retaining Wall Report)

As the following archived article details, Ghost Town executives knew that they had a serious site problem.

'Could have been twice as bad' The Mountaineer
Beth Pleming—February 10, 2010

Engineer says measures at Ghost Town mitigated Rich Cove slide

MAGGIE VALLEY — An engineer overseeing repair work where a giant mudslide originated Friday said the disaster could have been twice as bad and perhaps fatal had owners of the mountaintop amusement park not been proactive in trying to correct a problem.

Meanwhile, Rich Cove Road residents are still unable to return home both because the road is blocked and because more wet weather has authorities nervous about the prospect of a second slide.

An additional 12,000 to 16,000 tons of material— at least twice the amount that flowed down from the top of the mountain Friday night—is hanging loosely behind a retaining wall at one edge of Ghost Town in the Sky park property. Officials fear that the right amount of precipitation could break the material loose.

Rick Wooten, a geologist with the N.C. Department of Environment and Natural Resources, said recent snowfall, followed by heavy rains on Feb. 5, triggered the slide that originated at the retaining wall. However, an investigation continues on what caused the slide and what role the retaining wall played in the disaster.

Issues surrounding the wall have been a slippery slope for quite some time, said engineer Pat Burgin, who was hired by Ghost Town to inspect the wall in 2008 when problems first became apparent. Amusement park officials had been working to stabilize the area before bad weather hit.

Had Ghost Town officials not already removed a substantial amount of material from the slide site, Friday’s disaster would have been much worse and likely fatal, said Burgin.

“Present (park) owners kind of inherited a problem from the previous group of investors,” Burgin said.

Shortly after Ghost Town Partners, LLC purchased the park in 2006, Caroline-A-Contracting of Maggie Valley was hired to build a retaining wall. Construction was complete in 2008. The company was paid more than $600,000 for the job, leaving an outstanding balance of more than $28,000 owed to the contractor.

“That was the wall that began to fail shortly after the contractor finished it,” Burgin said.

Through their attorney, Russell McLean, Caroline-A-Contracting filed a lien against Ghost Town in the amount of monies owed. Park officials contested the balance with a counterclaim, filed May 20, 2009, alleging breach of contract based on allegations the wall was improperly constructed. At that time, the case was essentially put on hold until bankruptcy matters could be resolved.

“I looked at it and determined it was not done properly and was an unsafe situation,” said Burgin. “The contractor who built it didn’t build it right. It was a bad job.”

Burton Edwards, owner of Caroline-A-Contracting, disagrees.

“Mr. Burgin is wrong,” he said. “The professional engineer on the project was my uncle Verlin (Edwards), and he is an excellent engineer. (The wall) was designed properly and built properly because he was there everyday when it was put in.”

When the wall was constructed, the county’s slope ordinance had not been adopted, but would not have applied anyway since the area falls under the jurisdiction of Maggie Valley where there is no slope ordinance. The town relies on the N.C. Department of Environment and Natural Resources to handle permit issues.

If a land-disturbing activity exceeds 1 acre, a plan must be prepared to obtain a permit.

“I don’t recall a state permit on that and don’t know how much disturbance there was,” said Janet Boyer, regional engineer for the department’s land quality section. “If it was under an acre, there wouldn’t have been a plan required. Occasionally people have work done over an acre and people don’t get an approved plan or notify us. I may be talking to them in the future about plan to fix it and the cleanup.”

The contractors’ design choice was not the most suitable type for that location, Burgin said of the mechanically stabilized earth (MSE) wall.

“It is the opinion of the engineer, based on site observations, experience with local soil properties and MSE structure design, the primary cause of the MSE wall movements are due to improper construction of the wall,” states Burgin’s initial report. “The soil reinforcement component of the design may be inadequate and/or improperly installed. In addition, the design of the wall may be incorrect for the specific site. The MSE wall is not functioning as intended at this time and structural failure of the wall is possible if not replaced.”

When park officials noticed asphalt cracks around the wall, the contractor was the first person called, said Burgin.

“(The contractor) denied doing anything wrong, and blamed the problem back on Ghost Town,” Burgin said.

Edwards claims there are sewer and water line issues near the wall that are “beyond our control.”

“There’s a lot of things we want to know, too,” said Edwards. “Everybody needs to do their research before they go pointing fingers.”

When problems surfaced Ghost Town officials began removing the wall and taking steps to make the area safer.

Burgin visited this site about six months ago and said nearly one-third of the material had been removed by another contractor hired by Ghost Town.

Luckily, contractors had cleared a flat area below the wall to act as a safety net.

“They were basically doing everything they could do to prevent a hazard,” he continued. “If not, (the Friday slide) would have taken out houses instead of washing up behind them, and there would have been at least twice as much material come down that mountain, if not more. They were very proactive in trying to stop this thing in its tracks. Then came the rain. The wall gave way, and when it did the safety area caught a considerable amount of the material, probably half of it. The rest of it washed down the road.”

Geologists measured the slide and said it was about 3,000 feet long, 80- to 90-feet wide and reached up to 175-feet wide in some places. Fortunately, there were no houses in the direct path. The flow of mud took out the backside of one home and caused minor damage to three others, in addition to causing road damage.

“The slide did more damage to (Ghost Town) property, to their road, than anywhere else,” said Burgin. “It totally washed out their road.”

In several other places, mud and debris blocks road access, but does not appear to have washed out the road. Rich Cove Road is the steepest state maintained road in North Carolina and it the responsibility of the state transportation department to repair and maintain.

DOT officials did not return messages by press time, and no timeline for clean up of the road has been offered.

The American Red Cross of Haywood County is assisting with victims’ needs in the meantime, in collaboration with other nonprofits, including the Salvation Army. Donations from private individuals, including Ghost Town in the Sky and $1,500 collected as part of Jonathan Valley Elementary School’s penny war has also been contributed to the cause.

Maggie town leaders and county commissioners declared the site a disaster area, which is the first step toward seeking federal relief funds. Representatives of the Federal Emergency Management Agency were scheduled to visit the site Monday, but postponed the visit until today.

With regard to the park’s upcoming season, slated for a May opening, park CEO Steve Shiver called the “latest monkey wrench just one more in a long history of challenges for Ghost Town.”

“We were moving quickly to reopen for the 2010 season,” he said. “This is very unsettling and uncomfortable for us, and Maggie Valley as a whole is obviously going to be affected for this season. Historically we’ve been opening May 15, there’s no way we can open in May now. Pushing back our opening date will mean fewer overall visitors in the valley throughout the duration of the season.”

While awaiting results of a bankruptcy proceeding, the park continues to pursue funding options, but is now also at the mercy of DOT who must clear the road before park officials can proceed with clean up and repair work on Ghost Town property.

“They are literally caught between a rock and a hard place, no pun intended,” said Burgin.

The Ghost Town in the Sky landslide disaster would be a historic footnote except for the efforts of the Smoky Mountain News and The Mountaineer.

Ghost Town in the Sky $16,750,000 Federal Loan Package

Federal Funding for Ghost Town in the Sky Redevelopment

According to FedSpending. Org, Ghost Town Partners LLC, received $16,750,000 in direct and guaranteed loans from the Department of Agriculture’s Rural Business and Industry (B&I) Guaranteed Loans Program for the period 2006-2007.

These warranties persuaded Branch Banking & Trust to extend Ghost Town Partners, LLC loans in the amount of $9.5 million to acquire and improve the long-shuttered Ghost Town in the Sky Amusement Park business site.

In March 2009, Ghost Town Partners, LLC, filed for Chapter 11 bankruptcy protection to prevent creditors, namely BB&T from gaining control over the company’s assets. The Smoky Mountain News reported on August 24, 2010 that the debtor's reorganization effort is foundering. The promise of a $7 million payment to BB&T, on the part of Allen Harper one of the original Ghost Town investors, has not been fulfilled.

BB&T has indicated that it wants a court-ordered liquidation. Should this action occur, the company’s assets will be sold. If the monies received are less than the federally-backed loan amount, BB&T will collect an undisclosed sum from the USDA-sponsored Rural B&I Guaranteed Loan Program. The Smoky Mountain News queried the respective parties for information re the amount of the loan under federal guarantee but neither the guarantor nor the creditor would answer this question.

USDA Rural Business and Industry Guaranteed Loan Program

The USDA Rural Business and Industry Guaranteed Loan Web site provides the following information:

The purpose of the B&I Guaranteed Loan Program is to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities. This purpose is achieved by bolstering the existing private credit structure through the guarantee of quality loans which will provide lasting community benefits. It is not intended that the guarantee authority will be used for marginal or substandard loans or for relief of lenders having such loans.

What is the percentage of Guarantee?

The percentage of guarantee, up to the maximum allowed, is a matter of negotiation between the lender and the Agency. The maximum percentage of guarantee is 80 percent for loans of $5 million or less, 70 percent for loans between $5 and $10 million, and 60 percent for loans exceeding $10 million.

What are the Loan Amounts?

The total amount of Agency loans to one borrower must not exceed $10 million. The Administrator may, at the Administrator discretion, grant an exception to the $10 million limit for loans of $25 million under certain circumstances. The Secretary may approve guaranteed loans in excess of $25 million, up to $40 million, for rural cooperative organizations that process value-added agricultural commodities.

Ghost Town Partners, LLC Loan Exceptions

The Ghost Town Partners LLC, $16,750,000, loan package was exceptional in several respects. It exceeded the $10,000,000 Agency loan threshold and the project site is landslide hazardous.

Geologic hazards were not well-known development impediments in the 60s when the top of Buck Mountain was reconfigured to accommodate the amusement park, but they have been since 1998.

If the decision-makers had reviewed easily-accessible Haywood County landslide and soil survey risk data, they would have declined to underwrite this commercial/residential venture.


Haywood County, North Carolina Landslide Map

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