Earlier this year, Iredell County commissioners voted unanimously to pay $4.75 million for 189 acres of land adjacent to the county landfill – $3.25 million more than the land sold for just two years earlier, and about $3 million more than county assessors have since determined it is worth.
County officials maintain that the property – on which Twin Oaks Golf Course is currently situated – is needed for a future landfill expansion. They say the purchase was forward-thinking and fiscally responsible.
That could certainly be true. But the seemingly hurried process by which the county acquired the property, and the associations among some of the people involved, raise a few questions.
Was the county’s purchase of the Twin Oaks Golf Course property a sound, responsible decision? Read the following history of the project, and let me know your thoughts:
In November 2005, a development company, Twin Oaks Golf Development, LLC, purchased the 189 acres adjacent to the landfill for $1.5 million. Mooresville attorney Ben Thomas – the development company’s managing partner – said that he and his partners, Michael Ryon and John West, purchased the Statesville golf-course property “within days of it coming on the market (in 2005) and before it was common knowledge” that the land was for sale.
“The company believed the asking price was well below the market value for land that could be developed into residential lots with water and sewer already on site,” said Thomas in a two-page statement to the Report on Friday.
“At that time, in our view,” the statement read, “the seller was treating it simply as the sale of an older golf course needing significant repair, and not with the potential of it being developed into a viable and attractive golf course community.”
In December 2005, Twin Oaks Golf Development, LLC requested from the Iredell County Board of Commissioners a release of zoning jurisdiction to the City of Statesville in an effort to have city utilities extended to the golf-course property.
According to the minutes of the Dec. 20, 2005 briefing of county commissioners, Planning Supervisor Steve Warren said that the planning staff recommended approval of the request, which had received prior approval from the City of Statesville.
Warren cautioned commissioners, however, that the site was near the county landfill, which “at times, might not be too conducive for a housing development.” The minutes state that Thomas, along with Twin Oaks Golf Club’s general manager, Patty Keath, and Equity Commercial Property’s Frank Harmon – “all interested parties or developers in the housing project” – were at the meeting to encourage county approval. “They said having a landfill in close proximity to a housing development was ‘not new ground,’” the meeting minutes read.
Also according to the minutes, Iredell County Manager Joel Mashburn said that the area had “traffic, noise and occasional odors.” Keath added that “methane gas (from the landfill) could occasionally be smelled (from the golf-course property), but only on a really hot day.”
But Iredell County Commissioner Sara Haire Tice – who was chair of the commission at the time – noted a positive element to the proximity of the would-be residential project to the county landfill: homeowners would have city water.
The request for zoning jurisdiction was added to the commissioners’ consent agenda and later approved.
To read the minutes from the Dec. 20, 2005 meeting, click on the documents below:
Twin Oaks Golf Development, LLC “developed preliminary plans for a 335-home golf course community,” Thomas said, adding in his statement to the Report that “the potential profit margin of the home sites after expenses including the value of the improved golf course was determined to be in excess of $9.5 million.” It is unclear who made that specific determination.
Thomas said the company then acquired a $3.3 million loan, apparently from Catawba Valley (now CommunityOne) Bank, “to purchase the property and to develop approximately 1/3 of the home sites.”
The company, said Thomas, began “engineering the subdivision, clearing trees and making improvements to the golf course, including landscaping, new cart paths, remodeling the club house, acquiring new golf carts and building an outdoor pavilion.”
Approximately $2.5 million of the $3.3 million was spent on the purchase, engineering, planning, improvements and interest on the loan, Thomas said.
He said he and his partners “began negotiating in earnest with a large homebuilder to buy all the lots in an effort to realize the anticipated return on the company’s rather expensive investment.” But that builder backed out, so the company “was left looking for other options” and “began working with several small builders to purchase the future lots,” Thomas said.
That’s when Twin Oaks Golf Development, LLC contacted the county landfill office, said Thomas, to find out “when it would be finished with final landfill activities being conducted next door to the golf course.
“During that discussion, and in light of our unanticipated delays with potential construction partners,” Thomas said, “we disclosed that the project was being delayed and might even be sold to another developer.”
The county, according to Thomas, contacted Twin Oaks Golf Development, LLC “and indicated that if the property was for sale they might be interested in buying it to expand its landfill.
“Negotiations ensued, a selling price was discussed, and the county was not willing to pay what the company believed the overall property was worth at the time,” said Thomas. But since the company “was receiving pressure from its lender to move forward with the road construction, even though no contracts had been signed with builders to buy the lots,” Thomas said, “the company decided to continue negotiations with the county at a reduced price with the mutual understanding the county would lease the golf course back.”
Coupled with that, the company “felt an obligation to keep the golf course open and the employees on staff for as long as possible,” Thomas said. Therefore, “an agreement was reached and a sale was made under those terms,” he added.
Thomas said that the development company, at the time of sale, “had the very strong opinion that it was not getting as much for the property through its sale to the county as it could if it were to finish the development” or sell the property to another developer. But the company went through with the sale “because it felt the county could purchase the property sooner than any other potential buyers.” And that, he said, “would eliminate the company’s risk in the investment much quicker.”
By now, it’s November 2007. County commissioners were working on a “school improvements” campaign, planning to borrow $106 million in Certificates of Participation (COPS) to make capital improvements to various county schools. The COPS package was increased to $115 million in early December. In mid-December, the commissioners voted to purchase the golf-course land for $4.75 million.
In a Jan. 15, 2008 meeting, commissioners set the public hearing on the COPS package for two weeks later, on Jan. 29. It was also during the Jan. 15 meeting that the purchase of the golf-course land was added to the COPS proposal, increasing the total bond request to not-to-exceed $120 million – $113 million of which the county eventually issued.
Below are minutes from various meetings of the Iredell County Board of Commissioners, showing the evolution of the COPS bond package. Click on the documents to enlarge:
(The minutes above are from Nov. 6, 2007, when commissioners were discussing a "not-to-exceed" $106 million COPS bond package for improvements to various county schools.)
(These are minutes from a Dec. 4, 2007 briefing of county commissioners; the COPS package increased to "not to exceed" $115 million for "the financing of certain school facilities.")
(These are minutes from the county commission's Dec. 6, 2007 "mini-retreat." In a review of capital needs, no mention is made of the need to purchase land to expand the landfill.)
(These are the minutes from the Jan. 15, 2008 county board meeting, when the golf-course land is included in the COPS package. During this same meeting, commissioners scheduled the Jan. 29 public hearing. The COPS package increased to "not to exceed" $120 million.)
(Above are the minutes from the Jan. 29, 2008 public hearing.)
(These are minutes from the county commission's Feb. 5, 2008 meeting, showing the approved resolution regarding the COPS package.)
Also in January 2008, Iredell County Waste Management received a certified appraisal by Hawkins Appraisal Serve that placed the “highest and best use” of the golf-course property at $2.5 million.
But three months after receiving that appraisal, the county closed on the golf-course property for $4.75 million. And less than one month after taking over ownership of the property, county assessors appraised the property value at about $1.6 million.
To see the May 23, 3008 appraisal card, click on the document below:
After purchasing the property, the county attorney stated that the county had no intention of going into the golf business. But as a condition of sale, the county negotiated a “lease-back” agreement with Twin Oaks Golf Development, LLC, which stipulated that the county would receive 50 percent of the golf-course operation’s annual net profits, but a guaranteed payment of no less than $1,000 a month.
To read Iredell County's original lease agreement with Twin Oaks Golf Development, LLC, click on the documents below:
A consultant hired by the county to review the golf-course lease advised against the county asking for a percentage of net profits because the number could be “easily manipulated” by the lessee.
In three months this summer – May, June and July – the county received a combined total of $4,000 in rent, while the net-profit of the golf-course operations was $55,784 -- $20,015 in May, $20,532 in June and $15,237 in July.
The balance of one-half the net profits will be due no later than March 31, when the county, said Mashburn, also requires “audited financial statements to be submitted … for the preceding year.”
Thomas said that after Twin Oaks Golf Development, LLC sold the golf-course property to the county, “the golf management company called Twin Oaks Golf Club, LLC was transferred to the golf course manager of Twin Oaks who has been working there for 20 years. She is now the sole owner of Twin Oaks Golf Course, LLC.”
Just last week and after accepting bids, county commissioners approved a new operating lease with Twin Oaks Golf Club, LLC for a period of up to nine years, said Mashburn. Effective Jan. 1, “the lease payments to the county will be $2,000 a month and 3 percent of the gross receipts,” he added.
What oversight or monitoring does the county utilize to protect our investment? According to County Finance Director Susan Blumenstein, county staff makes “on-site observation visits to insure the course, equipment, and facilities are being maintained as required by the lease.” Also, she said a certified public accountant provides the county a monthly “‘cash basis’ financial statements for golf course operations.”
Why didn’t the county purchase the golf-course land in November 2005 when it was sold to Twin Oaks Golf Development, LLC for only $1.5 million? The answer is simple, said Mashburn: because the county didn’t know it was for sale. “What really triggered the county’s interest was when it came out in the paper that the new owner planned to put housing units in and around the golf course,” he said. “We felt that if that occurred, it would forever remove this land for possible landfill expansion, plus it would probably lead to numerous complaints from the new neighbors.”
Mashburn – who retires as county manager on Feb. 1, 2009 – said the county has been looking at the potential expansion of the landfill since 2004, when consultants told the county that it had 10-12 years of life left in the existing landfill. The county’s options: look for a new site elsewhere in the county or begin shipping waste to commercial landfills.
When Twin Oaks Golf Development, LLC made the golf-course property available for purchase in December 2007, Mashburn said it was a perfect opportunity for the county. “When the existing life is run out of the current landfill,” he said, “it will be almost impossible to relocate the operation to another location in the county. The possibility of finding adequate acreage will be almost impossible, to say nothing of the cost of relocating or restructuring the infrastructure which would cost well over $10 million for the infrastructure alone. It is in the best interest of all the citizens to be able to stay in the current location for as long as possible.
“By purchasing the golf course,” Mashburn added, “we should be able to stay at that location for about 50 years.”
He said the county does not anticipate expanding the landfill onto the golf-course property for another 12-15 years.
It is unclear if the county, before agreeing to purchase the 189 acres, thoroughly considered alternatives to solid-waste disposal or technological advances that could render landfills useless within the next 12-15 years. “Presently the only other effective alternatives to landfilling are cost prohibitive and very unpopular with most citizens” Mashburn said. “We are going a lot toward recycling to help reduce the amount going into the landfill.”
By the time that the landfill – if and when the county expands it – runs out of space, “hopefully suitable technology will be developed … so that it is no longer necessary to take up valuable land to bury the garbage … our society generates.”
Without an immediate need to expand the landfill – without compelling evidence suggesting that the landfill operation will ever need to be expanded, or even need to exist in a decade – did the county make a good decision in sinking $4.75 million into a piece of property that is worth far less than that? How much thought was put into the multi-million-dollar purchase, when the first time it was introduced for discussion was December 2007 and only a month later it was tucked into the county’s school-improvements bond package? And since many of the people integrally involved in the transaction have established associations with one another, the question must be asked: Did the business deal pass the muster of an “arms length transaction”?
Ben Thomas – the managing partner of Twin Oaks Golf Development, LLC – has served on the board of directors for the South Iredell Community Development Corporation (SICDC) since at least 2007 and is the organization’s attorney.
Iredell County Commissioner Sara Haire Tice and County Manager Joel Mashburn have also served on the SICDC’s board of directors since 2007, according to a roster of membership provided to the Report earlier this year by the Mooresville-South Iredell Economic Development Corporation (MSIEDC).
Woody Washam is President of the SICDC and – like Thomas, Tice and Mashburn – has served on the board of directors since at least 2007. Washam is also the market president of CommunityOne Bank (formerly Catawba Valley Bank), which provided the multi-million-dollar mortgage to Twin Oaks Golf Development, LLC to develop the golf-course property.
When Twin Oaks Golf Development, LLC sold the property to the county, the development group still owed Catawba Valley about $2.5 million on the mortgage, according to the HUD-1 settlement statement associated with the transaction.
To view the statement, click on the documents below:
When asked about the risks involved in providing a $2.5 million mortgage against a piece of property in which ownership was only $1.5 million (and the appraised value was approximately the same), Washam said that the HUD-1 statement “only will tell you part of the story of what is going on and the overall transaction itself.
“I am sure that you are aware that how a bank structures loans is based on many variables,” Washam added.
Thomas said in his statement to the Report that the sale of the golf-course property to Iredell County “was certainly a good and fair transaction under the circumstances as they existed at that time.
“It was good for the employees at Twin Oaks Golf Course, and it was a very smart and prudent investment by the county,” he added.
Thomas said that the county “paid approximately $25,000 per acre" for the golf-course property, "which was below the market value at the time." In addition to that, Thomas said, "the county now enjoys the benefit of post-sale revenues from the lease of the golf course until it needs the property to expand the existing landfill.”
He also pointed out in the statement that "the individuals associated with Twin Oaks Development, LLC and Twin Oaks Golf Course, LLC are private citizens and are not public officials." While granting "express permission" for the Report to use the company names and information included in the statement, he "expressly and strictly prohibited" the use of "individual names of persons associated with or employed by Twin Oaks Development, LLC and Twin Oaks Golf Course, LLC."
To read Thomas' full statement, click on the documents below:
Mashburn has pointed out that county staff, not commissioners, recommended purchasing the land, and he defends the county’s decision to buy it: “We were well aware of how much the owners paid for the land, and we also knew how much we had appraised it for tax purposes,” he said. “We knew that the owners were asking much more than supported by the above, but we all know that the real value of a piece of property is what a willing buyer and a willing seller are able to agree on the purchase price being.” Mashburn has also said that landfill fees, and not property taxes, will be used to repay the debt from the golf-course land purchase.
Neither Tice nor any of Iredell County’s other four commissioners – Marvin Norman, Steve Johnson, Ken Robertson and Godfrey Williams – responded to Report questions last week. Robertson was the only commissioner to contact the Report, asking for additional time to answer the questions.
I will post their responses if/when I receive them.
County Election 2008: Six candidates are vying next week for three open seats on Iredell County’s board of commissioners. Scott Keadle will join Williams and Robertson as the county’s three Republican candidates on the Nov. 4 ballot. Tice’s seat is also open this year, but she chose not to seek re-election.
Democratic challengers for the county commission seats are Chuck Gallyon, Barbara Orr and Mark Vanek.
The two top vote-getters receive 4-year terms on the county commission, while the candidate who finishes third receives a 2-year term.
(A friendly reminder: Ben Thomas raised a valid point in his response to Report questions: the employees and associates of Twin Oaks Golf Development, LLC are private citizens and not public officials. At the same time, those people became "public figures" when they participated in a public transaction, involving public money. That being said, I welcome and encourage open dialogue about the issues brought to light in this article, but I urge anyone who plans to post a comment to be civil and not to make unsubstantiated allegations against the people named in the article. If any unsubstantiated allegations are made, I will promptly remove them.)