Hendersonville Times-News Jun. 27, 2010
Let’s learn from Seven Falls debacle
Published: Sunday, June 27, 2010 at 4:30 a.m.
Last Modified: Friday, June 25, 2010 at 7:10 p.m
The problem with booms is they are invariably followed in the business and economic cycle by busts. One of the only upsides to a downturn is it allows us to ponder what went wrong and take steps to be better protected against economic blows.
The bank foreclosure of Seven Falls Golf and River Club,
planned as Henderson County’s largest subdivision ever with 900 homes
on 1,400 acres, is a good example. It points to weaknesses in
regulations intended to protect the environment, taxpayers and
A U.S. Bankruptcy Court judge threw out Seven Falls’ case for Chapter II bankruptcy Thursday, clearing the way for the National Bank of South Carolina to continue foreclosing on the property. Developer Keith Vinson says he has a plan to keep the project moving forward. Excuse us if we take that with a grain of salt.
Vinson has been talking up Seven Falls for years since he first proposed the mega-development in the formerly undisturbed Pleasant Grove valley in Etowah. He also said the development would follow all environmental rules and development regulations. Seven Falls has done neither.
The U.S. Army Corps of Engineers revoked Seven Falls’ permit to fill in 7,000 feet of mountain streams and 1.4 acres of wetlands after the development repeatedly violated environmental rules designed to protect water quality.
Seven Falls violated terms and conditions of its permit by filling creeks without authorization and failing to complete mitigation work, said Scott Jones, supervisor of the Corps’ Asheville office. The development also failed to pay $697,000 into the N.C. Ecosystem Enhancement Program to restore other streams in exchange for being permitted to fill waterways on its land.
The Corps has told Seven Falls to remove all the fill material and restore the streams to “pre-construction conditions.” Meanwhile, the N.C. attorney general is considering legal action against the development after citing it for numerous water quality violations.
The main issue is sediment running into creeks, a problem that has plagued neighbors of developments across Henderson County for decades.
“They constructed acres of roads out there, and they are not maintained. They are being eroded,” said Chuck Cranford, an environmental specialist with the N.C. Division of Water Quality.
Restoring Little Willow Creek and its tributaries, which make up an entire watershed flowing into the French Broad River, should be a priority. Stream monitoring by the Environmental and Conservation Organization has documented an 80 percent decline in aquatic life due to silt and sediment entering the streams from construction.
Henderson County has also fined Seven Falls $12,000 for sediment violations in addition to $28,000 in fines levied by the state. Seven Falls appealed but did not bother to show up at an April hearing, where the fine was upheld. Vinson claimed he was never informed of the time when the hearing would take place.
Christine Myatt, one of the development’s attorneys, said she was not familiar with the particulars of the violations but said the Corps had no right to revoke the permit. She sent a letter to the Corps saying she believes the agency revoked the permit because Seven Falls never paid money into the N.C. Ecosystem Enhancement Program.
It will be interesting to see how a judge rules on those arguments, if it comes to that. The Corps explicitly does have the right to revoke any permit it issues, but rarely does so. Brazen nose-thumbing against the federal agency comes with a cost. The question is whether that cost is high enough to prevent future violations of this type.
In the midst of all these troubles, the Henderson County Board of Commissioners recently approved a resolution seeking to get the developer’s insurance agency, Lexon Insurance Co., to pay a $6 million bond on roads and other infrastructure left incomplete.
The county is seeking the money to finish improvements that the developers promised but left unfinished, including a substation for Etowah-Horse Shoe Volunteer Fire Department. The county had already extended Seven Falls’ bond a year under the condition that work be done by June 1.
Seven Falls’ attorneys responded by saying the county had no right to place demands on the developer, and expressing indignation that the county sent the letter to all 140 owners of property in the development.
Vinson says he has a commitment from a lender for $8.5 million in financing, and a plan to pay off $5 million of the $26 million the development owes the bank, with the bank to “write off” the remaining debt. “We will buy that debt long before (foreclosure) happens,” he said.
Henderson County approved more than 12,800 subdivision lots from 2000 and 2007 in a crazy boom that looked like it would never end. One could argue that it’s nobody’s fault Seven Falls got caught in a nationwide crash of the housing market.
But that does not excuse the many problems that have gone unchecked: repeated environmental violations, unpaid debts and refusal to take responsibility. It’s time for Seven Falls to either fulfill its obligations or step aside.