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ETOWAH — Seven Falls landowners are facing an even longer delay to get answers about the future of the failed development.
Legal questions have stalled Henderson County's ability to move ahead on roadwork, erosion and water and sewer lines. That leaves lot owners with property they cannot access, and banks holding land that has little value.
County Attorney Russ Burrell told the Henderson County Board of Commissioners last week that the county is stuck between the demands of state and federal regulators and the possibility of a lawsuit from landowners if it starts on work it cannot complete.
The county last year received a $6 million payment from a bond that developer Keith Vinson had to take out as part of the planning and zoning review.
The cost of the work the bond was supposed to guarantee — the roads, stormwater drainage and water and sewer lines — is greater than $6 million, Burrell said. If the county spends money without actually completing all the work the bond insured, Burrell said, the county could be exposed to a claim from property owners for failing to do it all.
"They clearly can bring that lawsuit for not having done the things that that improvement guarantee was there to cover," he said.
The director of a Henderson County environmental organization said the county should look at options other than roadwork and water and sewer lines, and state Rep. Chuck McGrady offered to write legislation that could grant the county more flexibility in how it sends the $6 million.
Trying to move ahead on road building and utility lines ignores the reality of the situation, said David Weintraub, the executive director of the Environmental and Conservation Organization. Weintraub and other advocates for an environmentally oriented response — repairing erosion, restoring streambeds and fixing other damage — warned the Board of Commissioners last fall that state and federal regulators would block permits to resume work on the site unless the county settled unpaid bills and fines.
"What it means is they need to look back at what we have been talking about from the beginning," Weintraub said. "You can't just go and assume everything is the same. This is a different world from five years ago. It's not just the damage that was caused by a developer who had no interest in protecting what was here. The size and scale is just not feasible in today's world."
Weintraub said ECO had done some investigation of land ownership in the 1,400 Seven Falls development, which was the largest development ever permitted by the county and was projected to have 900 homes, an Arnold Palmer-designed golf course and an upscale shopping village.
"I think when it comes down to it and the smoke clears there's going to be very few actual bona fide landowners," he said. Many of the lots are either owned by a lender after foreclosure or by associates of Vinson or paper companies, he said.
"When the Corps of Engineers looks at the disturbing the land, one of the things they ask is who does this benefit?" he said. "The question is why would we do all the stuff again that did so much damage to the streams and slopes."
State Rep. Chuck McGrady last week offered to help by writing legislation that would give the county more flexibility in how it could use the $6 million.
"I told them that if they're running into impediments in terms of state law that requires them to build roads or infrastructure that just doesn't make sense, then come back at me and I'll try to help you with it," he said.
At stake, McGrady said, is a bigger question that has risen from the many half-finished subdivisions around the state abandoned by developers. Henderson County already requires developers to post bonds to insure that promised road and utility work gets done.
"But there are counties that aren't doing that," McGrady said. "Somebody's sitting there and people have moved in and all of a sudden the infrastructure isn't there because the development went belly up."
The legislators could write a law to give counties more flexibility in how bond money is spent, permitting the more conservation-oriented response that Weintraub says should happen at Seven Falls.
"It's sort of an open door," McGrady said.
County Manager Steve Wyatt said he appreciates McGrady's offer but is skeptical that the Legislature could write a law that really would free the county to do work other than what's spelled out in the bond agreement.
"We don't believe we have that flexibility now and I don't think the Legislature could write a law that turns back the clock," he said.
Weintraub said a new road would not guarantee that hundreds of vacant lots would suddenly become marketable.
"If you put those roads in then plan B is out the window and now you're stuck with this plan and if it does not go forward (as a housing development) the roads ultimately fall back into the creek and you have a worst disaster than you had before," he said.
McGrady said he has some sympathy with Weintraub's point.
"I understand that and generally agree," he said. "Why would we want to be about building essentially roads to nowhere, particularly when we've got ongoing erosion issues that really need to be addressed?"
Unpaid fees, fines total $800,0000
The legal question is not the only barrier to proceeding.
Vinson never paid the U.S. Army Corps of Engineers the $800,000 bill he was supposed to pay for permission to cross streams numerous times on the property. The development includes a substantial covered bridge over one of the streams and smaller crossings at other places. And the developer faces thousands of dollars in fines from federal, state and county regulators, all unpaid.
Burrell laid out two options. The board, he said, could file an interpleader lawsuit in federal court seeking clarification and the court's blessing for spending money and going work. The county, he said, would essentially say to a federal judge, "We've got this money, court, what do we do with it?"
The other option, which the board authorized, was to propose a meeting with "all those concerned" — the Corps, the state Division of Water Quality, property owners, mortgage lenders — and seek unanimous approval from every single one on how the money could be spent.
"I won't say I'm particularly sanguine about the possibility of that happening but it could happen and I hope it will," Burrell said.