By: Robin Ford Wallace, Reporter
have yet been signed and no fat ladies have sung, but after a hearing in
federal bankruptcy court in Chattanooga last week, a happy ending seems in the
offering for the long and convoluted story of the Preserve at Rising Fawn, at
least as far as Dade County is concerned: The Georgia Land Trust will buy the
Johnson Crook acreage from the bankruptcy trustee, the county will be paid the
half-million dollars in back real estate taxes it is owed, and the Crook’s
beautiful and cave-rich environment will be protected from development.
“It’s the best
thing that could have happened,” said Dade County Executive Chairman Ted
Rumley, hearing the news after Thursday’s hearing.
Other than, he
qualified, someone building up some enterprise that would pump tax money back
into the county – “which is not going to happen because we don’t have a sewer
down there,” he concluded.
At the Aug. 8
hearing, attorneys for the parties involved negotiated among themselves at some
length prior to appearing before Judge John C. Cook to announce they had
reached a tentative agreement to allow the sale to the land trust.
included TAS Properties, the corporate entity to which Southern Group,
developer of the Preserve, had deeded the acreage. TAS and Southern Group are
owned by the same three partners, Thomas and Joshua Dobson and Travis Shields.
None of these attended the hearing; TAS was represented by attorney David
Dade County had
scheduled a tax auction of the Preserve land owned by Southern Group for
January 2012. TAS filed for bankruptcy just days before, in late December 2011.
Dade went through with the sale only to have it invalidated when it was found
that the property had in fact been transferred to TAS, purportedly in payment
of a debt between the two companies.
creditor banks also attended the hearing on Thursday. These lenders included
Farm Credit Services of Kentucky and Cornerstone Community Bank of Chattanooga.
Cornerstone had earlier filed a petition to have the Preserve land released
from the bankruptcy in partial satisfaction of a prior judgment it had been
awarded against Southern Group. Bankruptcy trustee Richard Jahn had filed an
objection to that and in favor of a bankruptcy auction, joined presently by
Dade County as represented by Chattanooga attorney Skip Paty and by Farm Credit
the attorneys, all had agreed in principle to withdraw any legal impediments to
the sale of the acreage to the land trust, paying off the Dade taxes and
leaving some funds for the other creditors, and the judge set a new hearing for
Aug. 22 at which the deal may be formalized. Trustee Jahn said the sale could
close in as early as 45 days.
explained the delay after the hearing: Lawyers, he said, come often to the
negotiating table unarmed with the authority to agree to an arrangement on
behalf of their clients, and must obtain that consent before signing dotted
of the Georgia Land Trust confirmed on Monday morning that the sale price for
the Preserve land was around $1.2 million and that he believed the land
included in the bankruptcy was around 1,200 acres.
Also on Monday,
Angie Galloway of Tax Commissioner Jane Moreland’s office said her best
estimate of the taxes owed Dade on the Preserve parcels was $560,000.
on Thursday had spoken of the county adjusting penalties and interest owed on
the back taxes downward as a negotiation point. “Basically, it’s about how
quick do we want our money,” he said.
But Rumley said
any downsizing on the debt would be minimal. “I told Davenport that,” he said.
“I said, look, you’re going to be off the tax rolls forever and ever. These
taxes are critical.”
And Ms. Galloway
explained that interest on the back taxes had in any case stopped accruing when
the TAS bankruptcy was declared, and there was little else the county could
adjust. “The penalty portion is a state law,” she said.
Back at the
abortive 2012 tax auction, Bobby Davenport for the land trust had been by far
the biggest bidder, bidding on targeted parcels on the mountainside with a
view, he said then, at protecting Lookout Mountain’s slopes and underlying
caves. He paid at that sale $146,000 for 266 acres – only to have his check
returned when the auction was invalidated by the TAS Chapter 11 filing.
Davenport has accepted on behalf of the conservancy 435 acres donated by banks
that had foreclosed on Preserve lots.
after foreclosure at the Preserve followed the collapse in 2009 of the no-money
down, no-down-payment marketing scheme used to sell building lots at the
prospective development to “straw buyers” with no financial stake in them;
these buyers hoped to sell their lots back to Southern Group after the
development was up and running.
turned loan proceeds – typically $175-250,000 for two-to-three acre lots, many
without access to roads, water or electricity – over to the developer, who was
to make the monthly mortgage payments and use the funds to build out the
But then came
the collapse of the real estate market. Sales slowed, credit tightened and
Southern Group stopped making the mortgage payments. The Federal Bureau of
Investigation and Internal Revenue Service turned their attention to the
Preserve, and in May 2012 Josh Dobson and his associate, a loan facilitator
named Paul Gott, were indicted on fraud and money laundering charges in federal
district court in Chattanooga. The
federal indictment estimated the defrauded amount at $45 million.
Dobson and Gott
were found guilty on the more serious of 12 criminal counts and will be
sentenced in October.
A few cabins
and houses as well as limited infrastructure were completed at the Preserve,
and Davenport said he believes some of these structures are included in the
acreage he is buying for the Georgia Land Trust, but that his organization is
less concerned with these than it is with the land. “We’re not interested in
cabins,” he said.
He did not have
time for much comment on Monday but had earlier mentioned that the land trust’s
plans for the Preserve acreage are still hazy. Nearby acres at associated
conservancy the Lula Lake Land Trust, have, however, been opened for public
hiking and are being joined to Cloudland Canyon State Park by a connector trail
expected to be finished by the end of the year.