Asian Invasion 17

Mike McElhone, a resident of Sale Creek in northern Hamilton County, said his curiosity was sparked when he saw about 30 real estate transactions listed in the Chattanooga Times FreePress in late December between Walton Tennessee and what appeared to be individuals with foreign surnames.

"There was so many, it was eye-catching, which made me look further into it," McElhone said in a phone interview.

Walton Tennessee, a subsidiary of the real estate investment and land asset management company Walton Global, purchased a 187-acre parcel between Lovell Road and Dallas Hollow Road in Soddy-Daisy for about $3.3 million from the Mayfield Family Partnership in November 2022, according to the Hamilton County Property Assessor's
Office.

Walton Global's focus is "predevelopment land in the path of growth," and the company manages $3.3 billion of real estate assets on behalf of investors from more than 83 countries, according to its website.

"They're not all Chinese, or mainly Chinese," Anthony Sparrow, executive vice president of real estate in Georgia and Tennessee for Walton Global, said of the company's investors at a Loudon County Commission meeting in January. "A lot of them are Taiwanese and Hong Kongese."

These states enacted laws regulating foreign ownership of U.S. land in 2023: Alabama, Arkansas, Florida, Idaho, Indiana, Louisiana, Mississippi, Montana, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Virginia.

Source: Congressional Research Service

These states have a law prohibiting or restricting foreign ownership and investments in private farmland: Alabama, Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wisconsin.

Source: The National Agricultural Law Center

McElhone looked back at the newspaper's real estate transactions listings from previous weeks to see if he could fi nd any similar Walton transactions, and he said he was concerned with what he found.

In June 2023, more than 100 additional transactions ranging from $10,000 to $500,000 between Walton and its investors were filed in Hamilton County, according to the Register of Deeds. Deeds show at least 160 investors paid $10,000 each for one of 743 interests in the property.

The transactions are within the County Commission's District 1, represented by Commissioner Gene-o Shipley.

Ryan Jenkins, founder of the Concerned Citizens of District 1 Facebook group, of which McElhone is a member, said he's received emails and messages from other group members who question the motives of Walton's foreign investors.

"When you make an investment, you always want something back," Jenkins said in a phone interview. "How long will we have ties to the people that invest in this land? I just don't know the intentions and the motive."

As McElhone did more research into the company, he saw that Walton's real estate dealings also have drawn the attention of citizens and state representatives of Loudon County, Tennessee, where the company purchased 400 acres of agricultural land and sold interests in the land to foreign investors.

Passing a law State Rep. Monty Fritts, R-Kingston, represents a portion of Loudon County and is among the co-sponsors of legislation passed last year in the Tennessee General Assembly that prohibits foreign governments, businesses and nonresidential aliens from acquiring property in Tennessee if they are identified on the U.S. Department of the Treasury Office of Foreign Assets Control Sanctions Programs and Country Information List.

China is not a comprehensively sanctioned nation by the United States, but sanctions programs selectively target companies on the Chinese Military-Industrial Complex List as well as Chinese companies and individuals on the Specially Designated Nationals and Blocked Persons List. The U.S. also has targeted Hong Kong-related sanctions.

The legislation passed the House 83-6 and the Senate 22-4.

Sen. Jeff Yarbro, R-Nashville, who voted no, said on the Senate floor he opposes the legislation because it prohibits residents of sanctioned nations who oppose the sanctioned regime -- giving as examples Russian nationals who fled Russia because they oppose the war in Ukraine or Kurdish citizens of Iraq who were U.S. allies during the Iraq wars -- from owning Tennessee land.

"I believe this is a relatively dangerous piece of legislation if the sponsor's intent is that broad," Yarbro said. "This would simply punish those who unquestionably have been allies and are well within their rights under current law to be property owners, and I don't think that that's right."

He said he also opposes the legislation because it forces people who may not have been to their native country for a decade to forfeit their property if that country becomes sanctioned.

"It is hard ... to think of something that is more inconsistent with the foundation of the country that we recognize the people --all people -- have rights to life, liberty, property,"Yarbro said.

Fritts said in a phone interview he was concerned by the language included in the covenants, codes and restrictions for Walton's Loudon County property that restrict the sale of interests to U.S. citizens and businesses.

Owners of interest in Walton's Soddy-Daisy property are bound to the same restriction.

Sparrow, of Walton Global, said at the Loudon County meeting in January that the covenants, codes and restrictions state that interests in the property can be sold to a U.S. resident or business if 60% of investors vote in favor of the sale.

"We do set it up so it's not sold, and the reason it says not to an American resident is because it's a foreign investment and it's set up as a foreign investment and we don't want it to be sold," Sparrow said. "If a U.S. citizen wants to invest, we have U.S. land funds and other things they can invest in."

Walton spokesperson Hamilton McCulloh did not respond to a question from the Times FreePress regarding the reason for separating foreign and domestic investment vehicles.

By prohibiting U.S. citizens and businesses from purchasing interests in the property, Walton can legally avoid complying with U.S. securities laws, Stewart Crane, a Loudon County attorney specializing in property and estate law, said in a phone interview.

"I'm one of those people that thinks that we're in a clear threat from the communist Chinese in many areas, and owning property in the state of Tennessee is something I'm opposed to them being able to do," Fritts said. "I fi nd it offensive that a Tennessean couldn't invest in Tennessee soil and have the same opportunity to make some money, even if Tennesseans are going to pay taxes on it differently than a foreigner would."

Codes, covenants and restrictions at Walton Global property Sparrow said Walton closed on the property in Loudon County before July 1, 2023, when the state legislation prohibiting entities from sanctioned foreign countries from purchasing Tennessee land went into effect.

Although many of Walton's Hamilton County transactions were filed with the Register of Deeds in December 2023, the deeds show that those transactions occurred before July 1.

An Oct. 2 opinion from Attorney General Jonathan Skrmetti's office states that land purchases by sanctioned entities that occurred after July 1, 2023, must be reported to the Tennessee secretary of state's office within 90 days of closing. The penalty for noncompliance is a fine of up to $2,000.

"There are a lot of Chinese companies -- not just Chinese, but other foreign countries and companies and government agencies -- that are going in and buying large tracts of farmland, and in some cases buying them close to military installations, and everybody knows the concerns about that," Sparrow said at the commission meeting. "If you just don't like the fact that foreign people are investing, that's one thing. If it's a concern over security or anything else, these 1,000 people who bought a $10,000 interest in this will never set foot on this land, will probably never see this land, and will make decisions on when it's sold ... based on the suggestion that we make to them on whether or not they should approve it and move forward with the investment, and that's primarily the extent of the involvement that they'll have in the property."

Walton's intent Sparrow said Walton's intent is to sell the undeveloped land to an American builder.

Loudon County officials questioned how Walton's investors could get a worthwhile return on their investment.

"We take investments from U.S. folks just as much as we do from anyone else, and they all look for a return, but one of the things with these particular investors is they look for safe places to invest their money to get some return, but it's relatively patient and doesn't necessarily have to be high returns if it's in a safe place," Sparrow said. "A lot of these folks, they don't have the type of investment vehicles that we have. They have governments that they are afraid are going to take their money, and they don't have stock exchange like we have and they don't have places to put it, and that's one reason North American land is becoming a popular investment."

Document Tennessee Attorney General Jonathan Skrmetti opinion on Restrictions on Foreign Ownership of Tennessee Property Sparrow said Walton is careful about who is allowed to invest in its property and has a program that runs its investors through the Office of Foreign Assets Control's sanctions lists every day.

"We're not going to violate legislation, and if it's prohibited, we won't buy any more land there," Sparrow said. "We're not buying any more in Florida right now, and if the legislation stands, we won't buy any more in Tennessee because we're not going to violate the rules of legislative laws."

The Times Free Press asked the Walton spokesperson, McCulloh, why the Tennessee legislation might not stand and did not receive a response. In an email, he said the company operates across the country and works within each state's regulations.

"We purchase land in the path of growth and abide by the laws in every case," McCulloh said. "As new laws are enacted, they could be a determining factor in our future land acquisitions."

Safe and prosperous State Rep. Greg Martin, R-Hixson, said he made the attorney general aware of Walton Global's real estate dealings in Soddy-Daisy and defers to his office concerning the legality of those dealings.

"I don't believe people from nations sanctioned by the United States government should be able to purchase land in this state," Martin said in a text message, as to why he voted for the legislation last year. "My loyalty is to the citizens I represent, not to those of hostile foreign nations. Keeping Tennesseans safe and prosperous is my priority, and my vote will always reflect this commitment."

Another piece of legislation recently introduced in the Tennessee General Assembly would prohibit certain foreign party-controlled businesses from acquiring an interest in public or private land in Tennessee and prohibit certain foreign parties from acquiring agricultural land in the state.

It also would require land acquired in violation of the act to be divested within two years of the law's enactment, as well as create a felony offense for violations of the act punishable by a fine of up to $15,000, imprisonment of up to two years, or both.

"We're just looking at having Tennessee law to be able to protect our land from adverse countries," the House bill sponsor, Lowell Russell, R-Vonore, said in a voice message.

Walton's land in Soddy-Daisy is "proposed for a development of 420 single-family detached homes," according to the company's website.

"At this time, we have not submitted for zoning for our properties in East Tennessee, as we leave those decisions to our future buyers," a Walton spokesperson said in an email.