County land sale raises question

Local and state officials, including the attorney general, are looking closely at a large land sale in Loudon County with some unusual restrictions.

According to documents filed with the county Registrar of Deeds, about 400 acres near Sugarlimb and Hotchkiss Valley roads sold as an investment opportunity with Walton Tennessee LLC.

Walton Tennessee is a subsidiary of Walton Global LLC, described on its website as a developer with $3.6 billion in land under management. The company is based in Scottsdale, Ariz.

“We are an American company that buys land in the path of growth to sell to American homebuilders,” Kim Kaminski, chief operating officer of Walton Global, said.

Walton paid $4.69 million for five parcels before offering for sale more than 1,000 shares conveying an undivided interest in the property for about $10,000 per share.

What observers of the deal find unusual is the list of covenants, conditions and restrictions filed on the land last year. The CCR indicates the shares in the venture cannot be transferred to a United States citizen.

“I have a real problem with that,” Loudon County Mayor Buddy Bradshaw said.

Bradshaw said he met last month with State Attorney General Jonathan Skrmetti, state representatives and county commissioners to request an investigation into the sale. He said he’s also astonished by some of the other restrictions.

According to section F-8 of the CCR, the restrictions remain in place until 21 years after the last currently living descendants of former President George W. Bush have passed away.

Most of the names filed on the deeds appear to be Chinese.

When he spoke with a Walton representative, Bradshaw said he was told the investment was designed to be attractive to investors from China who are concerned about banking in the communist country.

A sensitive communications line runs through the property, which could add to concerns about national security, Bradshaw said.

Van Shaver, District 5 county commissioner, has been following the issue since he learned of the sale several months ago.

“My concern has to do with communist China, a country that wants to destroy us,” Shaver said.

State Rep. Monty Fritts, R-Kingston, said he has worked in real estate and had never seen such restrictions on the sale of Tennessee land to U.S. residents.

“I thought the CCRs were extremely odd,” he said.

Fritts said he has concerns about national security because of the proximity of the land to sensitive government installations such as those in Oak Ridge.

Earlier this year, the Tennessee General Assembly passed House Bill 0040, which went into effect July 1. As enacted, the legislation prohibits foreign ownership of real property in the state by nonresident aliens and foreign entities if certain conditions are met.

Fritts said he asked Skrmetti if the new law would apply to the Loudon sale.

An opinion issued Oct. 2 by Skrmetti’s office did not provide a definitive answer. According to the opinion, the property transactions after July 1 might be subject to the new law, but the definition of what or who might be considered an adversary to the U.S. is not clear. Skrmetti’s office did not respond to requests for clarification.

State Rep. Lowell Russell, R-Vonore, said he did not fully understand the implications of the AG opinion and was seeking further clarification. Russell said he has also sent his concerns about national security implications of the land sale to U.S. Rep. Tim Burchett, R-Knoxville.

“The Chinese really shouldn’t own land that close to Oak Ridge,” Russell said.

Both Fritts and Russell said if the new law would not apply to the sale in question they would consider working to strengthen the law.

Tammy Gallaher, registrar of deeds, said the CCR was filed by Walton in October 2022. At least 125 deeds on the land were transferred in her office within the last few months, including some as late as Aug. 8.

In her experience, the restrictions on future sale of the property to U.S. citizens were not typical.

“I’ve never seen that before,” Gallaher said.

Michael Ruppert, principal broker with Berkshire Hathaway HomeServices Lakeside Realty in Tellico Village, said he had never heard of such restrictions on land being offered for sale in Tennessee.

Anthony Sparrow, executive vice president of assets for Walton Global, said the investment and associated contracts are structured to provide offshore investors tax and other benefits. He said the covenants and restrictions filed on the Loudon property are standard with many contracts involving foreign real estate investment.

Sparrow said the reference to the property restrictions being in place until after the death of Bush relatives is based on a rule of perpetuity found in many real estate contracts designed to keep restrictions in effect for a specific period of time.

“They used to use Queen Elizabeth’s name,” Sparrow said.

He said the wording filed with the registrar of deeds did not include the full text of the clause that prohibits sale of land to U.S. persons, which references sales “other than the permitted disposition.” Sparrow said that means the land can be sold to a U.S. company such as a local homebuilder.

Bradshaw said a Walton representative inquired about the land being annexed by Loudon for development.

“I told him the county would fight any attempt at annexation,” Bradshaw said.

Dale and Teresa Horst have lived for 32 years on property now surrounded by the 400 acres sold to Walton. Dale said he didn’t learn of the sale until after the process was in motion.

He said he has had difficulty communicating with Walton about their future plans and is concerned local infrastructure, including roads and utilities, is not suitable for development.

“We bought this land to have a private place,” he said. “We don’t want high-density housing.”