Developer Mike Ross was in U.S. Bankruptcy Court in Knoxville to answer questions about Tellico Landing LLC, the development firm behind the Rarity Pointe community in Lenoir City.
Tellico Landing filed for Chapter 11 bankruptcy protection in June, listing assets including 204 residential lots and a golf course. An entity called WindRiver Investments LLC, whose president is Joseph Ayres, had purchased the project's debt from SunTrust Bank and scheduled a foreclosure auction, but that auction was forestalled by the bankruptcy.
At Wednesday's bankruptcy hearing, Ross said another of his businesses called LTR Properties spent approximately $13 million building the golf course at Rarity Pointe, but he estimated that the course's current value is around $10 million. He estimated the remaining property was worth approximately $20 million, and told the bankruptcy trustee that those would be "somewhat fire-sale prices."
One of the partners in Rarity Pointe is Robert Stooksbury, and Ross said Wednesday that he thinks WindRiver Investments, which bought the note for the project, may be related to Stooksbury. Ross's attorney cited a family relationship, an apparent reference to the fact that Ayres's son is married to Stooksbury's daughter.
Ross indicated it's been more than two years since most of the lots have been sold by his company at Rarity Pointe, and bankruptcy trustee Patricia Foster pressed him to explain how his company plans to emerge from Chapter 11. Ross said Tellico Landing officials are having discussions with a sales and marketing firm and have explored debtor-in-possession financing, adding that the Tellico Landing group is formulating a plan that will include aggressively marketing the project over four or five years.
A resident of the community also attended the hearing and asked about amenities that had been planned at the project but were never built, including a swimming pool and clubhouse. Ross indicated the social membership fees charged to buyers — originally $10,000 but later increased to $20,000 — were used to build the golf course.
Questioned by Lewis Howard, an attorney for WindRiver, Ross later said those fees did not entitle buyers to use the golf course full-time, although he said residents did have privileges at Rarity Bay, another community he developed. He acknowledged that the fees were not put into escrow for construction of the clubhouse, pool or tennis courts.