Retirement development faces foreclosure
BY ROBERT NORRIS (firstname.lastname@example.org)
GreenBank is foreclosing on 40 acres adjacent to Asbury Place on Sevierville Road in Maryville that were previously being developed to be an active adult retirement community.
The borrowers listed by the successor trustee on the trustee’s sale notice are real estate agent Darrell Tipton and developer Mike Ross, both of Maryville.
The $3 million commercial note held by the bank was agreed to in October 2005.
According to Tipton, the default on the loan stemmed from three main factors: the collapse of the real estate market, the decision by Asbury Place to not follow through on an agreement to establish a connection between Tipton’s development and Asbury, and a decision by GreenBank to no longer accept just interest payments on the loan.
It’s that last element that has brought foreclosure to the project that has roads and utilities for 120 zero lot line residences and room for 80 more. Tipton said GreenBank came to him about 90 days ago and asked what his plans were for the property.
“I was content to sit here and pay interest, hoping that eventually this market is going to turn around,” Tipton said.
GreenBank — dealing with $145.8 million in nonperforming loans it reported at close of 2010 — was not willing to wait.
“That decision was not done locally — I can’t say anything but nice about them. But people in Greeneville or the federal people are calling the shots,” Tipton said.
“There’s right at $3 million owed. The bank wants 10 to 20 percent capital reduction or to set it up on amortization. They weren’t happy with just catching the interest.”
The interest, which had started at 3½ percent, rose to 6 percent, according to Tipton.
A GreenBank official said the bank could not comment except to refer to the public notice.
Tipton said he decided to get out when continuing the project seemed hopeless. “It got to the point where you can only pour money down a well for so long.”
Tipton and Ross, who did not return a phone call, have invested together previously. They jointly sold the Luther Jackson farm property on Old Knoxville Highway at Pellissippi Parkway through the Blount County Economic Development Board which has installed infrastructure at its Pellissippi Place venture. The joint investors on the research and development park are Blount County, Knox County, Maryville and Alcoa.
And GreenBank has previously loaned money to Ross for his Rarity Community resort and residential developments, and foreclosed on some.
Asbury Centers Inc. sold the 40 acres next to its retirement community in 2005 after deciding not to develop the land itself but to let a professional real estate developer handle the project, according to Tipton.
“They discovered they did not have the expertise,” he said.
Asbury already has independent living residences on its property. When owners of those units decided to transfer into an Asbury facility with a higher level of care, an agreement assures Asbury will buy back the residence and put it back on the market.
Tipton said he and Asbury had agreed to work out a similar buy-back and services arrangement with his development.
“I thought we were rocking and rolling and we had an investor willing to help to build. Then Asbury changed their mind.”
Tipton attributed the change in the plan to a change in management at Asbury Place.
‘Nothing in writing'
Bernie Bowman, who was chief executive officer at Asbury at the time of the sale, said he had discussed a contractual arrangement with Tipton, but there was no contract signed, no agreed-to dollar amount, and no agreement about what services would be rendered.
He agreed Asbury had undergone a change in management and a new long-range plan had been established that did not include the 40-acre development. The plan called for higher density development on Asbury’s existing property.
“In the conversation we said to him, as he started marketing, that if he wanted to offer a package that included meals and activity space, we would be willing to develop the product and he would pay us. It was not the full continuum of services,” Bowman said.
“It was a verbal agreement, nothing in writing, just conversation.”
Then came the delays over several years, according to Bowman.
“If he had gone about marketing in a timely manner, and if I had continued as CEO, we may have very well put that package together. But he was not able to market in the time frame.”
He also noted that Asbury had already shown it was capable of developing privately-owned residential units without turning the project over to outside developers.
“I think that sometimes people in real estate don’t realize that marketing an active adult retirement community is a different product. Mr. Tipton didn’t have that experience,” Bowman said.
Tipton said it took time to get Maryville Planning Commission approval. The city also delayed the start of grading until access to Sevierville Road was approved, and that required engineering studies. As infrastructure development began, inadequate soil was discovered. Dirt that would not compact properly had to be removed and replaced.
“It finally got to the point where we were getting close to finishing it up. We had a party interested coming into the venture and build homes. During that time Asbury changed management, said basically, we’re not interested in doing that, we’re going in another direction. Consequently we lost our investor interest,” Tipton said.
In 2007-2008 the real estate market plummeted and new construction nose-dived.
Bowman acknowledged the challenges to the project, but rejected the idea that Asbury was a primary reason it failed.
“The idea that this (change in Asbury’s plan) would be one of the proverbial straws that broke the camel’s back is stretching it,” Bowman said.
Asbury project proceeds
Currently, as foreclosure looms next door, Asbury is well along in implementing its long-range plan. Construction is under way at Asbury Place on its new St. Claire Apartments, part of a $6 million project that also includes a new wellness center and dining room and renovations to the existing clubhouse. Construction is expected to be completed by spring of 2012.
Joy Evans, The Asbury Group’s regional director of marketing, said commitments to buy St. Claire Apartments have been going well. Only eight units are left.
“It’s done so well we’ve already added one building,” Evans said. “We’re very pleased with the way things are going.”
As for the 40-acre project, Tipton believes he knows what’s next.
“I think you’ll see the bank buy it back. I’d be surprised if that’s not what happens,” Tipton said.