Business

County gets $6 million bond for Seven Falls failure

By Bill Moss, Published: October 11, 2012

Henderson County had received the $6 million it was owed when a developer failed to complete work at the failed Seven Falls Golf and River Club subdivision on the French Broad River in Etowah.

Now the question is, how much work can be done to repair damage caused by the suspended real estate development, and what ought to be done first.
Henderson County officials received the $6 million in separate checks $3.24 million from Synovus Bank last week and $2.76 million from Lexon Insurance Co. on Thursday, the bank and insurance company that had fought the county's efforts to collect the performance bond posted by developer Keith Vinson.
"It's a good thing that that part of it's over," said County Manager Steve Wyatt. "I worried about that."
The $6 million payment came about a month after the insurer had filed a notice of appeal of an appeals court ruling in favor of Henderson County. The county won its lawsuit at the trial court level in August 2011, when Superior Court Judge Mark Powell ruled that the county was entitled to collect on the performance bond.
The settlement ended with a consent order filed Oct. 5 and signed by Judge Powell, giving Henderson County the money. To reach the settlement, Henderson County agreed to drop its claim on the interest that had accumulated on the bond, about a half-million dollars.
County officials say they worried about the financial stability of the bank and the insurance company.

"The County's legal case has always been one that I viewed as very strong," County Attorney Charles Russell Burrell said in a news release. "I believe that the Commissioners wanted to move forward with their role of attempting, within the limits set by the General Statutes, of protecting those who purchased lots within the subdivision.
"The Commissioners also noted the recent (August 29, 2012) downgrade by A.M. Best of Lexon Insurance Company, and the 'negative outlook' for the company that Best noted," Burrell added.
County officials believed the financial downgrade of the insurance company jeopardized its ability to pay claims. Getting the money now was the safer route to ensure that the county had money to begin to repair the damage caused by neglect and do as much of the road building and utility line installation as possible, the officials said.

Seven Falls was huge in size and ambition. Anchored by an Arnold Palmer-designed golf course, the development plans unvailed in 2007 included 700 single-family lots, 164 townhomes, 24 lodge and inn rooms and 36 condominiums. In a 14-page development agreement signed in May 2008, Henderson County said that the developer had invested $30 million and was expected to invest $180 million in a development that would ultimately have a value for tax purposes of $1.25 billion.