In November 2008 The Cliffs Communities, Inc. will begin showing land in their latest planned community, The Cliffs at High Carolina. This mountain slope development is located near Asheville, North Carolina.

During the private sales presentation, participants will have the opportunity to view the layout for the 3,200 acre mountain property that define High Carolina. Guests will be shown a map for the centerpiece Tiger Woods golf course and selected homesites. They will almost certainly be told that the High Carolina lots which are priced from about $500,000 to more than $2 million are desirable real estate. While this information may be true there are two factors that may undermine the future value and saleability of land in this development.

Geologic Hazards

Mountain land in the 21 county region known as Western North Carolina is inherently unstable. Professionals and lawmakers warn that the permitting of residential construction on unmapped and untested mountain slopes has caused and will continue to result in costly uninsurable property loss. In October 2006 Governor Mike Easley stressed the importance of the Western North Carolina landslide mapping program with this comment,
“These maps will show which areas are prone to landslides and that will help developers, county officials, and residents decide where to safely build homes, roads, and other structures.”

The Cliffs Communities, Inc. knew when they purchased the Buncombe County tract that many of High Carolina’s building sites were likely hazardous. In August 2004 Buncombe County officials issued a report which stated that the county’s land was highly susceptible to slope failures. Preliminary Buncombe County geologic hazard maps support these findings. (In September 2004 landslides devastated fifteen counties in the region).

Considering the risks, this hazard information should be disclosed on The Cliffs at High Carolina website.

It is unknown whether the Cliffs’ staff will advise their prospective clients that High Carolina land sales are subject to federal law under the Interstate Land Sales Full Disclosure Act. This law demands that all interested buyers receive a comprehensive Property Report regarding the land for sale. The developer must provide a description of the land and disclose all known geologic hazards. Experts define a geologic hazard as a natural geologic event that can endanger human lives and threaten human property.

Encumbrances, Mortgages, and Liens

HUD requires the following warnings in all Property Reports:

“A person with legal title to property generally has the right to own, use and enjoy the property. A contract to buy a lot may give you possession but doesn’t give you legal title to the lot. You won’t have a legal title to your lot until you receive a valid deed. A restriction or an encumbrance on your lot, or on the Subdivision, could adversely affect title to your lot.”

The Cliffs at High Carolina Property Report must disclose all encumbrances and restrictive covenants.

The Cliffs Communities, Inc. is a privately held company but because their sales activities are regulated under provisions of the Interstate Land Sales Full Disclosure Act, the company must provide HUD with a copy of their Corporate Charter and financial statements. These documents are available to the public.

The United State Department of Housing and Urban Development advises all purchasers to carefully read their Property Reports before signing anything. The most important question that the government asks purchasers to consider is “If the developer defaults on the mortgage or goes bankrupt, could you lose your lot and investment to date to satisfy a claim against the development?”

The Cliffs’ eighth master planned community, The Cliffs at High Carolina has been controversial since the project was announced in June of 2006. In John Boyle’s article for the Asheville Citizen Times “Builders rush to beat stricter slope rules,” Cliffs President Jim Anthony acknowledged that his company submitted the application to beat the deadline. The Cliffs at High Carolina is a 2500+ acre residential/resort enclave located on steep mountain slopes in Buncombe County.

In December 2007, The Cliffs Communities won a lawsuit they had filed against Buncombe County. At issue was the county regulation restricting the density of condominium or apartment complexes on steep mountain slopes. Buncombe County Superior Court Judge Ronald Payne ruled that The Cliffs Communities did not have to comply with the county rules. For more information please see “Cliffs can dodge building limits” by Mark Barrett in the Asheville Citizen-Times January 12, 2008.

The real estate web-site for The Cliffs Communities provides the following description:The Cliffs at High Carolina is nestled in the high mountain meadows of the Blue Ride Mountains at an elevation of nearly 4,000 feet and with views reaching 50 miles.

In 1998 the North Carolina Department of Emergency Management found that the mountain slopes of Buncombe County were at high risk for landslides.

The Buncombe County Hazard Mitigation Plan (August 23, 2004) stated that the steep slopes and fragile soils of Western North Carolina place Buncombe County at a high risk of landslides. This report was issued just weeks before the 15 county catastrophic slope failures of September 2004.

What are the plans for The Cliffs at High Carolina?

According to Mr. Anthony, “The final decision has not been made, as to how many homes and what kind will be built on the land.” Mr. Anthony said his company hopes to make an announcement related to the golf course being designed by Tiger Woods, in the coming months. Later in the year it will announce details of of the first offering for sale of lots in the development. Please see Mr. Barrett’s article.

Should prospective buyers of property in The Cliffs at High Carolina be apprised of the identified landslide risks with a Natural Hazards Disclosure Statement?

Please be advised that you are buying property in a high risk hazard area and this will affect your ability to obtain insurance. Buncombe County, location of The Cliffs at High Carolina, is in a state designated landslide district. The slope stability information provided by the federally mandated landslide mapping program was not available at the time this residential project was approved. The Cliffs at High Carolina is being developed under regulations that do not require site specific stability investigation.

It is unknown whether Mr. Anthony will provide due diligence for The Cliffs at High Carolina. Safety concerns for this project should dictate soil analyses and site specific studies for all roads and building sites.

If The Cliffs at High Carolina were being developed in California, state law would require site specific investigation and disclosure of landslide risks. For
more information about Western North Carolina landslides
please visit wncsos.blogspot.com

PS I would like to welcome David Hitch to the Carolina Mountain Realty & Development Team.

Gambling with the Unknown

Fifteen Western North Carolina counties were declared federal disaster areas in September 2004 after storm remnants set off 155 landslides, caused five deaths and destroyed 27 homes.

Since these catastrophes there has been an explosion of mountain resort development in Western North Carolina. No one is certain what impact this will have on mountainside stability, but geologists know and have stated that this increased residential and resort construction on mountain slopes is exposing more people to the threat of landslides.

Landslides do happen spontaneously but evidence shows that most slope failures in Western North Carolina are caused by construction practices. According to state geologists, building resorts and subdivisions on mountain slopes necessitates cutting roads into steep terrain and placing homes on vertical slopes. The infrastructure for this development requires burying piping for water, sewage, and septic systems in degraded and vulnerable ground. If construction for these projects is not done safely and carefully, these artificially created slope sites will fail.

Local environmental officers are also expressing alarm about Western North Carolina’s unregulated building practices. On March 27, 2006 Marc Pruett told the Haywood County Commissioners: “Currently anyone with a bulldozer and backhoe can carve out home sites and roads into the mountainside. This lack of engineering is causing homes and roads to slide down the mountain throughout the county.”

Pruett, who directs the county’s erosion-control program, has a slide show he uses to illustrate the ongoing local disasters. (”Disappearing Haywood” by Jeff Schmerker, The Enterprise-Mountaineer, October 31, 2005)

Pruett’s shocking photos show roads that have simply disintegrated as the land beneath them has shifted. There are images of chocolate-brown waterways clogged with runoff from construction. Others show slopes so steeply cut that they are continually eroding. Homes fare no better. Some have been knocked off their precarious perches by landslides; foundations are laced with cracks so big you can see daylight. Still other houses are being ripped to bits as the “solid ground” they are built on starts to move. And in just about every case, says Pruett, a combination of substandard construction and inappropriate sites is to blame.

Jeff Turner, District supervisor for Buncombe County Soil and Water, stated in a letter to a local newspaper in January 2007 ” I, along with many of you, have personally witnessed the condemned homes from past quick development of mountainous terrain. We have already learned our lesson here. We don’t need anymore of this. Some of these homes, only a few years old, are now just worthless investments. Developers who code jump or try continually to get variances on legitimate ordinances should be run out of town and forbidden to ever contract in our county again.” MountainXpress, “Economic development meets steep-slope reality” January 31, 2007

In the spring of 2005 a landslide covered Oak Street in downtown Spruce Pine. “It’s a gravity thing,” said Alex Glover, a geologist for Zemex Industrial Minerals. “It’s a fact of nature, there’s nothing that can be done to stop more debris from falling.” Mitchell News-Journal, March 16, 2005, “It’s a gravity thing” by Nathan Hall.

As reported in the Mitchell News-Journal article, Glover said the town can install permanent barriers to block or catch falling debris, but the construction will be expensive and there is no way to permanently stabilize the bank.

“It’s a bad situation,” he said, pointing to a large slab of exposed rock, its sections clearly slanted toward Oak Avenue. “It’s like a stack of dominoes, tilted, and now loosening and falling apart.” Glover said the sections of rock are called “Ash”, a group of old ocean-type sediments mixed with volcanic sediments. He said the formations, millions of years old, were originally formed to be flat, but shifted due to mountain building. He said as the rock degrades, it forms Saprolite - which is basically weathered, rotten rock.

Western North Carolina’s “Build Anywhere” standards are a developer’s dream but a potential financial nightmare for unsuspecting buyers and current property owners. State geologists and other informed professionals warn that the consequences of error can be great when homes and roads are carelessly placed on questionable mountain slopes. There are safe building locations in Western North Carolina but these sites can only be determined by state licensed professionals.

Western North Carolina Landslide Confidential

According to legislative findings and geologic investigations, landslides in Western North Carolina are serious and determinable threats to lives and property.

In February 2005 the state passed the Hurricane Recovery Act. The General Assembly found: Hurricanes Frances and Ivan wrought havoc upon Western North Carolina impacting the region on a scale not experienced before in that area of the State. The President issued two federal disaster declarations for the Western Region of the State. During Hurricane Ivan, the community of Peeks Creek was devastated by a debris flow triggered by heavy rains. The debris flow traveled speeds as great as 33 miles per hour for two and a quarter miles from the top of Fishhawk mountain. Five persons were killed and 15 homes destroyed by the flow that was estimated to be several hundred feet wide and up to 40 feet high. Other communities that were particularly hard hit by landslides include the Starnes Creek area in Buncombe County, the Little Pine area in Madison County, the White Laurel community in Watauga County, and the Bear Rock Estates in Henderson County. Further…people could not know the landslide risks associated with their housing location because such maps are not readily available. The state needs to…prepare landslide mapping for the region so that homes may be built in safe areas.

Extensive studies by the North Carolina Geologic Survey show that much of the salable land in Western North Carolina is susceptible to landslides. These areas include: steep slopes, usually greater than 30 degrees, embankments or fills, cut or excavated slopes, hillside depressions or hollows near streams and springs, eroded or undercut streams or river banks, areas below steep mountain slopes, areas on hills or mountainsides where runoff accumulates, disturbed or modified slopes on mountainsides, areas where roads cross drainage or streams on mountainsides.

Western North Carolina Realtors are currently marketing and selling this “unmapped” and potentially unsafe slope property to buyers who have no knowledge of the personal and financial risks. Investors receive no fair warning either in advertising or sales contracts that slope failures are an ever present threat to real estate values. Unless Realtors are legally compelled to disclose these significant risks, landslides will remain a well protected industry secret.

Anti-fraud statutes are clear. It is illegal to profit by schemes or tricks, by issuing untrue statements, by failing to disclose material facts, or by participating in deceitful and fraudulent business practices.

What isn’t clear is why the Western North Carolina real estate industry is allowed to conceal material facts from their clients. How can Realtors offer and sell hazardous land as a “no risk” investment? This legal question can only be answered by Roy Cooper, Attorney General of North Carolina.

Lynne Vogel
http://www.wncsos.com