Published: July 22, 2008 04:08 pm            

New River Gorge housing project hits snag

A housing development project that would have been the largest ever along the rim of the New River Gorge appears to be dramatically scaling back its plans in the face of a nationwide housing slump, a company spokesperson and Fayette County officials confirmed.

“We simply don’t have a lot of answers right now. We have stopped all construction and development at Roaring River as of this time,” said Mike Flaskey, CEO of Orlando-based Land Resources Companies (LRC), the parent corporation for the Roaring River project.

Rumors started flying in recent days that the Fayetteville office for Roaring River had closed down and that all of its employees — including project manager Tom Wagner — had been laid off. Flaskey explained that the office has indeed been shut down.

However, local residents should not take it personally — the action is part of a national reduction in LRC’s workforce. The company has released over 70 employees nationally. The corporate office went from 85 employees to only 16 in one fell swoop.

“The reason behind this is we simply find ourselves in a situation with our lenders where we can’t get folks financed,” he said. Lenders have now become a singular term for the company. As Flaskey explained it, LRC had eight lenders at the start of 2008. As of July? One.

“This one has very stringent criteria. It (the housing situation) has really put a damper on our sales pace. You may be successful with sales and marketing but, if you can’t get it (a sale) closed, you can’t fund the transaction and get the money to run your business. We had to close six sales offices around the country,” Flaskey lamented.

At one time, Roaring River had proposed building more than 2,000 houses on about 4,300 acres of land. Flaskey asserted that the company hopes to move ahead with Phase One of the three-phase project — which consists of 450 units — but even that is uncertain now.

“The ultimate plan for LRC is to continue developing and finalizing Phase One. Where we are today, I don’t think one would call it ‘going forward.’ We have closed down our sales and marketing development,” said Flaskey.

“They (those who have purchased lots) certainly have received a deed, a piece of property. From that perspective, they’ve got what they paid for. From the perspective of amenities, roads and infrastructure being completed, I would tell you that it’s contingent on the lenders that LRC relies on continuing to fund that community.”

Flaskey added that he hopes to know more about the development’s ultimate outcome when he meets with the company’s lenders in a couple of weeks. “We simply don’t have a lot of answers right now, and we won’t until we finish with our lenders,” he said.

“It’s not a very positive conversation we’re having, but I’m proud we’re here answering questions and facing the hard facts. We simply don’t know the outcome at this point,” said Flaskey, who vowed to communicate openly with the media and affected homeowners as more information becomes available to him in the coming weeks.



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Fayette County Commission president Ken Eskew estimated that LRC has sold 80 lots, and deals have been successfully closed on 60 of them. His theory is that LRC has simply been caught in the American housing downturn.

“They’re feeling the squeeze. In that market, the bottom has kind of fallen out. It restricts everything,” Eskew contended, adding that a spokesman for LRC told him recently that the Roaring River project would go forward with Phase One but that it would be managed from a company office in North Carolina or South Carolina.

“How do you manage that remotely? With e-mail and other technology, it’s very doable, along with periodic site visits. They will be interfacing with Tim Richardson (county zoning officer) and Dave Pollard (county resource coordinator). The pace of development of Phase One will likely be slowed somewhat.”

Eskew observed that LRC developments in Florida and the Carolinas have been much harder hit than Fayette County’s. The investment the company has made thus far in the Roaring River development behooves its continuation, Eskew believes.

“It’s hard to say what will happen. I think they have a good-faith effort there. If the economy turns (for the better), they want to close those sales they’ve made,” he maintained.

Fellow commissioner Matthew Wender was less impressed with LRC’s handling of the situation, expressing “disappointment” over the lack of direct communication between LRC and the commission over the project’s status.

“We’re supposed to have first-hand knowledge of a project of this magnitude,” said Wender.

Wender recalled that Wagner appeared before the commission to provide a project-status update on the morning of June 6 and gave a glowing report. The same afternoon, according to Wender, Wagner called Eskew to inform him that his job had been terminated.

“I’m puzzled. I saw no cautionary comments or anything else,” Wender pondered aloud. “We (commissioners) have to answer questions and can only respond with hear-say and second-hand information.”

Richardson wanted to dispel rumors such as the company’s imminent financial demise or that it is clear-cutting timber on its Gorge-adjoining property.

“Because of the economic downswing, they are putting projects on hold for now. They’re not filing for bankruptcy. They’re not going down the tubes,” he asserted.

“They’ve sold a lot of lots out there. There is a contractual agreement. Anyone who has closed on a lot, I’m sure there are safeguards in place (for homeowners). They (LRC) are weathering this storm. They said they would be in touch with me about their agenda when they know more. They are not going anywhere.”



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A spokesperson for a San Francisco-based land-conservation organization confirmed Wednesday that her group is in negotiations with LRC to purchase Phase Two of the project, which she said comprises the “bulk” of LRC’s holdings at the Gorge.

“We don’t have a deal. We’re exploring it with them,” explained Lynda Frost, a project manager with Trust for Public Land (TPL), adding that she was in touch with LRC representatives on Tuesday.

“I can confirm that. Certainly, the tract in the national park boundary is of most interest to us. The next step for us is to outline for them what we can do.”

Frost described recent developments in the housing market as “the green line of the downturn in the market.” In every economic circumstance, there are winners and losers.

She considers land conservationists to be beneficiaries of the present situation, as they are now presented with opportunities to buy lands that are of concern to parks enthusiasts.

“We’re doing this with many different places around the country, with the market as it is. This has created opportunities for TPL to go back to some of these development projects that are still in their early stages and say, ‘Hey. Do you want to sell to us for conservation?’”

TPL is a non-profit organization founded in 1972 and funded by private donations and contributions, Frost stated. It has previously been involved in other land acquisitions in the Gauley River and New River areas, she added.

— E-mail:

mhill@register-herald.com

        

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