Beaver Lake Subdivision Offered to the Highest Bidder
Last updated Thursday, June 5, 2008 5:15 PM CDT in Business
By Kim Souza
The Morning News
About two dozen spectators and a handful of interested buyers gathered in Rogers on Thursday to see one of Beaver Lake's residential subdivisions - Sunset Bay - hit the auction block.
It's been more than a year since the local developer, Wesley K. Neff doing business as Summit One LLC, filed Chapter 11 bankruptcy and leaving the project to languished in legal limbo.
Formerly touted as "one of Northwest Arkansas' premiere subdivisions" the 122 platted lots drew a lowball final bid of just $850,000, for a total sales price of $935,000 with added fees.
That's right. A little more than $7,600 per lot, compared to the $55,000 paid by area home owners three year's ago.
The sellers, Benton County Property Owner's Improvement District No. 6, had a vested interest worth $1.74 million, far short of the winning bid. The district has 90 days to close the deal, which they approved just a few hours after the auction ended. The deal is still subject to the bankruptcy court's approval.
Joe Wilson, owner of Hot Springs-based Wilson Auctioneers, said the price reflects the depressed times and sagging real estate market.
Several in the auction audience thought the 118-acre residential property overlooking Beaver Lake would command a higher price.
Wilson said the firm marketed the property nationally drawing interest from several states but those who showed up with a checkbook Thursday determined the market value.
The bids started at $500,000 and stalled quickly at $800,000. Wilson stopped and told the crowd again what the property's potential could mean to a lucky buyer.
With the skill of a television evangelist, Wilson and his assistants wooed the bidders higher but quickly hit a wall at $850,000.
After more than nearly five minutes Ted Suhl, sitting in the back row, gave a nod. Three other bidders continually shook off the $875,000 bid for another two or three minutes before Suhl won out.
A Jonesboro native, Suhl owns Rolling Hills Investments and has spent 15 years in the real estate development business.
"Our niche business is buying distressed properties - mostly in Florida - and returning them to their original glory, which generally makes the neighbors very happy," Suhl said.
David Quye and Darren Gaffney, who own high-end properties in the failed subdivision, were indeed happy to hear of Suhl's plans.
Quye who built a home in Sunset Bay nearly three years ago on the promise of a full-scale development including walking trails, tennis courts, boat docks and recreation areas has instead had ongoing sewer problems. He said the families living in the area would just like to get street lights for security as some of the unkempt lots have been the victim of dirt pillage and gate thieves.
Gaffney also applauded Suhl's plan to restore the subdivision's original covenants, or at a minimum redraft new covenants with the 11 families who have already built there.
Gaffney and Quye said two homes were built outside the covenants, which they fear will only bring their property values lower if such construction is allowed to continue.
"We didn't built at the lake to sell, but it is a little disheartening when realize you paid a lot more for your home and lot than it's worth today," Gaffney said.
Suhl's bid won him the property "as is", which will require roughly $500,000 in sewer upgrades before a single water meter will be issued.
Mike Whitehead with Nealy of Northwest Arkansas has worked on the sewer problems for the district in the past year.
"The sewer system is not up to code and was not maintained for some time. We have provided temporary upgrades and maintenance for the improvement district, but the new owner will shoulder the expense of permanent upgrades and maintenance," Whitehead said.
The seller of the property, Benton County Improvement District, is a legal entity formed as a financing authority for the subdivision several years ago. In 1998, the district issued $3.71 million in municipal improvement bonds to investors to finance the subdivision's infrastructure and bond interest for two years, said Jim McCord, legal council for the district.
The district was to levy taxes on the lots in order to pay the interest owed to the bondholders. That all changed when the developer's company, Summit One LLC, filed bankruptcy in 2006 and did not pay the taxes.
McCord filed a petition of tax foreclosure in Benton County Circuit Court which gave the district majority creditor status by the bankruptcy court.
McCord said the district is ready to resolve the matter and pay its bondholders. These bonds were not insured, nor has interest been paid for the past three years. He said after the district pays approximately $200,000 in back taxes, it will recover roughly $650,000 for the bond investors who hold $3.2 million in principal claims.
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Jimmy Walker wrote on Jun 6, 2008 10:17 AM: