Western North Carolina is a patchwork of small communities, close-knit groups operating independently to make their own town or area thrive. Whether it’s in the Nantahala Gorge, up the plateau in Cashiers or in downtown Canton, there are real people busting their butts each day who hold the well-being of their own “neighborhood” as a sort of higher calling. Personal success is intimately linked to the success of the community.
The latest — and in all likelihood, the final — effort to salvage the Ghost Town theme park that helped transform Maggie Valley into a unique kind of tourist town is a story that stretches across the mountains into several of these small communities. How this story finally unfolds will help define the future for those who call these places home.
Because our communities are small, those with lots of money have lots of power, the “big fish in a small pond” scenario. Al Harper, a successful entrepreneur whose holdings include the Great Smoky Mountain Railroad, is one of these folks.
According to a story in this week’s Smoky Mountain News (page 6), Harper is close to securing a loan for $15 million. He plans to use about half the money to pay off a portion of the theme park’s $13 million in debt. A bankruptcy court has decided the rest of the debt will be wiped away, leaving about 200 businesses large and small to write off what in some cases is a substantial debt (in the interest of full disclosure, the theme park owed some money to this newspaper for advertising costs that will never be collected).
That decision also leaves many investors, some local and some from far away, with huge losses. Those running the park since its re-opening in 2006 have cost a lot of people a lot of money.
It’s the little guys in the small towns that make this story interesting. Among those is Ghost Town employee Randy Bryan. He cashed out $200,000 in his 401K to invest in Ghost Town. He’s lost every penny.
“If I was ever going to give up on something, this would have been it. But I refuse to quit, I refuse to lose. I believe too much in it,” said Bryan.
Maggie Valley resident Alaska Pressley also invested substantially in the park.
“Any price is worth it to help this area,” she told a reporter last week.
There is that community spirit, that willingness to risk a life’s work for a community and — if it had worked out — some financial reward.
This Ghost Town tale is now part of the story of Bryson City. In order to get the loan, Harper is putting up his railroad as collateral. That means if the park does indeed go belly up, which many believe it will, a portion of Bryson City’s tourism lifeblood may disappear with it. In its worst year, Harper says the railroad attracts 150,000 customers. That’s a lot of people spending money in a lot of stores and restaurants in Bryson City. Those people disapper, and Bryson is City hurts.
We haven’t had the opportunity to interview business leaders in Bryson City about this new scenario, about how their future is now directly tied to Maggie Valley and Ghost Town. I suspect those who have dedicated their lives to Bryson will be there, willing to step up and fill the void if the need arises.
Tourism is a unique business. It’s not high-speed fiber-optic stuff, it’s not about connectivity or e-commerce. Sure, marketing these properties will rely on some of that. But when it comes down to it, it’s about selling an experience. Harper’s business model at the railroad and, we suspect, at Ghost Town is about creating memories, tugging at the nostalgic fiber that runs through all of us.
I’m certainly no judge of his chances for success, but I will bet on the resiliency of these communities regardless of whether this final gamble pays off.
Ghost Town in the Sky failed to make timely payments on its liability insurance policy, and as a result it lapsed just days before a massive mudslide originating from the theme park wreaked havoc on the mountainside below.
Now, property owners downhill of the mudslide whose homes were damaged may have no recourse to pay for repairs to their homes.
It is unwelcome news, although not surprising, to Kurt Biedler, a homeowner in the path of the slide whose home is now unlivable.
“We are victims of shabby business,” Biedler said. “Ghost Town is the Sky has effectively turned my life upside down and it is a very difficult thing for anyone to put with. It is not an easy thing knowing that a company, whether it is bankrupt or not, has been allowed to pull the shenanigans they have.”
Biedler and his wife have a mortgage on a house that has been destroyed. They say they are innocent victims with no clear or obvious path for recourse. But that isn’t going to stop Biedler from trying.
“We are still exploring our options of what we are going to do. There are always options,” Biedler said.
Ghost Town CEO Steve Shiver and others knew almost a year before the mudslide that the mountain was unstable. Ghost Town hired an engineer to examine the slumping portion of the mountainside in early 2009. The report calls into question the structural integrity of a massive series of retaining walls holding back a section of the mountainside that had proved troublesome on and off for 30 years.
“The MSE wall is not functioning as intended at this time and structural failure of the wall is possible if not replaced,” the report by Haywood County engineer Pat Burgin states.
The report was made in March 2009. However, Ghost Town owners failed to alert anyone of the potential danger — not the town, county, emergency agencies or homeowners living below.
Ghost Town was three months behind in liability insurance payments when a cancelation was issued on Jan. 28.
The mudslide happened on Feb. 5. Five days later, on Feb. 10, Ghost Town wired $27,400 to cover the past due bill. Insurance was reinstated, but it was too late to cover damages stemming from the mudslide, the insurance company contends.
The insurance company, First Mercury Insurance, has been contacted by three homeowners suffering damage in the mudslide, according to the company. But First Mercury says it will not cover the claims, citing a lapse of Ghost Town’s liability insurance policy at the time of the slide.
“Some homes were in the direct path of the landslide and certain homeowners appear to be pursuing claims against Ghost Town for damages,” an attorney for First Mercury wrote in a federal bankruptcy court filing. “First Mercury contends that it has no duty to defend or indemnify any claims that may arise from the landslide because the policy was cancelled prior to the landslide, and therefore does not afford any coverage.”
Homeowners could redirect their claims and lodge them against Ghost Town directly instead of the insurance company, but First Mercury admits in the court filing that route could be futile, stating there is “little to no likelihood of recovering anything from (Ghost Town) itself.”
Ghost Town has been in federal bankruptcy court for more than a year. This week, Ghost Town brokered a deal to sell the amusement park to one of its current owners, but under a new corporate entity — walking away from several million in debt in the process and starting over with a clean slate.
The former corporate entity of Ghost Town may cease to exist once the new corporate structure takes over. The new entity, while comprised of the same major player, may not be responsible for claims against the old corporate entity.
It’s the same principle that allows the amusement park to leave behind millions in unpaid debt while the primary owner remains at the helm.
First Mercury Insurance points out in its court filings that Ghost Town may not be liable for damage claims anyway. Lawsuits would have to hash out whether Ghost Town is at fault for the slide before the insurance company would have forked over damages under the policy, even if it was valid.
When The Smoky Mountain News first reported on Ghost Town’s insurance lapse two months ago, Ghost Town partners insisted their coverage had never lapsed. Failure to keep insurance current is a violation of bankruptcy rules.
Ghost Town has not filed a response to the court filing of First Mercury outlining issues with the insurance coverage.
Ghost Town in the Sky amusement park in Maggie Valley will emerge from bankruptcy under a new corporate structure.
One of the current owners has agreed to put up $7 million to buy the park. It’s not nearly enough to cover the $13.5 million in debt the park has. The rest of the park’s debt will be wiped clean, allowing the new corporate entity to start over with a fresh slate free and clear of old debt.
The deal was approved by the federal bankruptcy court on Tuesday (May 5), saving the park from certain foreclosure.
The deal turns over ownership of the park to a new corporate entity called American Heritage Family Parks, which was formed less than a month ago by Al Harper, who incidentally is one of Ghost Town’s current owners and primary investors. Harper is also the principal owner of the Great Smoky Mountain Railroad in Bryson City, and another excursion railroad in Durango, Colo.
Harper is one of three partners that chipped in to buy Ghost Town in 2006, but is the only one emerging with an ownership stake under the new entity. CEO Steve Shiver, who will remain at the helm as day-to-day operations manager, hopes the park will open for the season by July 1.
Shiver called a meeting of Maggie Valley business owners on Monday to share details of the plan and answer questions. He acknowledged that the outcome isn’t ideal but is the best option on the table.
“There are some of us in the room that if the plan is allowed to move forward would lose a substantial amount of money, but it would allow Ghost Town to open,” Shiver said. The deal was indeed approved the next day by the bankruptcy court.
The alternative was foreclosure, which was scheduled for the end of the month if Harper’s deal didn’t go through. Ghost Town would have been auctioned off to the highest bidder. Whether there were interested buyers waiting in the wings — particularly one willing to pay more than $7 million — will remain a mystery. But Ghost Town’s supporters feared no one else would be willing to keep operating it as an amusement park.
“I don’t see anybody else stepping forward,” said Randy Bryan, a Ghost Town employee and supporter.
Ghost Town faced a perfect storm that knocked it off its feet in 2008. The nation was beset by a recession, gas prices soared, and vacation travel plummeted.
Shiver estimates that the park needs 150,000 visitors a year to be profitable. But the park only had 129,000 visitors in 2008 and 71,000 in 2009, he said. The park lost money both years.
After a 40-year run, the park had been shut down for five years until new owners came along in 2006 to resurrect it.
But they discovered the infrastructure of the 1960s-era theme park was decrepit, requiring an unexpected and substantial burn of capital to make repairs and upgrades.
“We have done our damn best,” Shiver said of the park’s struggles. “It has been a challenge to say the least.”
Those left holding the bag under the new deal are numerous, from local business owners owed money to mudslide victims — even town and federal taxpayers will cough up money due to Ghost Town’s failings.
First come the more than 200 businesses collectively owed more than $2.5 million who will never see their money. The list includes local plumbers, electricians, contractors, building suppliers, and vendors of everything from fuel oil to advertising.
“It is very difficult for me personally to look someone in the eye I owe money to,” Shiver said. “But we have to more forward and open the park. That is our vindication.”
Shiver said the businesses aren’t the only ones not getting paid.
“Nor do any of the investors, nor do any of the bondholders. That’s just the way the cookie crumbles in the bankruptcy world,” Shiver said.
Shiver said he’s one of the losers in that sense. While he will keep his job as CEO of the park, he will no longer have an ownership stake to show for the investment he’s made, Shiver said.
“I am wiped out like everybody else,” Shiver said. “I lose a substantial amount of money. I make no bones about it. Millions.”
While some of the businesses left out in the cold by the deal may harbor ill will, locals who invested their money in Ghost Town say they aren’t angry.
“You have never heard me say a word about losing the money,” Brenda O’Keefe told Shiver at the meeting. “I want the park open. I want the park open for Maggie Valley. The poor guy who gave his 401K, now that’s a different story.”
That guy, however — Ghost Town employee Randy Bryan — said he isn’t mad either. He cashed in his 401K of more than $200,000 to invest in the park — money that he will now lose. But Bryan said his satisfaction is to see the park keep going.
“If I was ever going to give up on something, this would have been it. But I refuse to quit. I refuse to lose,” Bryan said. “I believe too much in it.”
Alaska Pressley, another Maggie Valley resident who invested a substantial sum, said she has no ill will either. Her only desire is to see Maggie Valley prosper, and the way to prosperity is through Ghost Town’s survival, she said. Pressley said she was happy to contribute to that.
“Any price is worth it to help our area,” Pressley said.
Federal taxpayers could be left holding the bag on $2.5 million of Ghost Town’s bad debt still owed to BB&T but backed by a federal loan guarantee. Ghost Town owes BB&T $9.5 million on a mortgage dating back to 2006. But only $7 million will be paid off under the current deal with Harper. The U.S. Rural Development agency had backed a portion of the loan back in 2006. The loan guarantee was intended to convince BB&T to underwrite the purchase of Ghost Town, which was otherwise considered a risky loan to make.
The U.S. Rural Development staff that made the loan guarantee wouldn’t reveal the terms — namely how much federal taxpayers may have to cough up. Richard Tucker of the commercial credit department with BB&T would not say either, citing “financial privacy,” and adding that the loan guarantee was between BB&T and the Rural Devleopment office, despite the fact that the public would be the one paying up.
And then there’s the mudslide.
Taxpayers with the town of Maggie Valley will foot at least $25,000 of the bill for the clean up and stabilization, and possibly more if costs exceed initial estimates.
Homeowners downhill of the mudslide may also be without recourse for damage to their property. (see article above).
Business owners in Maggie Valley seem to be pleased with just about any scenario that means Ghost Town will remain an amusement park and hopefully open sometime this summer.
“It’s a great day for Maggie,” Mayor Roger McElroy said. “The only thing I feel sorry about is anybody who is going to lose any money in the deal.”
Ghost Town today is nothing like its heyday in the 1970s and 1980s when more than 250,000 people a year funneled through Maggie Valley. But it is still a tour de force when it comes to filling motel rooms in the valley, according to Larry Debuke, owner of Tanglewood Motel for 14 years.
The county and town of Maggie Valley will also finally get their taxes. Ghost Town owes $65,000 in town and county property taxes from 2008, which will be paid when the deal goes through, and another $75,000 in property taxes from 2009, which is supposed to get paid as well.
A primary owner of Ghost Town in the Sky wants to buy the amusement park out of bankruptcy. But there’s a catch.
The owner would walk away from more than $5 million in debt, yet continue to own the park — only this time under a new corporate name.
More than 200 businesses still owed money by Ghost Town would be left holding the bag, including local contractors and laborers who did work for the park and were never paid. Myriad Ghost Town supporters in Maggie Valley coughed up cash to help the amusement park get off the ground when it reopened. They were promised a stake in the company in exchange for their investment, but they, too, would be left with nothing.
Employees who were sent home at the end of last season still owed two weeks of pay may be out of luck as well under the deal.
The deal is merely a proposal and would have to pass muster with the bankruptcy court. A hearing is scheduled for Tuesday, May 4. Ghost Town has asked the court to approve the sale to the new entity.
The timing is no mistake. Foreclosure of the park is scheduled to begin May 31. The plan put forward would avoid a forced auction of the park on the courthouse steps.
The bankruptcy court could opt to let the auction go forward in order to determine if there are any other prospective buyers willing to pay more.
The 1960s-era theme park was once a cash cow for Maggie Valley, raking in tens of thousands of visitors each year.
But attendance declined throughout the 1990s and the park was eventually shuttered in 2002.
It was purchased by a trio of new owners in 2006, including Al Harper, the owner of Great Smoky Mountains Railroad in Bryson City and other railroad tourism ventures, including the Durango Silverton Narrow Gauge Railroad in Colorado.
Harper formed a new LCC just two weeks ago called American Heritage Family Parks — the entity that is now trying to purchase Ghost Town out of bankruptcy. The name of the new entity is similar to the umbrella corporation for his railroad ventures, American Heritage Railroad.
The LLC was just created by Harper on April 8, apparently for the express purpose of buying the park. The registered agent is Jon Schlegel, the former general manager of the Great Smoky Mountains Railroad. The address listed for the new LLC is the same as the Great Smoky Mountains Railroad headquarters in Bryson City.
The public face for Ghost Town for the past two years has been CEO Steve Shiver. It is unclear from court filings or incorporation papers what, if any, role he would have in the new park.
“It is an unfortunate situation for all of us,” Shiver wrote in an email. He directed further requests for comment to Harper. Harper did not immediately return phone calls or emails requesting comment.
When Harper bought the dated theme park in 2006, he got an aging facility that needed millions of dollars in costly repairs and modernization. Coupled with the economic downturn, the park lost money and after just two years of being open landed in bankruptcy a year ago. It owes a total of $13.5 million. CEO Steve Shiver pledged the park could regain its footing and become profitable again, eventually paying off what it owes and pulling out of bankruptcy.
Bankruptcy court requires a detailed plan spelling out exactly how a turnaround will be achieved. Shiver was unable to put together an acceptable plan.
BB&T, which holds more than $9.5 million in debt on the property, was given the green light to proceed with foreclosure. The park was slated to be auctioned off to the highest bidder as early as June.
The entity is offering to buy the park for $7.5 million, although Ghost Town has more than $13.5 million in debt.
BB&T would get $7 million and back taxes would be paid — and that’s about it. The plan calls for paying back $300,000 in select debt, though it doesn’t say to whom.
Financial filings show past due bills of more than $400,000 still lingering from last year — racked up on top of the debt Ghost Town carried with it into bankruptcy. Last year’s past due bills include everything from property taxes to utilities, which were cut off due to failure to pay at the end of the season.
Current owners had been trying to find financing to bail themselves out of bankruptcy and open the park for the summer season. Ghost Town is urging the court to quickly approve the sale to the new entity so that it can still try to open the park by summer.
However, Ghost Town is still plagued by unstable remnants of a landslide that makes the mountain unsafe, according to state geologists. Stabilization will not be completed by the start of summer.
With federal and state grants in hand, work will soon get underway to stabilize the remnants of a massive landslide still looming precariously over Maggie Valley.
“You can see the cracking of the soil. It is obviously very unstable and just hanging there, if you will,” said Mike Hinton, manager of the federal Emergency Watershed Protection Program administered by the Natural Resources Conservation Service office in Raleigh.
The landslide originated from Ghost Town in the Sky, a mountaintop amusement park, and damaged five homes along its 3,000-foot path. But several other households are in the potential line of fire if the remaining portion of the mountainside gives way, essentially leaving them without a home until something is done to fix the unstable slope.
A chief concern right now is spring rain. A good, soaking rain could easily trigger a second slide, which makes time of the essence, Hinton said. But not at the expense of a carefully crafted plan.
“I know it is an emergency, and I know the people who are out of their homes are anxious for work to be started. I know if I was in their shoes I would be thinking ‘This is taking forever,’” Hinton said. “But at the same time, we need to make sure that whatever we do does not cause further damage and takes into account the workers’ safety.”
While a second slide would certainly solve the problem of trying to stabilize the precarious slope — it would simply come crashing down on its own — a second slide could be even worse than the first one.
Only a portion of the slope collapsed in the first slide. Far more is still vulnerable.
While a second slide would likely follow the same route down the mountain, it would be deeper, wider and faster — and travel further. Houses unscathed last time could be taken out by a second slide, Hinton said.
Plus, giant piles of dirt and debris left in the landslide’s track would get caught up in a second slide, creating even more momentum, Hinton said.
But figuring out how to shore up the remaining mountainside remains elusive. Clearly, it can’t all be stabilized in place. Some will have to come down, Hinton said.
“That is easier said than done: how do you remove it?” Hinton said. “That part is really the dilemma.”
A contractor who was at Ghost Town the same day Hinton was surveying the site said he was willing to get on his dozer and just start pushing dirt off the side. But if the whole slope began to give, the man on the dozer would have had a wild ride to the bottom.
Hinton said it would be impossible to be stationed on the slope itself while performing the work. Equipment would have to far from the edge and on stable ground. But from that far back, could it reach out far enough to knock loose the unstable part?
Another option is evacuating everyone who lives below and blasting the soil off — not in one big blast but a series of smaller, controlled blasts.
“But who is to say one little blast wouldn’t trigger the whole thing?” Hinton said. So that option would likely be frowned on.
Simply coming up with an estimate was challenging. They obviously couldn’t scamper along the face of the slope. Hinton wasn’t willing to stand at the bottom and look up at it either. So all they could do was stand at the edge and look down on it.
As a result, the estimate of $1.47 million is an estimate in the truest sense of the word.
“That amount could change dramatically,” Hinton said. “This is really a starting point if you will. We had to come up with an estimate in order to request the funds, so that’s what we did.”
The first order of business now is to hire a geotechnical engineer to do a more thorough assessment. Once work does get underway, Hinton has no guess how long it may take, since the approach hasn’t even been figured out.
Last on the list will be cleaning up debris left along the track of the first slide. The area is steep, wooded and inaccessible, so carting off truckloads of dirt from the slide’s wake may be difficult, Hinton said.
“You would likely create even more of a problem, so the question is ‘Can we stabilize it on site?’” Hinton said. “I think everyone would agree just throwing grass seed on it isn’t going to do it.”
But, it could be possible to recontour the mounds of debris and build some retaining walls that would hold it. Rich Cove Road, which winds up the mountain to Ghost Town, is crossed twice by the slide’s track.
“For a while every time you get a rain, it is going to wash some of that across the road,” Hinton said.
For now, that’s the least of their concerns.
“The main thing is to stop a major movement,” Hinton said.
In the meantime, Hinton does not foresee Ghost Town amusement park opening until the slide is stabilized, although it is not an area his agency has jurisdiction over.
“I don’t see how they could,” Hinton said. “I wouldn’t want a crowd up there on a Saturday and that thing decide to let loose.”
Ghost Town has been struggling with bankruptcy for the past year. Foreclosure against the park is scheduled for June by BB&T, which is owed $9.5 million on the property. However, Ghost Town owners are optimistic that investors or some sort of financing will materialize between now and then. If so, BB&T has said it would call off foreclosure.
Everything has fallen into place for a government-sponsored cleanup of the Rich Cove mudslide in Maggie Valley, an undertaking pegged at roughly $1.47 million.
The federal Natural Resources Conservation Service agreed last week to foot 75 percent of the bill to stabilize the slide through the Emergency Watershed Protection program, which helps repair watersheds damaged by natural disasters.
The N.C. Department of Transportation has agreed to fund much of the remaining 25 percent local match since the slide affects a state-maintained road.
Maggie Valley’s town government has agreed to chip in $25,000 toward the local match, while Ghost Town in the Sky, a bankrupt amusement park where the slide originated, has volunteered $25,000 as well, but possibly in in-kind services rather than cash.
Town officials were driven by a sense of urgency to lock down funding for the cleanup since a large part of the mountainside remains unstable and threatens an even worse slide.
“I don’t think we have a choice but to do it,” said Maggie Valley Alderwoman Saralyn Price. “Because I feel like it’s a safety issue.”
At first, the town was at a loss for how it’d come up with the local match, which under current estimates comes to $334,000. Maggie Valley could hardly afford the whole amount by itself.
The town asked county leaders for help, but they balked at the idea of committing tax dollars to fix a slide that originated on private property — even though the property owner is in bankruptcy with a long trail of debt and was unable to pay up, either.
In the end, N.C. Rep. Phil Haire and N.C. Sen. Joe Sam Queen stepped in, teaming up to secure emergency funding from the N.C. DOT.
“We realize the dire circumstances those people who use Rich Cove Road were in,” said Haire. “I’m certainly glad Sen. Queen and I could do all we could to help out.”
Alderman Scott Pauley said Friday he was disappointed in the county board for not pitching in.
“We’ve got county residents and town residents that are losing sleep every night and haven’t slept since the slide,” said Pauley.
Pauley called the town’s contribution of $25,000 “a small, small cost to get this done.”
Town Manager Tim Barth said the town had to take action because it was unrealistic to expect Ghost Town to foot the bill.
“The reality is Ghost Town is in bankruptcy,” said Barth. “I know that they don’t have $334,500, so there’s no point in forcing them to pay because they won’t.”
However, Barth and Pauley have not ruled out the possibility of suing Ghost Town to be reimbursed. For now, Pauley said the focus is on getting the cleanup going.
“Anything after that is going to have to be for a later date,” said Pauley.
Ghost Town CEO Steve Shiver said he hopes to pay the company’s share of the cleanup cost by contributing work from Ghost Town’s engineer.
“We want to make sure that he’s involved completely,” Shiver said.
Shiver also pointed out that Ghost Town has already cooperated with NCDOT, and state and local agencies to help study the slide and facilitate cleanup.
According to Shiver, the economic importance of Ghost Town to Maggie Valley “far outweighs” the government’s investment to repair the slide.
“There are issues that we all must be a part of the solution,” said Shiver. “This is one of them.”
The Town of Maggie Valley recently transferred the responsibility for building inspections to Haywood County. Now, Maggie is considering handing over soil and erosion control, too.
“We could really become a one-stop shop,” said Maggie planning director Nathan Clark.
Town officials from Maggie Valley and Clyde will meet Tuesday, March 23, with the Haywood County manager to discuss the potential takeover.
Both towns are also interested in exploring the possibility of adopting a county ordinance that regulates construction on steep slopes. Currently, neither town has such a policy.
The joint meeting follows a massive mudslide in Maggie Valley, which traveled 3,000 feet down the mountainside and damaged four homes.
Roads have been cleared, but up to 16,000 tons of unstable material still looms over the Rich Cove community.
Haywood’s steep slope ordinance allows the county government to force a property owner to clear debris from landslides. It can also coerce a landowner into stabilizing a slope that the county engineer deems unsafe.
If the Town of Maggie Valley adopts that ordinance, the county would have authority to deem the Rich Cove area an unstable slope, forcing Ghost Town in the Sky amusement park to take action.
Ghost Town in the Sky amusement park could be foreclosed on as early as June unless investors step forward with a cash infusion between now and then, according to Ghost Town’s bankruptcy attorney.
The theme park in Maggie Valley has been struggling with bankruptcy for the past year. Owners pledged to pull through and become profitable again.
But as of now, the company doesn’t have the money to ramp up to open for the summer season, according to David Gray, bankruptcy attorney for Ghost Town.
“We don’t have any funding to open the park,” Gray said in court last week.
Meanwhile, BB&T has been pushing to collect on its $9.5 million loan to Ghost Town. The current owners took out the loan to buy the park in 2007 and make major repairs. A frustrated BB&T has been calling for a court-ordered liquidation of Ghost Town, essentially a forced sale of the park to pay off its debts.
Ghost Town chose not to put up a fight in bankruptcy court last week and instead agreed to let BB&T start the wheels of foreclosure with one caveat: that it not take place before June. The move bought Ghost Town owners three months to continue their hunt for funding.
“They are going to try to put together some sort of financing,” Gray said.
Gray said it takes $250,000 to $300,000 to open the park for the season. Most of that goes to hire some 200 employees and pay their salaries until revenue from ticket sales starts to roll in, and to spruce up the grounds and get everything working again.
Ghost Town was supposed to formulate a plan on how it would emerge from bankruptcy and repay some $13 million in debt. Such a reorganization plan is required by the bankruptcy court.
The park owners came up with a plan that requires $2.3 million in new equity this year in order to pull off a reorganization, according to the bankruptcy administrator. But the plan fails to say where the new equity will come from. Gray said the park owners need more time.
Gray said Ghost Town will revise its reorganization plan — which faced serious court objections anyway — and present a new one if it can find the necessary capital.
If that doesn’t happen by June, Ghost Town will be sold to the highest bidder. CEO Steve Shiver could not comment on negotiations with potential investors but is positive about the eventual outcome.
If Ghost Town can come up with a new, viable plan between now and the June foreclosure proceedings, BB&T will likely be willing to work with Ghost Town and halt the foreclosure, Gray said. If Ghost Town is sold in foreclosure, it is unclear whether it would fetch enough to cover what BB&T is owed.
Ghost Town includes 288 acres and a collection of amusement park rides. Often with foreclosures, the bank holding the mortgage ends up owning the property.
“Do you think BB&T wants it?” Grey asked. “It’s the tar baby. What are they going to do with it?”
Prospects of a buyer are complicated by a mudslide originating from Ghost Town’s property last month. Who’s liable for the cleanup and stabilization is still being debated.
Maggie Valley Mayor Roger McElroy just hopes that it stays an amusement park rather than getting turned into a real estate development.
“Whoever can make a go of it will be what’s best for the town, whether it is this group or another group,” McElroy said.
Ghost Town is zoned commercial by the town. Residential is not allowed without an exemption. If a future owner wants to turn the mountaintop into a residential development, they would have to seek an exemption from the town zoning board of adjustment.
When Ghost Town’s current owners appeared on the scene in 2007, the park had been closed for five years.
“A lot of motels and restaurants were hanging on by the skin of their teeth. When Ghost Town opened back up, it made a difference,” McElroy said.
Lacking start-up capital for the season is not new, however. Ghost Town faced the same problem last year. Ghost Town CEO Steve Shiver went on an extensive but unsuccessful hunt for public funding from the Town of Maggie Valley, and courted numerous local and regional tourism and economic development entities but to no avail.
The town was unwilling to pledge tax dollars to help the struggling amusement park reopen with no guarantee it would be paid back. Investors, many of them Maggie Valley business people, chipped in to provide the capital to get the park open.
Brenda O’Keefe, owner of Joey’s Pancake House, invested in the park’s new owners out of her love and devotion for Maggie Valley. For four decades, Ghost Town was an anchor attraction that pulled tens of thousands into Maggie Valley each summer and fall. Like so many, O’Keefe was eager to see it reclaim its former glory.
“Was I 100 percent sure it was going to make it? No. But the motel owners have to have people come into Maggie Valley and stay overnight to make it,” O’Keefe said. “I am a member of this community, and I want to see it thrive.”
So she and others stepped up to the plate.
When Ghost Town reopened in 2007 after five years of being closed, it garnered lots of media attention. Now, it could be worse than if it had never reopened at all.
“A closed amusement park is one thing. A failed amusement park is much worse,” O’Keefe said.
Feedback from customers who had visited Ghost Town was all positive this year, which hasn’t always been the case, O’Keefe said. O’Keefe said that shows the park and its employees were trying their hardest to provide tourists with a positive experience. O’Keefe believes the park is almost where it needs to be, but has been a victim of the economy.
“If you got the figures for all theme parks last year, it wasn’t good,” O’Keefe said. “Everybody’s figures were way down. It is not just Ghost Town.”
O’Keefe credits Ghost Town CEO Steve Shiver for doing all he could.
“He has worked very hard to try to keep it going. He has put a lot of money into it certainly more than anyone else,” O’Keefe said. “It is just a matter of having enough capital to go forward. It has always had a problem of being undercapitalized.”
Like McElroy, O’Keefe is concerned about the impacts to Maggie Valley business owners if Ghost Town doesn’t open this year.
“We are very distressed about it,” O’Keefe said, adding that it is time for the town to get creative. “We are certainly going to be looking for something else to bring people to Maggie. We are not going to sit on the sidelines.”
When Ghost Town agreed to a June foreclosure by BB&T, what could have been a lengthy and dramatic courtroom showdown last week was reduced to less than five minutes.
Had Ghost Town pushed ahead with the reorganization plan in its current form, it’s unclear whether a judge would have approved it. It faced serious hurdles due to inadequacies, according to Alexandria Kenny, a federal bankruptcy administrator who works for the bankruptcy court.
Kenny wrote in her objection that the plan is “vague, ambiguous and not feasible,” and even called one portion “absurd.”
A handful of major stakeholders objected to the plan.
BB&T claimed the plan was not proposed in “good faith.” BB&T also objected to the general way Ghost Town has conducted itself during bankruptcy proceedings. Ghost Town’s reorganization plan was slow to materialize, requiring several court extensions. It has repeatedly failed to meet other court-imposed deadlines for filing various financial documents.
Failure by Ghost Town to pay its taxes in 2009 led both Haywood County and the town of Maggie Valley to object to the reorganization plan. Both are still owed taxes from 2008 as well.
Everyone owed money by Ghost Town could vote on the plan. Other than BB&T, there are 225 companies collectively owed $2.5 million from Ghost Town for everything from radio ads to souvenir merchandise to plumbing parts. Of those, 90 sent in ballots and 84 voted in favor of the reorganization, Gray said. It’s not surprising since those companies stand at the back of the line. Under a foreclosure or liquidation, the park’s 288 acres would have to sell for more than $10.5 million before those companies saw their first nickel.
Under reorganization, Ghost Town proposed paying back those 225 companies starting in summer 2011 based on a 6.5 percent cut of the park’s revenue. Kenny objected that Ghost Town should pledge a specific minimum dollar amount it would pay each year.
While in bankruptcy protection, Ghost Town got a hiatus from bill collectors and old debt. But the park continued to rack up new debt during 2009.
Financial filings show past due bills of more than $400,000 still lingering from last year. Some are for goods and services rendered, like attorney’s fees, termite exterminators and a marketing consultant.
But there are also hefty utility bills. Ghost Town owes a water bill of $4,430 and power bill of $20,000, both of which were cut off due to failure to pay at the end of the season last year. It owes AT&T $2,000.
Other past due bills from 2009 include $85,000 in property taxes to the town of Maggie and Haywood County. Both are still owed taxes from 2008 as well.
Ghost Town also owes the state $10,500 in sales tax from 2009 and $4,800 in amusement tax. It owes the IRS $2,300.
In addition to $400,000 in past due bills from 2009, Ghost Town owed investors and partners $712,000 that was put up over the course of the year. Ghost Town has listed the $712,000 from as part of its debt to be repaid.
Ghost Town’s current reorganization plan forecasts the park would continue operating at a loss until 2013, even with the infusion of new equity to the tune of $4 million over the same three year period, according to the bankruptcy administrator.
Ghost Town is far from off the hook for repairing the latest landslide in Maggie Valley.
The Rich Cove slide originated from Ghost Town in the Sky amusement park more than a month ago. About 16,000 tons of material remain unstable at the site, threatening an even worse slide.
No one has said yet whether natural causes or the failure of retaining walls led to the mudslide. But that might not matter. Town officials have discovered several lines of attack for forcing the amusement park company to foot the cleanup bill.
Town Manager Tim Barth has unearthed a state law that would allow the town to step in and stabilize the site then force Ghost Town to cover all the expenses.
Another more long-term option is to pass an ordinance regulating development on steep slopes — to prevent future landslides and force property owners to clean up slides that occur. The county already has such an ordinance, but the town chose not to adopt it, so it doesn’t apply to Ghost Town, which is within town limits.
The state law that Barth cited says a town can summarily remove anything that is dangerous to public safety within one mile of time limits. Expenses would be covered by the property owner. If they aren’t paid, the town could place a lien on the property and on any other property owned by the same entity in town, except for primary residences.
Barth acknowledges that it would be difficult to get Ghost Town to pay up since it’s already mired by bankruptcy. But the town may proceed anyway.
“It may be a situation where certain actions have to be taken to stabilize that area, and maybe the town gets paid back at a later time after the property is sold,” said Barth.
It would be beneficial for anybody who owns the land to repair the slide, Barth added.
Town officials are still waiting to hear on the prospect of federal assistance from the United States Department of Agriculture.
The USDA may be able to provide 75 percent of funding for the Rich Cove slide repair, though local sources will still need to scrape up the remaining 25 percent.
The town and county plan to meet jointly after the estimate for the cleanup and stabilization work is finalized some time this week. Both governments hope Ghost Town will cough up money for the cleanup regardless of its bankrupt status.
However, Ghost Town’s bankruptcy attorney has said the park does not have the $250,000 it needs to open for the season unless an investor is found.
Steep slope ordinance in sight?
Barth recently consulted with Haywood County on the possibility of adopting a steep slope ordinance within town limits.
Because of the potential for another slide at Rich Cove, the town would have to move fairly quickly. It could adopt the county’s slope ordinance wholesale, rather than take the time to write one of its own.
“We recognize that there’s a time factor, that we need to probably get something in place fairly soon,” said Barth. “But we want to make sure we do things the right way, and in a way that makes sense for Maggie Valley as well as the county.”
Barth said the town had not pursued an ordinance in the past because little development occurred on steep slopes within town limits.
Another limiting factor was not having enough resources to hire a full-time engineer to enforce a steep slope ordinance. If the county agrees to handle enforcement, Maggie might sign on to Haywood’s ordinance.
“That would be the easiest, quickest way to have legislation enacted,” said town planner Nathan Clark, who hopes that the slide will renew serious discussions about a steep slope ordinance in Maggie.
Such an ordinance provides several ways to force a landslide cleanup.
For example, Haywood can delay necessary permits to hold up development until the slide is stabilized. It can also fine property owners until they cooperate.
“It might start out at $5,000 or it might start out at $50, depending on the severity of the slope failure and how much noncooperation there is,” said Mark Shumpert, Haywood County engineer.
Under the county ordinance, Shumpert has the authority to deem a slope in danger of sliding a “critical slope” and compel the property owner to stabilize it.
For now, the county has little influence over the Rich Cove cleanup. That would change, however, if Maggie passes a steep slope ordinance and the county takes over.
“It all boils down to jurisdiction,” said Shumpert.
Two landslides hit in the Maggie area in January 2009, but they were outside the town limits so the county’s slope ordinance kicked into effect.
For the first time, Haywood County was able to force a property owner to clean up a slide.
One property owner recently submitted design plans for the slide stabilization.
The other owner filed for bankruptcy, and the county is now negotiating with the bank that’s taken over the property. Haywood has not filed a lien on the property.
Shumpert said the bank has two options: it can either repair the site and sell the house on it, or it can bulldoze the home and return the area to its natural state.
Haywood County commissioners are reluctant to hand over taxpayer money to stabilize the latest landslide in Maggie Valley — even if the federal government chips in for much of the cost.
At a commissioners meeting on Monday, the Town of Maggie Valley asked the county to partner in a grant application from the federal Emergency Watershed Protection Program. If approved, the grant would pay to remove debris, reroute the natural stream channel, and most importantly, shore up the still unstable portion of the mountainside. About 12,000 to 16,000 tons of material is looming over the Rich Cove community, posing the potential for more slides.
The federal grant would cover 75 percent of the cost, while the remaining 25 percent would have to be found locally.
But lingering questions over whether the slide at Rich Cove was a natural disaster or caused by a failed retaining wall at Ghost Town in the Sky amusement park has caused county commissioners to hesitate about participating in the program.
Commissioner Kirk Kirkpatrick said the issue at hand is whether Ghost Town is at fault. If so, the company, not county taxpayers, should pay for the slide’s impact. Ghost Town has been struggling with bankruptcy for the past year, however.
Steve Steve Shiver, CEO of Ghost Town, said he just didn’t have enough data — namely the cost of cleanup and stabilization — to make any decisions.
“At this point, we’ll just wait and see what the estimates are,” said Shiver, adding that Ghost Town has been able to repair a road that was washed out by the slide over the weekend. Road access to the top of the mountain is now restored, Shiver said.
At one point on Monday’s meeting, Commissioner Skeeter Curtis asked Maggie Valley’s town manager point blank if the town would pursue litigation against Ghost Town in the future to recoup its costs.
“Is the Town of Maggie Valley willing to enter litigation to get their 25 percent back?” asked Curtis.
Maggie Valley Town Manager Tim Barth replied the town would talk to Ghost Town about whether its owners would chip in to cover the 25 percent local match.
“It won’t get any cheaper for them, I’ll just say that,” said Barth. “If they have to fix that on their own, it’ll be 100 percent cost, and not 25 percent.”
Meanwhile, Commissioner Mark Swanger worried about setting a precedent for providing county money to clean up slides, even when they occur on private property or are caused by private companies.
“How is this one different from the ones we had in the past?” asked Swanger.
Swanger said if Maggie is going to ask for county assistance, it should also follow the county’s lead in implementing regulations for development on steep slopes.
Curtis added that local governments should begin pushing to bring landslide insurance coverage to the state, even if it is expensive.
The commissioners ultimately decided not to commit to the program before receiving a concrete dollar figure on the 25 percent match.
“Really, the bottom line is going to be the cost,” said Commissioner Bill Upton.
Town and county leaders will hold a joint meeting once the federal agency, Natural Resources Conservation Service, comes up with a proper estimate for the stabilization and clean up.
A project manager and engineer surveyed the slide this week and hope to provide a damage survey report by early next week.
Carol Litchfield, a local representative from the Natural Resources Conservation Service, said while legal complexities may arise with this particular landslide, it meets the objectives of the Emergency Watershed Protection Program, which only responds to natural disasters.
Litchfield said the main issue now is not the 25 percent, but whether the grant will be awarded given competition for the funds. Litchfield said it can cost hundreds of thousands of dollars to clean up a site, though she does not have a ballpark figure for what it would cost to stabilize the Rich Cove slide.
The agency will not cover the costs for repairing structures or homes damaged by the mudslide, she added.
The last time the Emergency Watershed Protection Program was utilized in this area was to mitigate the impact of the 2004 floods in 17 western counties, including in Haywood and Macon counties. At that time, a federal state of emergency was declared, and the state covered the 25 percent match.
With this slide, there hasn’t been enough damage to call for a state of emergency at the state or federal level, though both the county and the Town of Maggie Valley signed a disaster declaration.
For now, the threat of another slide still looms over Rich Cove with a precautionary zone that covers more than double the size of the area currently damaged by the slide.
“We got to do something,” said Greg Shuping, emergency services director for the county. “The fact remains that we have a threat.”