The future of the nature center at Balsam Mountain Preserve has been in limbo for years. It was spared from foreclosure once, but a deed dispute has hung over the nature center like a dark cloud on the horizon.
The nature center’s predicament dates back to 2005, when the original developers borrowed $19.8 million from the real estate lending firm Vestlyn.
The recession hit, and the rest is history. The developers couldn’t pay off the loan, so the lending firm foreclosed in 2009 and took title to development.
At the time, the nature center was exempt from the foreclosure. But the lender has now come calling and wants to cash in on the lingering lien it’s held on the nature center property.
Balsam Mountain Trust, the nonprofit that operates the nature center, has tried unsuccessfully over the years to convince Vestlyn to untether it from the ill-fated $19.8 million loan.
Vestlyn maintains the nature center property was part of the collateral for the original loan — albeit a very small part — and it’s perfectly fair to call in its long-held lien.
However, Balsam Mountain Trust claims it never should have been mixed up in the deal. The nature center was supposed to be off the table, carved out as a stand-alone entity to protect it from this very scenario.
As a last resort, the nonprofit sued the investment lender in court, challenging its lien on the nature center property, but lost that battle this spring.
Now, Vestlyn has finally set the wheels of foreclosure in motion, leaving the nature center at a crossroads.
“We are proceeding on two parallel paths,” said Rob Howard, the chairman of the board of Balsam Mountain Trust, the nonprofit that’s over the nature center.
Ideally, they could pay off Vestlyn and strike a bargain to call off the foreclosure so they don’t have to move out of their home.
“Is there some settlement we could reach that would preclude the foreclosure?” said Howard. “Meanwhile, we have operations that have to go forward, so we have to assume we won’t find a resolution, so we are looking at a place to relocate to.”
Moving the nature center’s snakes, birds and other live critters, along with its botanical repository and museum exhibits would be a hassle to say the least.
But, “We have to plan that we won’t have that nature center to live in at some point in the next several months, and that’s what we are doing in spades,” Howard said.
An alternative location within the development has been found already should the nature center be evicted, Howard said, but it’s smaller than its current facility. Some of the live animals would likely have to be farmed out to other nature centers in the region and some of its exhibits and inventory put in storage.
The nature center would hopefully only stay in the downsized home for a few years, however, while raising money to build a new permanent home, Howard said.
Calling in the chips
There is certainly one way the nature center could avoid the foreclosure.
“They could buy it from us to keep it at that location,” said Mark Antoncic, founder and managing partner of the real estate investment firm that is foreclosing on the nature center. “If it is so important to them and their grandchildren, they should pay for it.”
Otherwise, the nature center will be evicted, Antoncic said.
The past chair of Balsam Mountain Trust asked Antoncic to give up his claim on the nature center at one point “Because ‘it is simply the right thing to do,’” Antoncic recounted in court filings.
But he said he can’t simply declare the nature center a charity case and write it off.
From Antoncic’s perspective, he can and should try to get back every dime of investor’s money that was put into Balsam Mountain Preserve. The $19.8 million loan Vestlyn made to the original developers was other people’s money. Antoncic said he’s obligated to earn them the highest return he can — even if it now means cashing in on its lien against the nature center.
His asking price on paper is $900,000 for the two-acre lot the nature center sits on.
But the nonprofit can’t afford that. More so, it’s not worth that much, Howard said.
“No one in the world would pay $900,000,” Howard said.
A stacked deck
There have been several attempts over the past decade to convince Antoncic to give up Vestlyn’s lien on the property. As soon as the ink dried on the original $19.8 million loan in 2005, the original developers tried to get Antoncic to cut the nature center loose.
But Antoncic countered that if Vestlyn gave up the nature center, it would diminish the value of Vestlyn’s collateral for the loan.
“Vestlyn expressed concern that the value of the property would be materially affected if they released (the nature center) without obtaining other substitute collateral,” court papers recount.
So the original developers, Chaffin and Light, proposed a swap. They gave Vestlyn a two-acre lot elsewhere in the development in exchange for the nature center property. Only Vestlyn refused to give up the nature center in exchange, according to court allegations.
“Vestlyn has received the substitute lot that it bargained for but it has refused to release the nature center property,” according to court filings.
But Antoncic claims he never made any such promise.
“I specifically recall telling Mr. Chaffin more than once that Vestlyn would not agree to that request. It would have been absolutely irresponsible to consent to giving up Vestlyn’s security interest in (the nature center) while the loan was in default,” Antoncic said in a deposition.
The financial outlook of the original developers grew increasingly dire, and by 2009 the reality of foreclosure by Vestlyn became more and more likely. The developers made a last-ditch attempt to save the nature center on their way out. They sold it to Balsam Mountain Trust for only $10, with a deed caveat that it could be used only for community purposes.
“It became a community resource that no longer has the characteristics of a saleable lot,” according to court filings.
When Vestlyn pulled the trigger on foreclosure against the entire development in 2009, Balsam Mountain Trust was prepared to mount a legal fight to exempt the nature center, which would have stalled the whole foreclosure from moving ahead.
Eager “to stop the bleeding,” Antoncic voluntarily took the nature center off the table so the dispute wouldn’t hold things up, according to his court deposition. But the lien “remained as a cloud upon the title” of the nature center, the trust claimed.
Balsam Mountain Trust periodically made forays to get Antoncic to drop Vestlyn’s lien, but he wouldn’t.
Then, in late 2013, Vestlyn made a deal to sell its lien against the nature center for $900,000 to the new owner of the development at the time, David Carlile.
Balsam Mountain Trust countered by filing a civil lawsuit. The suit claimed Vestlyn’s interest in the nature center had already been slaked when Vestlyn was given a substitute lot as collateral years earlier.
“We challenged the validity of the lien. We didn’t think the lien was proper because they actually gave them another lot,” Howard said.
A jury found otherwise and Balsam Mountain Trust lost the lawsuit, but in the meantime, Carlile had backed out of his $900,000 offer. Vestlyn has now sued Carlile for breach of contract, and initiated foreclosure against the nature center to boot.
The next hand
It’s now up to Balsam Mountain Trust to strike a deal with Antoncic to stop the foreclosure and avoid being evicted. While Antoncic has asked for $900,000, that’s not a realistic market value for the two-acre lot, Howard said.
The nature center can’t be sold to a private owner — it can only exist as a nature center or “related purposes that are of significant benefit to the Balsam Mountain Preserve community,” according to the deed restriction put in place by the original developer.
Given its limited potential uses, Balsam Mountain Trust believes the market value is far less than what Antoncic is asking. A foreclosure hearing is scheduled for the first week in August.
Realistically, the retrofitted old house isn’t an ideal setup for the nature center anyway.
“We either need to do mega upgrades to that house or build something new,” Howard said. “We are developing a strategic plan as we speak so we can make intelligent choices.”
Balsam Mountain Preserve: defying the conservation development oxymoron
Balsam Mountain Preserve has long been a symbol of the luxury second-home market in the mountains.
It was one of the first mega-developments in the region when it was launched in 2000, encompassing a whopping 4,400 acres between Waynesville and Sylva. Locals historically fished, hunted and camped on the land and didn’t take kindly to rich out-of-state developers coming along and locking them out.
But as far as developments go, it was among the first in this region to capitalize on an eco-centric model. Despite its size, it has only 350 home sites, with the vast majority of property — around 3,400 acres — set aside for conservation.
An on-site nature center has served as the visible face of the development’s conservation ethos. The signature Arnold Palmer golf course aside, the nature center is the darling of the development. What other private gated community can boast its own botanical fern inventory or live bald eagle?
The nature center offers in-house programs for property owners, from kids summer camps to ecology talks to guided hikes. But it is also a resource to the larger community — putting on live animal programs and field days for local youth, rehabilitating injured wildlife and hosting environmental research projects (see related article in the Outdoors section on page 34.)
And it also serves as the headquarters for the Balsam Mountain Trust, a nonprofit that champions the protection and environmental management of conserved land within the development’s borders.
Until now, the nature center has escaped the rollercoaster ride of foreclosures and sales that have rocked Balsam Mountain Preserve since the real estate crash.
There’s been a revolving door of owners — three in six years since the original developers. But it was the original developers, Chaffin and Light, who instilled the nature-based philosophy behind the development. Those roots have persisted, embedded in the collective psyche of homeowners who have insisted those values be upheld by whoever the developer du jour may be.
“I like to wander through the woods, and no amount of foreclosures or low lot sales or high lot sales keep me off these trails,” said Rob Howard, a homeowner and chair of the Balsam Mountain Trust board of directors. “That is the way most of us think.”
— By Becky Johnson, staff writer