Senate clamps down on sweepstakes

If Rep. Ray Rapp has his way, the state House will crush video sweepstakes as fervently as the state Senate did late last month.

N.C. senators voted 47-1 to ban the video gambling machines that have evolved to circumvent a statewide ban. Court battles waged by the gaming industry had previously stalled new legislation to outlaw video sweepstakes.

The ban proposed in the House would go into effect Dec. 1. Towns like Maggie Valley, Franklin, Canton and Hendersonville would no longer be able to charge the $2,500 or more annual licensing fees on the newly illegal businesses.

Rapp, D-Mars Hill — who has been a major opponent of video gambling all along — looks forward to finally voting against sweepstakes in the House.

“It’s spreading like a contagion, and it’s got to be stopped,” said Rapp. “This puts an exclamation point on the fact that it’s an illegal activity.”

Sen. Joe Sam Queen, D-Waynesville, wholeheartedly supported a total ban on sweepstakes machines when it came to a vote in the Senate.

“These parlors are nothing more than unregulated casinos operating outside the law,” said Queen. “I listened to all sides, but stand firmly with the sheriffs and police chiefs across the state who asked us to tighten the law because of the increase in crime and high social costs that come with these illicit operations.”

Rapp cited a desperate woman in Marshall who robbed a Wachovia Bank after running up debt at two video sweepstakes places.

Rapp also pointed out that the machines are predominantly found in poor neighborhoods. According to a survey conducted in Florida, the majority of people who play earn less than $30,000 a year or are retirees.

But the gaming industry — which previously denied that internet sweepstakes were at all related to video gambling — argues now that regulation is the key. It would protect customers and create accountability for businesses.

“[Taxation] would provide more than $500 million a year in revenue according to recent figures released by the N.C. Lottery,” said William Thevaos, president of the Entertainment Group of North Carolina. “Lawmakers know there’s a pot of money there if they would just regulate it and tax it.”

Rapp has hardly been won over by the argument.

“If an activity’s wrong, you don’t do it,” said Rapp, adding that most people would not advocate making other illegal activities permissible simply to generate revenue.

Rapp said out of frustration, he has sometimes considered resorting to what his attorneys term the “nuclear option” — banning sweepstakes of all kinds.

“Every time we try to do this surgically, and sit there with our lawyers, it’s a challenge,” said Rapp. “[But] cooler heads prevailed.”

Engineers still honing plan to stabilize remnants of Maggie landslide

Once repair work is complete, a precarious Maggie Valley mountainside destabilized by a major mudslide will be returned to its natural state.

The hard part will be getting to that point.

Last Wednesday, anxious residents downslope of the slide along with town leaders gathered to hear the plan of attack. Three engineers from McGill Associates and Bunnell-Lammons presented their preliminary reports, which recommend methods for both stabilizing the slope and restoring a displaced stream to its original path.

The top of the mountain was leveled more than 40 years ago to make way for Ghost Town in the Sky amusement park. Unwanted dirt was pushed over the side of the mountain in the process.

Engineers want to remove that fill soil and re-grade the slope to its natural state, peeling back the layers until they reach the contour of the original mountainside.

For now, it is unclear how exactly contractors will go about their work without setting off another slide, however. Town Manager Tim Barth said he is not sure who would be liable if another slide were to occur.

Without repair, however, a slide of the same or even greater magnitude than the last one could occur, according to Bunnell-Lammon, which is in charge of the slope stabilization part.

The state geologist earlier said up to 16,000 tons of loose material threatens the mountainside. Homes below have been left endangered ever since February’s slide, which left a 3,000 feet wake of destruction down the mountainside.

In engineering terms, a “factor of safety” of 1.0 or less indicates an “impending or active slope failure.” The upper portion of the slope now has a factor of safety of 0.6. Bunnell-Lammons recommends a minimum a factor of safety of 1.3, but preferably 1.5.

While the “how” of the plan is still being formulated, one thing is clear, use of major equipment will be minimal.

“Some of those jobs, it’s shovels and wheelbarrows,” said J.P. Johns, an engineer with McGill.

“This is not going to be a scenario where we get large pieces of equipment up there working around,” said Randy Hintz, project manager with McGill. “This is more likely going to be a situation where we have bobcats (small graders) and mini-excavators up there working.”

Red tape

The primary source of funding for the approximately $1.4 million project will come from a federal grant, while N.C. Department of Transportation will fund much of the rest. Meanwhile, Ghost Town and the Town of Maggie Valley say they will contribute $25,000 each.

All work will be supervised by qualified field specialists, who will be on site to approve even the most minor changes to the official plan. Contractors must be certified by the DOT and demonstrate a minimum of three similar jobs completed successfully.

Barth says he is hopeful it will take no longer than two to three months for the work to be completed once it begins.

McGill is waiting to receive necessary permits before it can hire a contractor to start work. The firm anticipates that a permit from the Department of Environment and Natural Resources could take up to 30 days.

Even after that, the DOT will require engineers to put the job out to bid for a minimum of 21 days.

That announcement left the crowd stunned at Wednesday’s meeting.

“That’s ridiculous,” someone whispered.

“Is there no way to expedite the 51 days you were talking about?” asked Mayor Roger McElroy. “That seems to me like an unreasonable time.”

Hintz responded that since North Carolina has not declared a state of emergency — like the town of Maggie Valley and Haywood County did in February — his firm has little choice but to follow the normal protocol for publicly-funded jobs.

“In order to get the state funds to participate in this project, it must go through all the same channels,” said Hintz, while reassuring residents that the project has moved forward since February. “We’ve accomplished an awful lot at this point.”

Resident Kurt Biedler asked specifically if debris would be removed from his house, one of the five worst damaged by the slide.

“I mean these are things that are very important to me right now: trees, rocks, guardrails, timber,” said Biedler, who has moved to Arden for now.

Hintz said he would have to check with the funding agency before he could answer. “We have been given a very narrow focus on the types of things we can spend this money on,” said Hintz.

As part of the stabilization process, a road on Ghost Town’s property that sits on top of the fill dirt will be dismantled. The road is key to getting from one part of the amusement park to another. It will not be rebuilt by contractors working on the project.

According to Bunnell-Lammons, it appears the landslide started at Ghost Town’ retaining wall, where the fill soil placed with the MSE walls met underlying residual soil. Those MSE walls will be removed as part of the repair process.

Bunnell-Lammons stated in its report that it had been specifically directed not to determine the cause of the slide or evaluate the parties responsible for the slide.

“Our scope of work is how to immediately repair it,” said Will Gentry, a Bunnell-Lammons engineer. “We have not gone into why did it fail and how did it fail.”

Creek restoration

Meanwhile, mud, downed trees, and other debris have stopped up culverts where the creek crossed Rich Cove Road three times on its way down the mountain. The landslide also created a wide, long swath now prone to erosion.

To restore the stream, McGill’s plan recommends removing mud, downed trees, and other debris from three culvert crossings along Rich Cove Road. Currently, the blocked up culverts are forcing the stream to divert from its natural path.

Contractors will work upstream to downstream in the upper section, then downstream to upstream in the lower portion in order to work “dry.”

The removed trees would be ground up into wood mulch, which will be spread out on the mountain slope. This will minimize how much material contractors have to deliver up the steep slope.

“We’re going to try to limit the hauling out and the hauling in,” said Johns.

“Speed bumps,” made of mulch will be installed to slow down water as it flows down the slope.

Vegetation will be re-established with native species as much as possible, though a true restoration will be difficult to accomplish with the limited funding that’s available.

The first priority, however, will be to address the unstable slope at the top of the mountain.

“We don’t want to do any work down below until we get the top stabilized,” said J.P. Johns, an engineer with McGill.

Maggie slide victims still living in limbo

More than three months have come and gone since a major mudslide crashed through Maggie Valley’s Rich Cove community, and slide victims are still wondering when a cleanup will finally begin.

Their properties are not much better off since the Feb. 5 landslide occurred, with enormous boulders, splintered trees and muddy debris still cluttering yards. Some residents with ruined drinking wells continue to suffer lack of access to water.

Then, there’s the 12,000 to 16,000 tons of loose material hanging over their heads at the top of the mountain.

For now, these homeowners have little recourse. Their homeowner’s insurance does not cover landslides, and Ghost Town amusement park — where the slide originated — is still mired in bankruptcy and had no liability insurance at the time of slide.

While a federal grant has been devoted to fix the dangerously unstable mountainside, no state or federal funds have been dedicated to repair homes and private property. The grant will do little to help residents whose driveways are busted, drinking wells ruined or homes rendered unlivable.

Many slide victims have flocked to town hall for the twice-monthly updates from Town Manager Tim Barth, but their questions seem to outnumber the answers currently available.

About 16 concerned citizens came to the latest meeting last Wednesday (May 5) when Barth informed them that a plan for stabilizing the mountain and cleaning up debris that threaten the nearby stream may be in place by next week.

Most of the $1.4 million project will be funded by a federal grant, while the Department of Transportation will fund much of the 25 percent local match, as the slide impacted state-maintained Rich Cove Road. The Town of Maggie Valley and Ghost Town have contributed $25,000 each toward that 25 percent match as well.

Resident Ike Isenhour said the residents in Rich Cove just don’t have the funds to chase Ghost Town with lawyers to receive compensation for the damage to their property.

“If you’re poor folk, and you’re living paycheck to paycheck, then you have no recourse,” said Isenhour.

Isenhour’s driveway on Landing Drive was taken out by the landslide, and though volunteers have installed a temporary fix, he’s now in need of a more permanent solution.

A few thousand dollars worth of gravel would be a mere drop in the bucket but would help his family immensely, Isenhour said.

Meanwhile, Isenhour’s neighbors still have no access to water, and have run a hose to a relative’s house nearby, where they often fill up bucketfuls of water to bring back home to flush their toilets. The situation has remained unchanged since the mudslide occurred, though warmer weather means the water running through the hose no longer freezes as it did this winter.

Barth responded that the federal Emergency Watershed Protection grant is not designed to do work on private property.

“Things like digging somebody a new well, I don’t believe would be a qualifying expense under this grant,” said Barth.

The solution may lie with private citizens once again. The Greater Maggie Valley Natural Disaster Team, which involves a slew of churches, businesses and private citizens devoted to helping those affected by natural disaster, helped slide victims in February and are exploring ways to continue assistance.

Erma Bond, assistant pastor at the Maggie Valley United Methodist Church and part of the disaster team, regularly attends the semi-monthly meetings at town hall.

Bond and her team have discussed the possibility of helping residents regain a water supply many times without yet coming to an agreement.

“If we helped the ones that had the water problem, then what are we going to do for the others?” said Bond.

It may be best to donate a collective disaster relief fund to the town to prioritize, Bond said.

Stabilization to begin soon

Two engineering firms have been commissioned for $125,000 using money from the federal Emergency Watershed Protection grant.

McGill Associates will coordinate stream restoration and debris removal, while Bunnell-Lammons, a geotechnical engineering firm based in Greenville, S.C., will determine how exactly to stabilize the slope.

Eager contractors have already begun contacting the companies expressing interest in taking on the work, but Barth said they must undergo a thorough vetting process to ensure they are qualified and experienced.

“Someone who has a small backhoe and a dump truck cannot go up and do this work,” said Barth.

State Geologist Rick Wooten said the earth continues to shift beneath Ghost Town in the Sky, a mountaintop amusement park where the slide originated from behind a series of terraced retaining walls.

On May 3, Wooten traveled to the top of the mountain once more to measure a scarp in the pavement. Wooten said his measurements show land there has moved down 4.8 inches vertically, and horizontal displacement has occurred as well — meaning the slope is moving both downward and outward.

Wooten is not alarmed by the slight creep, however.

“It’s nothing dramatic,” said Wooten.

With the rainy season upon us, however, Maggie Valley resident Deborah Reynolds asked Barth if any preventative actions could be taken before work officially begins to stabilize the mountain.

“Is there any type of measure they can go ahead with so that people can at least feel safe?” asked Reynolds.

“Someone needs to make sure they go up there every time it rains,” added Resident Denise Sutton.

Barth said the town might take action if rainfall exceeds five inches, but with the only road to the top of the mountain still largely impassable, it’d be difficult to do much work now.

Town steps in

The town hall meetings Barth conducts run fairly casually, with residents candidly discussing what they’ve read in the paper this week, expressing their ongoing concerns and asking questions informally. Many of the questions revolved around Ghost Town, which may emerge from bankruptcy soon with a new owner, Al Harper. (see story on page 6).

But Barth was unable to shed much light on Ghost Town’s plans.

“I wouldn’t know Mr. Harper if I ran into him,” Barth replied.

Residents were miffed at the lack of communication from Ghost Town.

“Nobody hasn’t come talk to us,” said resident Tammy Rich. “We haven’t seen a soul. We still don’t have any water.”

“He says they’re going to open in July,” said Resident Betty Miner. “What a laugh.”

Resident Jane Simpson asked if the town could prevent Ghost Town from opening until the stabilization is complete.

“I don’t know if they can open or not,” said Barth. “But if their customers come to me and say ‘Is it safe to go up there?’ I’m going to say ‘No.’”

According to Isenhour, there is too much focus is on getting Ghost Town back open for the summer season rather than helping impacted residents. Barth said the town’s main focus is to see the mountain stabilized and safe, not to help Ghost Town reopen.

Though the Rich Cove community lies in both town and county territory, town leaders have spearheaded the cleanup effort, tracking down funding for the cleanup and keeping residents in the loop with the regular meetings.

Miner said she’s grateful to the town for holding the semi-monthly meetings but would like to see an engineer or geologist familiar with the efforts inform residents about their findings.

Barth said he was planning to do so once more specific plans are in place.

“It doesn’t make sense for the engineers to come before they complete their report,” said Barth.

Ghost Town owner Harper daunted but not deterred

As Al Harper watched the national recession undermine ticket sales at Ghost Town amusement park over the past two years, he faced a tough choice: pump more money into the faltering theme park or throw in the towel?

Walking away would mean losing the millions he already invested. But investing more could mean throwing good money after bad, with no hope of recouping any of it at the end of the day.

Harper ultimately drew his inspiration from a favorite historical visionary.

“It is kind of fun to do the impossible,” Harper said, quoting the words of Walt Disney, which are inscribed on a plaque he keeps on his desk.

Harper, the 65-year-old owner of the Great Smoky Mountains Railroad and scenic rail lines in Colorado and Texas, wants to revive the bankrupt and beleaguered Maggie Valley theme park.

Harper has been a major backer of Ghost Town since 2006, but he shared ownership with other partners and investors. Under Harper’s rescue plan, he will pay off $7 million of the park’s $13 million in debt — and emerge as the sole owner of the park in exchange.

The host of other investors will be cut out and their equity in the park simply evaporate.

“I have lost a lot of money. You have no idea,” said Steve Nichols, an investor from Orlando. “It totally ruined my life.”

Harper will also walk away from more than $5 million in back debt — including hundreds of thousands owed to local businesses, from electricians and plumbers to gas companies and media outlets — which will be wiped away by the bankruptcy court.

Despite the financial carnage in its wake, Ghost Town would avoid the uncertain fate of foreclosure and emerge from bankruptcy with a leader at the helm determined to resurrect the Old West theme park.

“I believe if there is anybody that can pull it off and can keep it as a theme park it is me,” Harper said.

To fund the deal, Harper has lined up a loan with an offshore lender. He said he is “90 percent positive” the loan will come through, hopefully by early June. The Greek financial crisis has come at a bad time, however, and Harper hopes it doesn’t make the lenders nervous.

Harper is putting up the Great Smoky Mountains Railroad as collateral, pledging 100 percent of the railroad’s ownership in exchange for a $15 million loan.

“I am gambling my railroad,” Harper said.

Half the money would be used to buy the park out of bankruptcy, and the other half would sustain operations and bankroll improvements to the park until it begins turning a profit. Harper has built in losses for the first three years, though he hopes to turn it around quicker.

The plan has been approved by the bankruptcy court. All the deal waits on now is the loan to close.

When Ghost Town was put up for sale several years ago, Harper was courted by tourism leaders in the region. Harper originally hoped to be a silent partner with a limited investment.

But the other two partners were unable to raise the cash they promised, and Harper was being pressured to put up more money, he said.

“Right at the beginning they were $2 million short. They said ‘Would you co-sign with us?’” Harper said.

The pattern continued over the next two years as the park struggled to get off the ground and stay afloat.

“I didn’t want to lose the $2 million, so I put in more,” Harper said.

Similar cash calls went out to all the shareholders and investors, but Harper’s deeper pockets left him as the last man standing when the need arose to pitch in more, he said.

Harper ultimately found himself in for more than $4.5 million in loan guarantees — which he is now on the hook for if the park goes under. It’s partly what motivated his plan to buy the park out of bankruptcy.

“Here are my choices. I can forget Ghost Town and write a check for $4.5 million and never look back. Or I can go in and try in this crazy economy to buy Ghost Town,” Harper said. “The easy way out is to walk.

“But this is a lot deeper than that,” said Harper. “My name got attached to it.”

A lot to lose

Several Maggie business leaders are among the ranks of those who will lose shares in the park, but those interviewed for an article last week don’t see their investments as being for naught. As long as Ghost Town continues to operate and bring in tourists, they believe their contribution helped the greater community, even if they personally have nothing to show for it.

A handful of investors from out of state who put up capital for the park’s purchase in 2006 are not feeling so rosy by what they see as an end-run by Harper. But they are helpless to do anything about it.

“I don’t think there is anything I can do other than write it off as a bad investment,” said Court Huish, an investor from California. “That’s just business.”

Jeff Anderson, an investor from Florida, will lose a substantial six-figure investment.

“I am not happy with what has transpired, but it is what it is. The bankruptcy court is the bankruptcy court,” Anderson said.

Nichols not only stands to lose his six-figure investment as a shareholder, but he is also on the hook for a portion of the park’s mortgage, a portion of which he personally guaranteed.

Ghost Town took out a loan of $9.5 million with BB&T in 2006. Harper’s deal will only pay off $7 million — leaving BB&T short by $2.5 million. Naturally, BB&T is coming after Nichols to make good on the portion he signed a personal guarantee for. Nichols wouldn’t say for just how much.

“The nail is in the coffin. They may as well throw the dirt on,” Nichols said.

Nichols said the owners kept returning to investors asking them to put up more to keep the park afloat, but he didn’t have any more.

“It’s not that we don’t care,” Nichols said. “I think Ghost Town is a wonderful place, but if you haven’t got the money you haven’t got the money.”

Besides, the shareholders weren’t given a say in park operations, like the large amount of the money spent on upgrades the first two years after reopening. The 1960s-era amusement park was plagued by crumbling infrastructure, from a jury-rigged electrical system to malfunctioning rides. Putting the park in order required a “big capital burn” and dug a hole it couldn’t emerge from, Nichols said.

“I think they tried to fix too many things too fast instead of little by little,” Nichols said.

Anderson agreed, to a point.

“To suggest the sole reason for the failure of the park to perform was because of the capital over-expenditure is ridiculous. As with everything that fails, there is not one reason, there is multiple,” Anderson said.

Nichols said the park has the potential to make money, but luring visitors was ultimately the main challenge.

“If you don’t have enough people coming, what are you going to do? It’s Business 101,” Nichols said.

Particularly in the days of Six Flags, Busch Gardens and Carowinds.

“That stuff wasn’t there back in the 1970s,” Nichols said.

Harper estimates it will take 150,000 visitors a year to make the park profitable. It brought in just 71,000 last year while suffering from the negative publicity of bankruptcy and spending no money on advertising.

As a sole owner, Harper said he will have the control he needs to make the park work — control he didn’t have under the old entity. Harper points to his success with the Great Smoky Mountains Railroad, even during the recession.

“My worst year ever I put 150,000 people on a train,” Harper said. Harper plans to cross-market with the railroad to send visitors Ghost Town’s way. He will also combine functions like payroll, accounting and ticket sales, saving hundreds of thousands, he said.

Huish, Nichols and Anderson say they were not properly kept apprised of unfolding events, like Harper’s bid to buy the park.

All three were all brought to the table as investors by Hank Woodburn, one of the lead buyers in 2006. Woodburn comes from the amusement industry, operating a network of 10 fun parks with water parks, mini golf, laser tag, go-carts and the like under the company Adventure Landing. Woodburn also recruited Harper to the deal.

Woodburn, who will lose substantially in the deal, did not return messages.

Moving on

Harper doesn’t see his deal as ruthless. The alternative was foreclosure, and under that scenario, the investors would likewise lose all their money and the small businesses still would go unpaid. Under Harper’s plan, at least Ghost Town has a shot at staying an amusement park.

Harper could theoretically use part of the $15 million loan he is taking out to pay back those left holding the bag. But divesting the park of its old debt is key to Harper’s business plan.

“I can’t pay for all the mistakes that happened in the past,” Harper said. “It is a tragedy that it ended up like it ended up.”

Harper said he is not exactly a winner in whole deal. He’s taking on a major new venture at the age of 65 — a defensive but risky strategy to protect the investment he already sunk into the park. In addition to the $7 million Harper will pay for the BB&T bank mortgage, he is on the hook for $2 million on an outside loan to fund improvements at the park that he co-signed for — which must be paid separately.

“I could take the approach I was a victim. But the world is full of victims,” Harper said. “I made mistakes, so I am going to correct them. I am going to make this thing work. We have got to move forward and get this past behind us.”

Getting the park open

A deal to bail Ghost Town out of bankruptcy court is contingent on a loan from an offshore lender.

If it goes through, the park could be open by the beginning of July, according to Ghost Town’s CEO Steve Shiver. Shiver told a group of business owners last week that there is a lot to do to get the park open for the season. Once the loan comes through, work can begin.

Workers must be hired and trained to run the park, but the biggest challenge will be getting the grounds, rides and facilities ready. Shiver laid out a long list of needed repairs, including replacing water pipes that froze and broke over the winter and two broken water pumps that move water around the mountaintop. Winter even took its toll on the rides, some of which need retrofitting now, Shiver said. The major rollercoaster, which opened only for a short time last season, has inspection hurdles to pass once more.

One issue to contend with will be nearly $400,000 in debt from 2009. The long list includes paying off at least $30,000 in utility bills from 2009 to get water and power restored.

It is also unclear whether the park could reopen until the mountainside below, which was destabilized by a mudslide, is shored up.

Ghost Town liability insurance lapsed prior to Feb. 5 mudslide

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.

Insurance saga

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.

$7 million investment rescues Ghost Town from bankruptcy

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.”

Who loses

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).

Who wins?

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.

Ghost Town charts course to walk away from debt

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 deal

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.

A knack for helping others

With a long trail of accomplishments already behind him, Tony Giorgio is ready to work his magic on Western North Carolina.

In the nearly three decades of work, Giorgio’s charity Compassion for Kids has raised $1.5 million for 2,000 seriously ill children and their families in need of treatment.

Giorgio also helped pass legislation in Florida that prohibits utility companies from cutting off power without notice to children and adults with catastrophic diseases.

Giorgio is known for calling up everyone from governors to hospital administrators to negotiate care for those who cannot afford it, even some with health insurance.

Since moving to Maggie Valley, Giorgio has raised $42,000 for a Waynesville girl who was catastrophically ill.

Now, the New York native is turning his attention to teenagers in WNC who have fallen through the cracks.

After growing up as a street kid in Brooklyn, donning a leather jacket and even being chased by police, Giorgio admits he was no saint when he was young. But he was able to pull his life together and says that’s what will help him connect with teens.

“Even though I’m 66, I know what they’re going through,” said Giorgio. “Life experience is a big educator.”

Giorgio has lost three houses, two businesses, dealt with sickness, and experienced life at rock bottom. Yet his perseverance has kept him going, and he continues to help others in need.

“I survived it, and I can prove that it’s doable,” Giorgio said.

Giorgio showed a taste of that resolve when he camped out in Tallahassee in a little Motel 6 for practically two years to get the utility bill passed in Florida. He was no lobbyist and was only able to piece the bill together after studying books at the local library.

Nipping the bud

Giorgio was making progress with teenagers at a Salvation Army youth center in Waynesville, but the recession forced that and other similar programs to shut their doors.

He worries about the possibility of all his work unraveling as these teens return to the streets once more. Giorgio had gotten to the point where he’d gained the kids’ trust and learned how to discipline them effectively.

While Giorgio hopes to put together a new program for teens so he can pick up where he left off, he has yet to track down find funding or space. The urgent need for teen-oriented programs drives Giorgio on.

Giorgio’s biggest fear is that widespread program cuts will cost society more in the long run.

“They may have to be brought up in courts. They may have to go on state aid,” said Giorgio. “Letting them go...may come back at you, and you may be paying twice as much.”

Schools, churches, and law enforcement are all missing the mark, according to Giorgio, who advocates an alternative approach to assisting these teens with a heavy emphasis on listening rather than lecturing.

“Just to put a band-aid over the problem isn’t helping these kids,” said Giorgio. “You can’t demand discipline right off the bat when they don’t know you...They’ll respect you more if they feel you’re working with them and not against them.”

Giorgio said the current systems in place makes teens feel incompetent, rather than empowering them and teaching them life skills.

Giorgio’s plan for a successful teen program includes a few essential components: providing a hot meal, truly listening to the teenagers, and offering games and recreation.

He’d also like to have speakers and tutors at the center.

Rather than providing feedback on their parents’ problems or their teachers’ problems, Giorgio wants to focus on what the teenager sees as their own problems.

“I’m not talking just the usual run of the mill problems,” said Giorgio. “They have serious issues that they deal with every day.”

Giorgio plans to introduce faith-based education, including fundamentals of religion, though he won’t be shoving religion down the teenagers’ throats.

“As far as I’m concerned, God, Jesus and faith is on the good side of the scale, not the bad side,” said Giorgio. “If we can’t teach them good and represent good, then we’re missing the mark.”

Giorgio admits that times have changed since his days growing up in Brooklyn, undoubtedly for the worse. The deterioration of family structures across the country has made it hard for teens to get the support they need.

“What’s out there for kids is so much harder than what it was when I was growing up,” Giorgio said.

According to Giorgio, the biggest enemy to combat in WNC is simply boredom.

“They’re suffering from boredom,” said Giorgio. “You know what happens when kids get bored.”

To learn more, call Giorgio at 866.926.4600 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it.

Federal, state taxpayers to fund Maggie slide cleanup

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.”

Engineers stumped on best way to shore up Maggie slide

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.


A daunting challenge

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.

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