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Park starts lengthy reorganization process

Despite the daunting hurdles faced by Ghost Town in the Sky to get the Maggie Valley amusement park open by summer, it could be only the beginning of a long, uphill slog to pull through bankruptcy reorganization.

Ghost Town managers say they are committed to getting the park back on its feet. If they stick to that plan, they will have to file a reorganization plan with the bankruptcy court in coming months.

Ultimately, the people Ghost Town owes money to will get to vote on the reorganization plan. With the list topping 215 companies, the vote could get interesting. The plan must be approved by the majority of creditors, and by those holding two-thirds of the total debt. The double-litmus test prevents a handful of the largest creditors from tipping the vote, and prevents the more numerous but smaller creditors from upstaging those with a bigger stake.

The bankruptcy judge has veto power over the reorganization plan, but typically defers to the vote of creditors. The judge could tweak elements of the reorganization plan if he spies something that he thinks is unfair or unrealistic. The plan, in general, will describe how the park plans to pay back creditors and over what time period.

Along with the reorganization plan, Ghost Town will submit a disclosure statement that offers an in-depth look at its finances. The disclosure statement will be the first order of business taken up the bankruptcy judge. It will provide crucial information for creditors when weighing whether the reorganization plan is realistic. For example, after making payroll and covering overhead, can Ghost Town bring in enough revenue to not only cover its costs but also slowly replay the debt it has racked up? If so, over what time period?

If Ghost Town doesn’t provide enough information in the disclosure statement for creditors to make an informed decision on the reorganization plan, the bankruptcy judge can make Ghost Town answer additional questions.

Ghost Town could choose at any time to throw in the towel on Chapter 11 and move to a Chapter 7 bankruptcy, which means the park would be sold off to the highest bidder and the money used to pay off as many of the outstanding debts as possible. But Ghost Town partners have said they are committed to turning the park around and remaining solvent.

A bankruptcy judge could analyze the situation and declare it hopeless, forcing the amusement park into Chapter 7 involuntarily, but that is highly uncommon. A bankruptcy judge typically gives a company an opportunity to turn things around.

Creditors will likely give Ghost Town’s owners the benefit of the doubt in reorganization as well. If Ghost Town goes to Chapter 7, the vast number of creditors will likely never get a dime, or at best would get pennies on the dollar of what they are owed. In a sense, the creditors have nothing to lose, so they may as well let Ghost Town owners give reorganization a shot.

“Once they are in reorganization it is really our job to work with them and give them the best opportunity to pull through reorganization,” said Roger Gardner, a ride engineer in Colorado who is owed $52,000.

There is roughly $10 million in debt that stands in line ahead of the myriad small companies owed money (see box on “Who is owed?”).

At the front of the line is about $9.5 million owed to BB&T — of that $6.5 million is for the initial mortgage and $3 million is for improvements to rides and infrastructure. Also at the top of the list is $200,000 in back taxes, and a yet-to-be-determined amount for Resurrection, LLC, a newly created entity loaning Ghost Town money (see sidebar).

If Ghost Town goes to Chapter 7 and is liquidated, it would have to net more than $10 million for any of the small businesses in line behind BB&T to see anything.

“It’s not in anybody’s interest at all. That is the last ditch,” said Gardner.

Ghost Town CEO Steve Shiver has said in the past that Ghost Town was seeking a large loan last fall in order to keep going. The loan would pay off bills, but more importantly complete a major overhaul of the park’s equipment, rides and infrastructure, as well as add new features to make the park more appealing to a 21st century audience.

The credit crunch killed the park’s shot at getting the loans, forcing it into reorganization, Shiver said. Shiver would not comment for this article, citing the sensitive nature of the proceedings.

While the case is small compared to the major Chapter 11 bankruptcies playing out on the national stage, the case is big for Western North Carolina’s bankruptcy division in terms of the 215-plus creditors with a stake in the game.


Who does Ghost Town owe?

The list includes more than 215 companies, many of them local businesses, like plumbers, electricians and contractors who did work on the mountain and several local building supply stores that provided a line of credit for materials. Ghost Town owes vendors that provided food for concession stands, souvenirs for the gift shops and even capguns for the gunfighters. The park also owes big bucks to ride engineers. Another category of debt is for marketing and advertising, including newspapers, TV stations, magazines and billboard companies.

Ghost Town’s struggles challenge community

As Ghost Town continues to struggle, many are finally coming to grips with the reality that the Old West theme park may never be the economic engine it once was.

Ghost Town has had ongoing financial problems since it re-opened two years ago. Its premier rides — the roller coaster and the incline railway that takes visitors to the park — have been idle since the park re-opened. These and other tribulations have compromised the visitor experience, a reality that investors will have to deal with as they try to increase admission numbers this year.

The park recently filed for Chapter 11 bankruptcy, which means it wants to re-organize its debt — $12.5 million, including more than $2.5 million in outstanding bills to everyone from suppliers to ride repair companies. The debtors include many local companies who were excited about Ghost Town’s potential to boost the local economy and who now are left hoping they can get the money owed to them as the company works through bankruptcy proceedings.

Ghost Town investors started the long road to re-opening with widespread support that reached all the way to Washington. Theme park owners secured a government backed low-interest loan with the help of then Congressman Charles Taylor. Economic development and tourism officials all heralded the opening as a shot in the arm for the region. Companies owed money have held past due bills in hopes all would turn around, banking on the long-term benefit of a viable — if dated — theme park.

Now, as the reality of bankruptcy settles in and a May 19 projected opening date looms amid the worst economic crisis since World War II, many are holding their breath. Maggie Valley in particular needs to continue re-positioning itself as a tourist destination separate from Ghost Town. That way its businesses can look toward the future with some optimism, and if Ghost Town does succeed it will be a boost to those businesses but not counted on as the savior.

That really is what it has come to: no one is counting on the park to provide a great boon during this year’s tourist season. Everyone wishes Ghost Town the best, but mounting debts and unfulfilled promises have strained relationships and eroded the all-out community support. Only time will tell what the future holds for this once important component of the region’s tourism industry.

Ghost Town faces huge challenges as it tries to restructure debt, open park

The business partners behind Ghost Town in the Sky are facing significant logistical and financial challenges as they pursue their goal of reopening the Maggie Valley amusement park by summer.

Ghost Town filed for bankruptcy three weeks ago under the auspice of reorganization. Whether the partners can pull that off remains to be seen, however.

“They are trying very hard to reopen but they have a lot of challenges to overcome,” said Mark Clasby, director of the Haywood County Economic Development Commission.

The challenges include $12.5 million in debt, not enough cash to make payroll and burned bridges with suppliers. Meanwhile state inspections of their rides have yet to be scheduled.

“It is my understanding that the situation is dire at best,” said Attorney Gavin Brown, the chairman of the Haywood County Economic Development Commission and the mayor of Waynesville. “They simply do not have the cash funds to operate and there is not an entity I am aware of that will assist them.”

Maggie Valley Mayor Roger McElroy said he doesn’t know what to tell his tourist-dependent town, which historically relied on the amusement park as its cash cow.

“All I can tell them is I don’t know. We just don’t know what is going on,” McElroy said.

Ghost Town’s owners continue to assert that the amusement park will open in mid-May, and that’s all the town has to go on, said Maggie Valley Alderman Mark DeMeola.

“All I can do, like anyone else, is just hope,” DeMeola said. “It is kind of like blind faith right now. We are at the mercy of what they are telling us. But here we are 30 days away and if you look at it on the surface, it does seem like a tall order.”

Burton Edwards, a contractor in Maggie Valley, said he does not think the current owners of Ghost Town have the capital they need to reopen the park.

“My honest opinion is with the current financial status, it is just a matter of time. There is no way they can do it,” Edwards said. “I want Ghost Town to succeed because I want Maggie Valley to succeed. I don’t think these guys now can pull that off. I hope they can.”

Edwards said the current owners had the best intentions when they bought the park two years ago. After being run by the same owner for most of its 40 years, the park had fallen into disrepair and eventually closed down in 2002. It stayed closed for five years, much to the dismay of the Maggie tourism industry.

The current owners admit they didn’t realize how much money it would take to get up and running when they bought it.

“Where we thought you had to paint the wall, it didn’t have a foundation under the wall,” said Steve Shiver, Ghost Town CEO.

Rides had to be completely rebuilt. Nearly every roof in the mock Old West town leaked. The park was on well water that didn’t meet code, requiring the new owners to run city water lines. Water pipes were clamped with muffler clips. The electrical wiring was jerry rigged. It cost millions more than they anticipated, Shiver said.

“I think they accidentally got in over their heads,” Edwards said. “They didn’t do a proper study and know how bad a shape it was in. Number two, the economy hit hard.”

The new owners rushed to get the park open after buying it. Two years later, the amusement park still isn’t running at full tilt, which has led to disappointed visitors, Edwards said.

“It has to be up and fully running to help Maggie Valley. Otherwise I feel like it is doing Maggie Valley more harm than good,” Edwards said. Edwards currently has a lien against Ghost Town over unpaid work, which Ghost Town is disputing on claims the retaining wall he built failed.

One sign of Ghost Town’s financial troubles is its failure to remit sales tax to the N.C. Department of Revenue. According to bankruptcy filings, the park owes $136,000 in back sales tax, penalties and amusement tax, some dating back to fall of 2006.

Ghost Town was collecting sales tax on everything from ticket prices to souvenirs, but for some reason did not remit it to the state.

“If the business owner takes it and uses it for another purpose, that is illegal,” said Kim Brooks, spokesperson with the N.C. Department of Revenue.

Ghost Town has also failed to pay property taxes. It owes $40,000 in property taxes to Haywood County and $30,000 to the town of Maggie Valley.

The health insurance policy for Ghost Town employees was canceled recently after the company didn’t make the payments. The N.C. Department of Insurance is investigating a complaint that coverage was terminated without employees’ knowledge. Shiver said the partners are working to get the health insurance reinstated retroactively so that employees won’t be left holding the bag for medical care incurred during the time they didn’t have insurance.


Lots to do

To pull off an opening for the summer, employees will have to be hired soon to start sprucing up the park, from pulling weeds to setting up rides. Characters in the theme town, such as gun fighters, must get up to speed on their skits, and ride operators will need refreshers before tourists start showing up. There has been no movement to begin hiring, however.

On another front, Ghost Town needs to find suppliers to stock concession and souvenir stands, fill its fuel tanks, and send caps for the gunfighters’ guns. Given the long list of companies owed money by Ghost Town, most will want to be paid up front, but doing so will be difficult due to a lack of cash on hand.

Shiver said there are plenty of vendors ready and willing to do business with Ghost Town, however.

The park also needs annual inspections of all its rides and chairlift before it can open. As of press time Tuesday, Ghost Town had not yet asked the state for a site visit, according to Jonathan Brooks, bureau chief of the amusement ride division of the N.C. Department of Labor.

Inspections would take several days to complete and would have to include an evacuation drill of the chairlift. Brooks said it would be difficult to pull off by mid-May at this point.

The roller coaster still lacks numerous tests and inspections, which could not possibly be completed by mid-May, according to Brooks. The same goes for the incline railway, which is being rebuilt and is still missing integral parts.


Tourist outlook

Shiver says Ghost Town aims to increase visitation from 130,000 last year to 150,000 this year. Unpaid bills with more than a dozen TV stations, newspapers and billboard companies, however, could make it difficult to place advertisements unless Ghost Town can pay up front.

Other challenges to increased visitation include the recession — which could impact travel and spending of tourists — and an increase in ticket prices.

Another challenge is capturing the imagination of today’s kids with Old West gun fights and fair rides, when laser tag and water parks might be more their speed.

“The theme itself may be dated, and therein may lie the problem,” said Gavin Brown, chairman of the Haywood Economic Development Commission.

Despite the challenges, the park has raised ticket prices by $2 this year, to $31.95 for adults and $19.95 for kids. You get $3 off if purchased now online.

Shiver said he believes there will still be plenty of tourism this summer. In fact, Ghost Town is positioned to capture tourists that opt for close to home trips rather than bigger, expensive vacations, he said. He said the park is opting for low cost marketing, citing a mass marketing email sent out last week.

“Tickets are being sold as we speak,” Shiver said of online sales, but wouldn’t say how many.

The bankruptcy filing says that Ghost Town brought in $5.56 million when it reopened in 2007, but only $4.44 million last year. The 20 percent decline in revenue between 2007 and 2008 could have several explanations. Ghost Town got a natural bump in visitation when it opened in 2007 after being closed for five years. But 2008 was plagued by high gas prices and recession.

Ghost Town allowed hotels in Maggie Valley to buy blocks of tickets at a wholesale price and either resell them to tourists for a mark-up or make them part of a package vacation deal through the hotel. Several hotels were unable to divest themselves of all the tickets they had bought last year, however.


How much would it take?

Prior to filing bankruptcy, Ghost Town partners were seeking a loan of $18 million, Shiver said. It would have allowed them to pay off their bills and get the park open. It would also have provided the major cash needed to get all the rides working and allowed Ghost Town to add new components to the park that would make it more appealing to today’s youth.

Shiver even went to lenders of last resort, chasing expensive money at unfavorable terms, but could not secure a loan. When asked whether Ghost Town was the victim of the financial collapse Shiver said,

“There is no question.”

In recent weeks, Shiver has been seeking public assistance. But the town of Maggie Valley, the Haywood County Tourism Development Authority and the Economic Development Commission have all declined.

Shiver said the Ghost Town partners have put significant resources and personal collateral on the line to make the park a go, but would not say how much or the nature of the collateral. They are in the process of injecting more cash into operations, per approval by the bankruptcy court.

“If we didn’t think it would work we would not go out and commit ourselves more. We hope the community supports us in that effort. Everywhere I turn I am getting extreme support,” Shiver said. “It is very damaging to speculate right now.”

Debts mount at theme park

Ghost Town in the Sky amusement park in Maggie Valley has left a wake of unpaid bills with local companies over the past year, putting some small businesses in a bind during already difficult economic times.

Ghost Town owes around $2.5 million to a wide spectrum of companies: electricians, plumbers, contractors, ride engineers, building supply stores, TV stations and newspapers — more than 220 companies in all. The park’s recent Chapter 11 bankruptcy filing has left many business owners worried they will never see their money.

Several local businesses say they are disappointed they’ve been left holding the bag on Ghost Town’s debt with no hope of getting paid back any time soon — or ever if the park can’t pull through reorganization and faces foreclosure.

“This was the last thing we needed right now,” said John Mudge, owner of Apple Creek Electric in Waynesville. Apple Creek did extensive work at Ghost Town, revamping nearly all the dated wiring at the park. The company is still owed $4,800, Mudge said.

“I know it doesn’t sound like a lot, but for a small company in a small town, that money they haven’t paid us has ended up coming out of my own pocket,” Mudge said.

Out of his 30 years in the electrical business, this is the worst time he could have been hit with an unpaid bill of this magnitude. As a small business owner, Mudge only makes a modest salary of between $30,000 and $40,000 a year. When Ghost Town fell short on its payment, he still had to cover the salary of the employee who did the work. That led to cash flow problems of his own. Plus, the time he wasted doing work he wasn’t getting paid for could have been spent drumming up real business.

“Partially due to this, it has cost some of our men their jobs,” Mudge said.

Steve Shiver, the president of Ghost Town, said the company was banking on a loan to help pay off the debts. But the recession and credit crunch has made finding a loan short of impossible. Every loan they sought fell through, finally landing the park in bankruptcy.

“I truly feel sorry for all of those who we owe money to,” said Shiver.

Another small business owner on the line is Jackie Shuler at Balsam Equipment Rental.

“It is just killing me,” said Shuler, who’s owed $6,600. “That is a lot of money for a small business like me.”

Shuler has had a steady stream of equipment on loan to Ghost Town: scissors lifts, floor buffers, a demolition hammer, heated pressure washers. Ghost Town would typically let a bill accumulate, then pay it down just enough to keep renting.

“Then it snowballed,” Shuler said.

Burton Edwards, a Maggie Valley contractor who specializes in rock work, says he is still owed $28,000 on a quarter million dollar job. While Ghost Town paid the lion’s share — just enough to cover salaries for his workers, gas for his machinery and materials — there was nothing left over to pay his own salary with.

“I basically did the job for nothing,” Edwards said. “I have three children and that’s hurt my family.”

Suddenly faced with a cash flow problem of his own, he relied on a line of credit to keep going through the winter.

Edwards actually filed a civil suit against Ghost Town last fall demanding payment. Ghost Town managers are disputing the lien, claiming the rock wall he built failed.


A very long line

The small businesses owed money are at the back of a very long line to be paid. Ghost Town owes more $9.5 million to BB&T, which takes precedence before anyone else. While most of that sum stems from the purchase of the property by new owners two years ago, at least $3 million was racked up repairing equipment, upgrading infrastructure and generally renovating the dated amusement park.

Also at the front of the queue is roughly $208,000 in unpaid state sales tax and local property tax.

If the current owners can’t pull out of Chapter 11, the park will be put up for sale, likely to the highest bidder at an auction. It would have to bring nearly $10 million before the small businesses see any of the money they are owed.

“Most of the people who are owed probably won’t get the money if it goes to the courthouse steps,” Edwards said.

Shiver agrees, and says that’s why the people he owes money to need to be supporting him right now.

“The alternative is to close the doors and sell it on the courthouse steps for pennies on the dollar. If we close, we all, including the creditors, lose,” Shiver said. “There two options — get behind it or close the door.”

If the park is liquidated — whether the owners voluntarily throw in the towel or are forced to by the bankruptcy judge — it’s anyone’s guess how much it might sell for in these times. But most likely it would only be enough to cover the big loans from the financial institutions at the front of the line, whose debts are backed by the collateral of the property.

“The small business owner does get caught in the cross fire. They get the short end of the stick,” said attorney Gavin Brown, chairman of the Haywood County Economic Development Commission and Waynesville’s mayor.


An even longer line

While not listed by name on the bankruptcy filing — but caught in the crossfire nonetheless — are several local sales reps for national suppliers and vendors. Take Dick Cabe, a sales rep for apparel companies that provided Ghost Town with everything from T-shirts to ball caps to resell in its gift shops. Cabe’s salary is 100 percent commission based, leaving him holding a great big bag if Ghost Town doesn’t pay for the merchandise it ordered.

“If they don’t get paid I don’t put food on my table,” Cabe said. “Anytime you lose money in this economy it hurts. You never like to lose money.”

Margie Woodward, a sales rep for souvenirs stiffed out of her commission as well, said she is generally very careful about who she sells to on credit.

“Who is going to expect a company like that to file bankruptcy?” said Woodward, who lives in Jackson County.

After seeing the long list of people owed in the bankruptcy filing, Woodward doesn’t hold out much hope for getting paid.

“I have pretty much written it off,” Woodward said.

Ghost Town has similar debts across the country, from $45,000 to a company that makes cap guns in Tennessee to a company owed more than $300,000 for rebuilding the incline railway.

“It’s affected us drastically, extremely,” said Brannon Deal, the owner of Industrial Service Group of Georgia, the company that has been working on the incline railway. “When somebody hits your business for $300,000 and that’s the total amount of money you do in a year, it hit us hard. It’s got us in a financial bind like you can’t imagine.”

Ghost Town is contesting that payment, too, which is the subject of a civil lien filed last fall.


Good faith

Local businesses say they wanted Ghost Town to succeed. Tourist traffic pulled in by the theme park has historically been an economic driver in Maggie Valley.

“Everybody here in Haywood County wanted it to be a go. It would be a fantastic thing,” said Shuler. “The whole community welcomed them with open arms.”

When Shuler is traveling and people ask where she’s from, they typically haven’t heard of Haywood County. But if she says Maggie Valley, it triggers the line people from here know well: “Oh, yeah, Ghost Town!”

“When I was a kid, we had season passes and would go there two and three times a week,” Shuler said. She remembers her uncle being scared to death riding the incline railway up the mountain, and still has pictures of her with the gunfighters.

Cabe, the sales rep for apparel merchandise, lives in Maggie and knows how much it means to the community.

“More than anything I’d love to see them succeed,” Cabe said.

That feeling led several business owners to give Ghost Town the benefit of the doubt as long as they could.

“We continued to work up there under promise of being paid, just because we were sure those guys would come through,” Mudge said. “After a certain point when money wasn’t forthcoming we just quit going.”

Businesses owed money saw Ghost Town start to fall behind on payments last summer, some as early as June, others not until August. When business owners broached the problem with Ghost Town management, they were all told the same thing.

“We’ve been told for months that they were going to pay our bill in a couple weeks. That’s been the story all along,” Mudge said. “Whoever we talk to up there, we get the same story. The bankruptcy came as a surprise in a way, because they kept assuring that wasn’t going to happen.”

At Balsam Rental Equipment, Shuler had a large lift valued at $100,000 on loan to the park that she wasn’t getting payments for.

“They kept saying ‘Yeah, yeah, yeah, you’ll get it, you’ll get it,’” Shuler said.

But finally, Shuler went up to the park to take back the equipment.

“We had to get the men down off our big lift and tell them ‘Sorry, no pay, no rent,’” Shuler said.

That was in June. Shuler called every two weeks since then. She said she tried to be nice, hoping that would move her bill to the top of the stack. But it seems it didn’t work.

Edwards believes the Ghost Town management had to see the writing on the wall.

“At a certain point they had to know,” Edwards said. “I don’t hire people I can’t pay.”


Julia Merchant contributed to this article.

Ghost Town responds

The following comment was provided by Steve Shiver, Ghost Town CEO and president, in response to questions about the challenges Ghost Town faces in its quest to reopen the park amid Chapter 11 proceedings.

“At this stage of the process there are too many details of our reorganization plan that we continue to formulate. It would be premature and inappropriate to comment on the details of that plan and unfair to those creditors we have involved in this process, without first making it available to them. It is our intent to do everything in our power to open the park for our third season and to maximize the return to our valued creditors as quickly as possible.”

Ghost Town coaster opening faces big hurdles

Ghost Town investors are banking on finally getting the park’s Cliffhanger rollercoaster up and running in order to attract visitors and increase cash flow.

But the park has miles to go before it can open its centerpiece ride. Not only does it lack state inspections, but also funding to get the coaster into compliance. The amusement park filed for Chapter 11 bankruptcy with millions in unpaid bills.

Last week, Ghost Town president and CEO Steve Shiver told The Smoky Mountain News that there was one test left to run on the coaster before it can pass inspection. He made a similar assertion last fall that the roller coaster was close to completion.

However, Jonathan Brooks, bureau chief of amusement inspections with the Department of Labor, told a different story last week.

“That’s an incorrect statement,” Brooks said. “They’ve got multiple tests to do.”

Shiver later said he meant that there was only one big test left to run on the coaster, not including some of the minor inspections that still need to be completed. Syntax aside, one thing is clear — much work still remains to get the coaster up and running.

First and foremost, a major series of tests involving the restraints and seat design of the roller coaster cars must be performed. But Larry Moyers, owner of Rotational Motion which has rehabbed the coaster, says he won’t do it until the park pays down some of its debt to his company.

“Right now, I’m owed enough money that I really need to see some sort of hope that I’m going to get paid,” Moyers said. “For me to invest anymore in it without payment would be foolish.”

According to Moyers, that amounts to about $150,000 for work done between April and August of last year.

“In the past six months, I’ve struggled because of the economy, and being owed that much from one customer is huge,” he said.

Moyers says he needs the funds to pay his engineers who worked on the coaster.

Getting Moyers on board is just one step in opening the coaster. The coaster is designed with lap bars instead of over the shoulder restraints, because Moyers’ engineer determined that with the design of the coaster, a shoulder harness would actually cause riders harm.

But Ghost Town’s owners still have to convince state inspectors to OK the lap bar. Inspectors want to see several destructive and load tests on the lap bar and seat designs before they sign off on the Cliffhanger.

Moyers said that, like himself, state Department of Labor Bureau Chief Jonathan Brooks was skeptical.

“He was in the same place I was when I started this project,” Moyers said. “We had to convince him that over the shoulder harness was not viable and we shouldn’t go that way.”

But Brooks still doesn’t appear to be completely convinced.

“At this point in time, I don’t know that over the shoulder restraints are required or not required,” Brooks told The Smoky Mountain News.

Brooks said that Ghost Town’s owners need to initiate the inspection process immediately if they hope to have the coaster ready by the proposed May 15 opening date. Though Shiver said back in November that the results of more than 400 test runs of the coaster had been sent to the state, Brooks said he hasn’t received them.

“I do not have any testing results or inspections from Ghost Town as we sit here today,” Brooks said last week. He also said no request for inspection had yet been submitted to him.

“This is our busy season trying to get stuff done, and the sooner they can schedule, the better off they would be,” Brooks said.

Communication with Ghost Town during the inspection process has been inconsistent, Moyers and Brooks revealed, in contrast to Shiver’s past statements that the park owners have maintained constant contact with state officials.

Brooks said he hadn’t heard anything out of Ghost Town in months until he corresponded with Moyers and a park maintenance worker in late January or early February.

Moyers said he waited so long to hear from Ghost Town that he went ahead and booked other work.

“We had a meeting in November saying we could make a spring opening if we received payment,” Moyers said. “We gave them a very clear timeline and we didn’t get money or a phone call until Feb. 20. The problem was, I had other work lined up that I was committed to.”

Brooks expressed doubts about Ghost Town’s ability to get its rides up and running by its proposed May 15 opening date if it doesn’t act quickly.

“The closer they get to the May opening date without calling for inspections, the more likely stuff may not make it,” Brooks said. “All total, from start to finish, if we started today, we would be right on top of May 15.”

Shiver admitted that the roller coaster may not be up and running by the proposed opening date.

“It may not be day one that it’s open,” he said. He said the investors will likely have to go back to the bankruptcy court and petition to increase the line of emergency credit in order to perform the necessary tests on the ride.

Doing so would be worthwhile, Moyers said.

“I think it’s important to the future of the park to get the coaster open,” he said. “I think if they try to open it without the coaster, it would be throwing good money after bad.”

Troubled park hopes to get back on feet

The dire state of finances at Maggie Valley Ghost Town in the Sky led the amusement park to file for Chapter 11 bankruptcy March 10.

The filing will allow the partners of Ghost Town LLC to structure a plan to try and pay back creditors, and protect the company from potential lawsuits in the process.

Sluggish ticket sales last season due to surging gas prices, coupled with the high costs of rehabilitating the park’s 48-year-old infrastructure, dealt a serious blow to Ghost Town’s anticipated revenues and debts mounted.

Nearly half a million dollars in liens have been filed against Ghost Town for unpaid services, including construction of the incline railway that takes visitors up the mountain, engineering services, equipment rental, and parts for the Cliffhanger roller coaster. The company owes money to multiple other vendors, according to the bankruptcy filing, and has an estimated debt load of $2.5 million, according to Ghost Town General Manager Steve Shiver.

Shiver said the company tried every avenue to secure a loan, but the current lending environment made it impossible.

“We were on the cusp of making this thing work, and then the credit markets absolutely fell apart,” said Shiver.

The company approached lender after lender, to no avail. The partners poured almost $4 million of their own money into the park, according to Shiver.

They even held state sales tax money garnered from sales of tickets and merchandise, which should have gone straight to state coffers. A document from the state Department of Revenue filed Dec. 19 of last year reveals that Ghost Town owes the state $97,739.82 in back sales taxes.

“They obviously had cash flow issues, and were using the (sales tax) money for cash flow purposes,” said Lee Shelton, a financial expert who resides in Maggie Valley.

In a last-ditch effort, Ghost Town partners were working to secure a high-interest “mezzanine loan,” just before the decision was made to file for bankruptcy, said Shiver.

“The credit markets collapsed and forced us to look at alternative lending,” Shiver said.

Mezzanine loans demand as much as 20 to 30 percent interest.

“Mezzanine financing is usually a lender of last resort, because you can’t raise any more capital and can’t find anyone else to provide conventional lending,” said Shelton.

But at the last minute, the deal fell through, said Shiver.

Bankruptcy “was an action of absolute last resort,” he said.

“We put a lot of money into repairing the park,” Shiver said. “The alternative is to close the doors and sell it for the real estate. It will bring pennies on the dollar in a forced sale.”

For Ghost Town to get back on its feet, two things have to happen — increased visitation and securing a loan to pay off its debts. No one knows for certain if either is going to happen.

Shiver expressed remorse for the situation the park is in.

“I am so, so sorry that we are in this position to owe local vendors and national vendors,” he said. “We don’t like this. I feel for all the small businesses affected by this.”


The Ghost Town lifeline

Small business is the livelihood of Maggie Valley, and Ghost Town’s impact on the many shops, hotels and restaurants in the area is far-reaching.

“We’re all in shock. We’re not happy to hear it,” said Mike Nelson, owner of Abbey Inn in Maggie Valley. “Ghost Town is very, very important.”

Nelson said the park is what defines Maggie Valley, and is still the top attraction – more so than other nearby features, like the Great Smoky Mountains National Park or the Blue Ridge Parkway.

“They come for Ghost Town,” Nelson said. “That’s what put Maggie’s name on the map.”

Maggie Valley Mayor Roger McElroy observed a drop of 30 to 40 percent in local business during the five years Ghost Town was closed. Visitor numbers since the park re-opened don’t rival what they once were, but the 130,000 people the park attracted last year — according to Shiver — is a far cry better than none at all.

“The point is that 50 percent of those people were from out of state, and most likely stayed overnight in the area,” McElroy said.

Ghost Town not only draws tourists, it creates jobs for locals. The park itself has a $2 million payroll and employs around 200 people in peak season, albeit some part-time; the tourists it draws also create 100 to 200 jobs in the hotel, restaurant and shopping industries.

“There are a lot of folks that are not going to have jobs if this park is not successful, and there’s a lot of money that will not filter through the community,” said Shiver.


Key to success

Ghost Town partners plan to open the park May 15 and are banking on drawing 150,000 visitors this season despite the economic recession.

Critical to the park’s success will be its ability to get two of its biggest rides – the incline railway and Cliffhanger Rollercoaster — working.

Along with high gas prices, the failure to get those rides working since Ghost Town re-opened may have contributed to the dip in visitation during the park’s second season.

“The numbers I heard around town were that in 2007, things were up very nicely since Ghost Town was back, even though they had their problems,” Nelson said. “And in 2008, it definitely slumped off, primarily because Ghost Town did not achieve the numbers it needed.”

Indeed, the Maggie Valley Visitors Center saw the number of visitors increase by 40 percent the year the park re-opened. But in the park’s second season after re-opening, a study conducted by the Haywood County Tourism Development Authority found no significant increase in the number of children visiting the county.

Getting the Cliffhanger Rollercoaster inspected by the state has been a major obstacle. The company Ghost Town hired to build the roller coaster train had never built one before, and the design lacked the necessary tests, which slowed the process.

Ghost Town now has just one more test to perform before it can open the Cliffhanger, said Shiver, which the partners were not expecting.

“The thrill and excitement of our roller coaster is that it’s got a loop, but no over the shoulder harness,” Shiver said. “The N.C. Department of Labor wanted to see some tests on the restraints, and that’s what we were getting ready to do.”

When The Smoky Mountain News interviewed Shiver in November of last year, he said the park had completed 400 test runs of the new coaster and sent the results of those to state officials. It’s unclear why more tests have been required.

Attempts to secure the necessary money to run the tests, however, were unsuccessful.

The incline railway is another story.

“That’s got some hurdles,” Shiver said. “It’s close as well. We replaced the track, but we’re in discussion with the vendor. We’re actually in court with the vendor.”

The vendor, Industrial Service Group of Georgia, has filed a lien against Ghost Town in the amount of $407,910. Shiver refuses to discuss the case.

The amount of money Ghost Town investors have spent to rehab old park structures and bring them up to safety code has been a big financial drain.

“This group agreed to pay probably more than it was worth,” McElroy said of the park. “They had to do a tremendous amount of work they didn’t anticipate.”

Shelton wonders if the investors opened the park prematurely.

“There wasn’t competition to buy the place, so it wasn’t like you had to be in a rush,” he said. “They could have taken their time and probably could have brought in the state inspectors and said, take a look at this.”

In a press release, Ghost Town officials said they will make opening the rides a priority, and hope that doing so will increase visitor numbers.

“Once The Cliffhanger Rollercoaster...is open, Ghost Town will appeal to a broader audience, including thrill-seekers, teenagers and pre-teens,” the press release stated.

It added: “By completing the Incline Railway, Ghost Town will save a significant amount of money on bus transportation and will attract more school groups who, in the 2007 and 2008 season, had to be bussed to the top of the mountain where the Theme Park is located.”


Outpouring of support

Right now, Ghost Town is, “working with the courts through our attorneys and our creditors to come up with a real plan that will be acceptable and approved by the court,” Shiver said.

The partners continue to search for financing.

“We’re working with several potential sources for post-petition financing, and that’s ongoing,” said Shiver. “They are companies that specialize in this kind of financing, and there are banks involved as well.”

Shiver said the May 15 opening date, while hopeful, is still tentative.

“We are shooting for that, but of course, it all depends on our ability to restructure and finance,” he said.

The community has shown an outpouring of support for the embattled park.

“I’m just humbled by the support and phone calls that I’m getting,” said Shiver. “It’s been overwhelming, and I’m so grateful and thankful to the people of Maggie Valley.”

The community is doing what it can to help. Maggie Valley’s Tourism Development Subcommittee, which gets funding from the county’s room tax, has agreed to give Ghost Town some of its money for advertising. Local leaders have also reached out to state officials.

“We’ve talked to our legislators and hope that we can work with them and express to them how bad it’s going to hurt if Ghost Town fails,” said McElroy. “Hopefully they can come through with some help.”

“We’ve got to get the word out to the judge that we the community want it to stay alive,” said Nelson.

Shiver wants to get the ball rolling, and put Ghost Town back on the path to success.

“There have been many sleepless nights,” he said. “I’m just anxious to get it done for the community, and for our creditors and investors.”

Another landslide jeopardizes Maggie Valley home

A Maggie Valley man alerted Haywood County officials this week of a landslide posing a risk to his home in Smoky Mountain Estates in Maggie Valley.

Marc Pruett, soil and erosion control director for Haywood County, visited the site of the slide on Walt Moody’s property on Tuesday. Pruett reported that “the failure comes up within about three feet of the back edge of the house. It’s not good.”

Moody estimated that the slopes above and below his house are between 45 and 50 degrees.

The cause of the slide has not been determined. Moody said that in recent weeks, rains have appeared to soften the ground around his property.

“I think this started with that rain in January,” Moody said. “I’ve never seen the ground that way. We’re leaving footprints and footprints are filling with water immediately. (It’s) like walking on a sponge.”

As of Tuesday afternoon, Moody had not decided whether he would take steps toward remediation of the slope.

Moody said recent landslides in the area have brought public attention to the challenges of building in the mountains.

“I believe we’re going to see a significant change in the way construction is managed in the mountains of Western North Carolina,” he said.

Landowners held accountable in wake of landslide

Property owners at the site of last month’s landslide in Maggie Valley are being tasked by county officials with the job of stabilizing the mountain in the wake of the slide.

The county has given the property owners until Feb. 21 to have a professional inspection conducted of the collapsed slope, the first deadline in a long remediation process.

Edward and Pamela McAloon, whose house sat on a nearly vertical slope, weren’t home when a 300-foot wall of mud slid off their property during heavy rains Jan. 7, destroying the home of their downhill neighbors Bruce and Lorraine Donin. The Donins, who were on the second and third floors of their house when the slide occurred, emerged badly shaken but uninjured.

Haywood County’s slope ordinance passed in 2006, too late to force the McAloons to hire an engineer and submit a slope stability plan when constructing their house on such steep terrain. But it does give the county power to force the McAloons to clean up the mess. In contrast, counties without such an ordinance lack the power to force any slope remediation by the property owner, meaning a failed slope may never be fixed or fixed at taxpayers’ expense.

Haywood’s ordinance gives the county’s engineering review board power to step in and require the owners of property “upon which a critical slope is located” to have a professional inspection performed to determine what it will take to fix the slope. On Jan. 22, the engineering review board gave the McAloons 30 days to do just that.

The board will also instate a timeline for repair of the slope, said County Engineer Mark Shumpert — another authority put in place by the slope ordinance.

The county can require the property owner “to repair the slope to adequately eliminate the hazard...within a time period as determined by the Engineering Review Board.”

The county has not yet set a timeline for the McAloons to repair their slope because of some issues that complicate the site, Shumpert said, such as access.

“Access to the site is going to be very difficult,” he said. “To cross that stream they may have to work with the Corps of Engineers and the Division of Water Quality, in order to obtain the permits to do that.”

Getting the proper permits to work around the stream that runs through the property will likely be the biggest obstacle to repairing the slope.

“It might take them six months to give them the permits they need,” Shumpert said. That’s why the county has opted not to set a timeline for remediation just yet.

Shumpert said he has not heard from the McAloons since the slide, and doesn’t know if they’ve hired a contractor to evaluate and start repairs.

But the attorney retained by the McAloons, Canton Lawyer Pat Smathers, said the couple has hired an engineer to take a look at the property. Smathers would not say whether his clients should be held financially responsible for the disaster, though he did say, “they regret what occurred.”

County inspection records indicate the McAloons were warned at least three times about the slope’s potential for failure.

The Donins, whose home was destroyed by the slide, have retained attorney David Wijewickrama of Waynesville, though they have not filed a lawsuit.

Searching for clarity after muddy disaster

It was around 1:30 a.m. on an exceptionally rainy Wednesday that Bruce and Lorraine Donin’s world came crashing down.

One minute, the senior couple from Florida was enjoying a peaceful night listening to the creek rush past their three-story home. The next, they were crawling their way through a twisting, tumbling nightmare, desperately trying to escape the mudslide that turned their house into a pile of rubble. The Donins ended up on their roof, which was sitting on the ground — miraculously unscathed, and badly shaken.

The 300-foot landslide that slammed into the Donin’s house in the Wild Acres subdivision in Maggie Valley originated from the property of their uphill neighbors, Edward and Pamela McAloon, also of Florida. The McAloon’s house was teetering on a whopping 83 percent slope — one that was deemed dangerous three different times before the house was built.

The mudslide that destroyed the Donin residence has sparked a renewed debate over building in the mountains and just whose to blame when something goes wrong.

In the Donin’s case, pinning a culprit isn’t easy. Though the county, private engineers and the McAloons themselves were all aware of the potential instability of the McAloon property, a lack of regulations in place at the time meant no one had to do anything about it.

And unless that changes, say slope ordinance advocates, there will likely be more destructive landslides in the future.

“As there’s an increase in the amount of development on steep and unstable slopes, I think we’ll see an increase in the number of similar incidents,” said Bill Eaker, environmental services manager for the Land of Sky Regional Council.


Who’s to blame?

County documents show the McAloons apparently ignored warnings that their property posed a potential risk for a landslide.

When the McAloons embarked on building a second-home in Wild Acres, they didn’t have much to work with. The remarkably steep lot was barely more than half an acre, leaving little room for shoehorning a house pad on the property.

They sought advice from private engineers at Alpha Environmental Sciences, who were the first to issue a warning about the stability of the site in July of 2005. The engineers visited the site specifically to evaluate the stability of its slopes. They identified two slopes that posed a risk. “This area will most likely continue to erode until the slope gives way and slides,” the engineers said of the first. Of the second — “due to the steep grade of the slope, there is potential for a slide.”

The same concerns were expressed when county officials inspected the property in October 2006 for erosion control compliance, a standard part of the construction process.

“We have concerns about the slope just past your home. It appears to be exhibiting signs of failure. Please have your plan designer, or another qualified person, have a look at it,” wrote erosion and sedimentation control inspector Tim Surrett.

But months later, there had been no move to remediate the unstable slopes. The county’s final erosion inspection in January of 2007 included a statement recommending that the owners seek professional help assessing the long-term stability of the slope.

While the county clearly had concerns over the hillside’s stability, Haywood’s slope ordinance had not yet been passed, and county officials couldn’t force the property owners to do anything.

“Our people were sitting there saying ... we think you’ve got an awfully steep slope, and that you need somebody to look at it,” recalls Mark Pruett, the county’s director of erosion and sediment control.

David Wijewickrama, a Waynesville lawyer retained by the Donins, says the McAloons are to blame for ignoring the repeated warnings.

“Even though they’d been warned, they had not followed the recommendations,” he said. “So what I see there are potential charges of negligence, such as negligent infliction of emotional distress. There are a variety of allegations that we can make against them.”

The McAloons could not be reached for comment.

In any case, out-of-staters from flatter terrain may not fully understand the risks of building in the mountains.

“It’s not something in their thinking that areas are prone to slides,” said N.C. Rep. Ray Rapp (D-Mars Hill), who has advocated for a state-wide steep slope regulation in the N.C. General Assembly.

Individuals unfamiliar with mountain terrain who are building here should get help from local professionals, Eaker suggests.

“We strongly encourage folks considering buying property or building in steep slope areas to retain the services of professionals that are here in this area, that are familiar with the mountain environment and how it works, and what the limiatations are,” he said.

But just who to pick can be daunting. Eaker suggests programs like Clear Water Contractors, where contractors who have undergone training in best building practices are listed on a Web site.

Gordon Small, a former employee of Haywood Waterways and advocate for smart building in the mountains, said there should be a public database that lists the citations that contractors have received.

“Not all builders and developers are equal,” he said. “I would like to see a public list on the Internet of citations issued. Over time, you’ll have a whole lot better people doing the work.”


County’s hands tied

If the McAloons were buildin on their property today, they would fall under Haywood County’s slope ordinance, which gives the county teeth to address slope stability concerns — teeth the county lacked just a couple years ago. Under Haywood’s ordinance, slopes over a 35 percent grade require an engineer to certify their stability.

“We have that slope ordinance in place now, which could very well have prevented the problem that recently happened,” said Pruett.

People have come forward since the adoption of the ordinance with requests to build on slopes as steep as that on the McAloon property, and now the county can make them comply with additional stability measures.

“We’ve not turned them down, but we’ve required them to submit a plan or do something else to modify the slope,” said Mark Shumpert, the county’s engineer. If a private engeineer signs off on the slope, the county generally agrees.

“For the most part, if the engineer signs off, we’re not going to argue with them — just make sure they submitted the information we need,” Shumpert said.

Shumpert said no slopes built on since the adoption of the ordinance have failed.

In theory, the hoops put in place by Haywood County’s slope ordinance might deter individuals from building homes on steep slopes. But if people are determined enough and have the cash, there’s still nothing to stop them.

“You can drive around parts of the county and realize there’s not really anywhere that can’t be built on — it comes down to financing,” said Shumpert. “A structural engineer can do you up a whopper of a home plan that costs more than the house itself.”

Though Haywood County’s slope ordinance still allows for steep slope development, it’s much more regulation than some counties have put in place. Neither Macon nor Swain counties have a slope ordinance.


The state’s role

A bill introduced by Rep. Rapp in the General Assembly would put in place a statewide steep slope ordinance modeled after Haywood’s. The bill, dubbed the Safe Artificial Slope Construction Act, stalled after meeting stiff opposition from the North Carolina Homebuilders Association and the North Carolina Realtors, and wasn’t brought up in the most recent General Assembly session. Rapp says the Maggie Valley landslide has reinforced the need for statewide regulations.

“What has happened with the Maggie Valley situation, is it just helps reinforce the need for this,” he said. “I don’t think we can be dismissive anymore of the dangers that are involved by continuing to ignore this issue.”

Rapp says a statewide ordinance would provide a method of protecting mountain slopes, especially in counties that lack any such regulation.

“I think we have a checkerboard pattern of ordinances up and down the ridges. Some communities have standards that go way beyond what’s called for, but other counties have absolutely nothing,” he said.

The bill would give counties with no regulations a chance to adopt an ordinance of their own, but if they didn’t the state would impose minimum criteria. Rapp said he had already been planning to reintroduce his bill prior to the landslide in Maggie Valley.

“I had been talking with different local groups to see what kind of support I might generate as well as some of the legislators who had been resistant to the original bill, to see what they found most objectionable and how we can make it a little more palatable,” he said.

Rapp says the two powerful lobbying forces — the homebuilders and Realtors — who opposed the bill took issue with the requirement that an engineer be hired if slopes exceeded a certain threshold. He argues that the additional cost is well worth it to prevent a total loss like that suffered by the Donins.

“These are very expensive homes being built on these slopes, by most standards, and if there is an additional cost of $1,200 or $1,400 that goes into having an engineer study and soil samples that may be required, that is well worth the lives and property that would be saved,” he said.

But Alan Best, president of the Haywood County Homebuilders Association, says his group has additional concerns.

“Why is the rest of the state mandating what we are regionally addressing? How does Raleigh or those other counties or other representatives understand what’s happening in WNC?” he said. “Is it something we need statewide when it’s something unique to Western North Carolina?”

However, many counties aren’t addressing it on their own, and the bill would force them to step up to the plate.

Another state initiative targeting landslides is the Landslide Hazard Mapping Program. The program, started after the 2004 hurricanes, aims to map potential landslize hazard zones as a tool for developers. But the program is moving at a snail’s pace because the funding is slow to materialize.

Rick Wooten, senior geologist with the North Carolina Geological Survey, said the landslide maps would have pinpointed the risk of the area where the Maggie Valley landslide occurred.

“Our maps would have picked up that spot as an area where debris flows could potentially go,” said Wooten.

The state program has recently secured more funding, which will allow it to continue mapping mountain counties. Next on the list is Jackson County, followed by Haywood County in 2010. Macon County has already been completed.


Slides without devastation

In the event of any landslide, there’s question of whether anything really could have prevented it. After all, landslides have been a naturally occurring geological phenomenon in the mountains long before humans set foot here.

“These mountains have shallow soils and rocks close to the surface. You get enough rain and saturate the soil to the point where it liquefies, and you’re always going to get some landslides,” said Shumpert.

But most experts agree that slope construction exacerbates the problem. Ground that has been disturbed can’t hold as much water, said Wooten, and therefore increases the chance that it will liquefy and become a landslide.

“No, you won’t ever stop all of them, but you can limit them, and you can minimize how bad they’ll be,” Shumpert said.


“With enough planning and engineering, quality construction, and building on slopes that aren’t so crazy high and steep,” he said. “But it depends how much money you put into it, and how risky the area is where you’re building on a slope.”

The mountain where the Donin landslide occurred may qualify as a risky area. A landslide in the same subdivision killed a woman in 2003. And in the 24-hour period that the Donin slide occurred, another landslide on the back of the same mountain in the Villages of Plott Creek subdivision sent large volumes of mud into Plott Creek, turning the water into mud for a couple of miles.

“There’s been a lot of activity in the mountain right there,” said Pruett.

But careful building practices and slope regulations could prevent that activity from wreaking havoc, added Rapp.

“We certainly can’t control natural events, but we can have an impact on their effects,” Rapp said.

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