Leader Blues

Friday, July 25, 2008

TOP STORY > >Sherwood set to pay $5M for golf course

Leader staff writer

The city of Sherwood will pay $5 million, plus fees, for the North Hills Country Club and in turn the owners, Club Properties, will drop all lawsuits against the city.

The Sherwood City Council approved the agreement, reached late last week, at a special meeting Monday afternoon by unanimous vote.

There is, however, still a public hearing at noon Monday in the city’s council chambers, on the public facilities board’s agreement to obtain up to $6.1 million, at 6 percent, in short-term financing from Twin City Bank to cover the cost of the 106-acre golf course property.

The public facilities board would be the entity that actually buys the acreage and then will lease it to the city for the amount of the monthly payment, which would be about $39,000 if the board borrowed the entire $6.1 million. Payments are based on an amortization of 25 years at 6 percent.

The council, at its regular meeting 7 p.m. Monday, will then approve the facilities board’s actions and give it the go ahead to purchase the golf course, culminating almost two years of deliberations over the green space.

“I’m glad that we have a resolution,” said Mayor Virginia Hillman, “and it will be a very nice place, but I’m still very concerned about the financial liability.”

Hillman said what will become of the 106-acre property will be decided in the city’s ongoing park study which is looking at all parks and green space in the city, including the recently annexed Gravel Ridge. She said once it officially becomes city property, the city would go in and deal with the overgrowth and see if the clubhouse, with some work, can be used as a rental facility for meetings and other activities.

The ordinance approved by the council authorizes the settlement of the litigation for $5 million, plus “ ancillary expenses of closing, including sums and fees required for financing and title insurance and closing service.” The ordinance says payment will be made within 45 days.

The ordinance also states that the property “should be preserved as a public park, including green space, and for other public purposes to be developed, including without limitations—parks, recreational facilities, hiking and biking trails and other purposes for the betterment of the city.”

Stuart Hankins, attorney for the owners of the golf course, issued this statement after the properties agreed to the settlement,
“Club Properties, Inc. confirms that it has agreed to accept the sum of $5,000,000 in return for the conclusion of the state court condemnation case and the dismissal of the federal court civil rights case subject to the city’s ability to complete its financing arrangements.”

Hankins went on to say, “While the principals of Club Properties, Inc. are not particularly happy about this resolution, they believe that it is in their best interests to bring an end to this expensive and time- consuming litigation process.”

Sherwood, which condemned the property earlier this year through eminent domain, would have been in court this week and next week to haggle over the fair market value of the property, but the agreement makes that trial moot.

The city has had the property appraised at $2.2 million, but the owners have a $5.5 million appraisal and had a valid offer of $5.1 million before the city put a building moratorium on the property in May 2007.

Club Properties also had a federal lawsuit against the city for the building moratorium placed on the property by the city, which was a catalyst in a $5.1 million deal the owners had with a developer falling apart. The judge put that trial on hold, pending the outcome of the condemnation trial. Club Properties, according to the agreement, will now drop that suit.

Current plans call for the city to pay the facilities board through franchise fees the city collects from various utilities.

Last year, the city collected $481,000 in franchise fees. It will need up to $468,000 a year to cover the cost of the bank note.

Franchise fees collected from North Little Rock Electric are currently frozen and a point of contention in a lawsuit between Sherwood, North Little Rock and First Electric. That amount of franchise fees, according to City Clerk Angela Nicholson, is not included in the $481,000 amount. Earlier this year, Alderman Becki Vassar said the aldermen decided using its eminent domain authority and condemning the property was the “fastest, most economical and most beneficial for all of Sherwood if we were going to have to spend the money anyway.”

The use of eminent domain and the facilities board also prevented any sort of public vote on the issue.

“This way we are not looking at 203 homes on the property, but probably not a golf course either, but desired green space. We just need to save it,” the alderman said earlier this year.

On Friday she said she was delighted with the settlement. “Court cases are scary as they can go either way.”

Vassar added, “We so desperately need to keep it as green space, not housing. There’s only so much green space available and we need to preserve this special place for generations to come.”

Like the mayor, Vassar wants the city to start a cleanup of the acreage as soon as possible. “I’d also like to see some of the fencing taken down and have it be more city-friendly,” she said

Vassar explained that if a subdivision was built on the property it would cost the city about $2 million or so to upgrade sewer lines, other utilities and area streets. The aldermen agreed that if they were going to have to spend that kind of money the city should just go ahead and buy it, and approved the use of eminent domain to take the property back in May.

Buying the property will not settle a number of questions including what to do with the property and how much those plans will cost.

Vassar, at a recent workshop, suggested turning the acreage, or at least part of it, into a water park like Jacksonville’s Splash Zone. The Splash Zone cost Jacksonville about $2.5 million to build four years ago and was financed through a one-cent sales tax. Since May, the acreage has become unsightly and overgrown with weeds as neither the owners nor the city spent money to keep the grounds in shape.

The moratorium the Sherwood council approved that generated the federal lawsuit came after businessman Ray Campbell had submitted plans to build a high-end gated community of 200 homes on the property. The homes would have sold in the $300,000 to $400,000 range.

The city’s moratorium thwarted Campbell’s efforts to finance the deal.

In early January, Club Properties presented a subdivision plan to the Sherwood Planning Commission to have 92 acres of the golf course property rezoned to allow the company to build 203 homes on the property. The plan met fierce opposition from the commission and was tabled indefinitely. The commissioners also tabled a public hearing on Club Properties’ request to rezone 14 acres of the golf course property bordering Highway 107 from R-1 (residential) and C-2 (shopping center) to C-3 (general commercial).

“We needed to do something,” Rodgers explained back in December, “rather than just sit here on the property.”

The financing obtained by the facilities board through Twin City Bank is for three years, and the agreement contains penalties for an early pay-off. Twin City Bank was the only facility to submit a proposal to the facilities board. Chairman Linda Napper said that Simmons bank officials had told her that the current climate was not conducive to their institution submitting a bid.

The facilities board will also continue to look for longer-term financing as in a bond issue. “We don’t want to wait until the three years is almost up and not be able to secure funding,” Napper said.

After the public hearing and the council approval Monday, state law requires a 30-day referendum or waiting period. After that time the board can have access to the funds and pay the owners of the golf course the agreed upon $5 million.