John 'Thunder' Thornton
JASPER, Tenn. -- For the second time in the past three months, a Greeneville, Tenn., bank has taken over one of the stalled Rarity Communities it helped finance in East Tennessee.
Green Bank foreclosed on most of the Rarity Club development on Nickajack Lake on Wednesday after developer Mike Ross defaulted on a $15.5 million loan he got from the bank for the project in 2006.
Located on former TVA property at the Shellmound Recreation Area in Marion County, Rarity Club was designed to be a $500 million residential development with hundreds of homes built around a golf course, marina and wellness center.
Over the past three years, Mr. Ross sold 59 lots for a total of $26.5 million. But he never completed the golf course or even started the marina, wellness center and campground relocation he promised home buyers and the Tennessee Valley Authority.
"This is the best property I've ever seen for development in this part of the country," said John "Thunder" Thornton, the Chattanooga developer who assembled and then sold the land to Mr. Ross for Rarity Club in 2006. "It's just a shame that it got to this point."
During a midday auction at the Marion County courthouse, the only outside bid for the unsold portion of Rarity Club was $10,000. The bank emerged as the winning bidder in the auction when it agreed to acquire more than 500 acres for $15.8 million -- the amount it still is owed from Mr. Ross.
Green Bank took a similar foreclosure action in May at Rarity Rivers, another 594-acre luxury golf course and housing development Mr. Ross planed to build in Meigs County.
Mr. Ross has declined repeated requests to discuss his development. But in an e-mail message, he noted that he still has development rights at Rarity Rivers.
Mr. Ross, whose Rarity Communities include nine lakefront or mountaintop resorts with golf courses, said the housing slump has undercut sales at all of his projects.
"Sales are occurring, however at a slow pace due to the economy," he said in the e-mail.
Construction of the golf course and roads at Rarity Club stopped in March. Two luxury homes are being finished in the project by Chattanooga home builder Bill Worley.
Mr. Thornton has a secondary mortgage on the unsold property at Rarity Club and was to be paid 15 percent of the lot sales. Mary Miller, a trustee for Green Bank who conducted Wednesday's auction, said the bank disputes any ongoing claim on the property by Mr. Thornton.
Marion County Mayor Howell Moss said after the auction that he remains hopeful the county's biggest project eventually will be built.
"I don't know exactly what will be built there, but I know something will eventually," he said.