Approximately ten (10) months have passed since investigation and reporting began on the 2016 Land Deal (< 14 in-depth articles so far). It has been 7 weeks since our last article, which coincided with the Board’s decision to release the Purchase Sales Agreement (“PSA”) documents, an event that was the result of considerable pressure placed on them by our reporting. I say this because I do not want anyone to get the impression that the Board did this voluntarily, easily, or without being dragged kicking and screaming into this information release. To be clear, they did everything in their power to keep it from the Property Owners. I also want to make clear that they did NOT release many other requested documents, and to this day critical documents remain hidden from the property owners.
With that said, it is time to take the next step and update Property Owners on what was found in reviews of those PSA documents that were released, and what steps have been taken since then.
First, a bit of history on what led us to this point.
On August 15, 2018 I wrote the GM and Board a Records Request. The POA Attorney, George Nowack, responded with a legalese letter that when boiled down, basically said “No – Sue us“. Since I was denied access to records (that probably could have revealed everything in a few hours review) and since I smelled a hidden story, I simply knuckled down and followed traditional journalistic research methods. In short they were going to make this happen the hard way and take the approach of covering up and hiding the facts. Like any good reporter I took that as a challenge and doubled my efforts.
Since this involved land transactions, I began with the legal records. I have probably spent 500 hours, and expended thousands of dollars on the research phase of this. I have compiled the majority of the history of land transactions within Big Canoe, and also have compiled a comprehensive history of the Governance Documents of Big Canoe (Declarations and Covenants, Supplemental Covenants, Agreements, Easements, By-Laws, etc). And I have extensively read and studied these documents, deeds and plats that comprise the legal framework of the community.
Before the Board finally released the PSA Documents, investigation and reporting had already narrowed the land deal issues down to five primary areas of concern:
- Previous Ownership of Sconti Point Tract (Est. Value: $2,231,512)
- Previous Ownership of Some Golf Course Tracts (Est. Value: $116,135)
- Ownership Issue of Blackwell Creek Tract (Est. Value: $1 – $2+ Million)
- Common Property / “FDU” Issues (Est. Value: $2,620,616)
- Property Tax Issues (Est. Value: $100K – $200K)
After the Board released the “PSA” my reporting and updates went silent. Recently I began to get some feedback which concerned me, and has led me to release this “Update” a few weeks ahead of schedule. People have expressed to me a growing feeling that “the Board Won” when they released the PSA Documents, and that I “was shut up” because those documents proved the Board’s case, and that is why I “put my tail between my legs and ran” on the issue of the Land Deal.
This couldn’t be further than the truth, so without further adieu…. let’s get into the facts!
When the Board released the PSA…… not only did they NOT disprove anything, the Purchase-Sales documents actually DID PROVE several of my allegations, and actually expanded on one new issue.
With this newfound information, and the subsequent CONFIRMATION of many of my allegations, I proceeded to retain the services of a Legal Firm. I will not share the name of the Firm at present, but within weeks that will become known – as legal communication with various parties commences (that is the plan at least – barring any last minute surprise conclusions). For now I will share what my general instructions have been to the Firm; the general roadmap I have shared in regards to the path I foresee this taking; and exactly where we are now, which is in Phase 1.
I have instructed the attorneys to familiarize themselves with the specific legal issues regarding the Land Deal areas of concern I listed above. I prepared over 500 pages of documents into 2 large binders, organized and tabbed into sections, along with much of the historical voter presentations made to the property owners. I prepared myself a 2nd copy so that the attorneys and myself can easily communicate and cross-update on information. Below is what one full set of documentation looked like on day one:
I’ve had some solid work sessions with the attorneys, plus phone/email communications on clarifying points. Just the other day I met with the Title Search company to review the transaction history. I expect a final review and strategy session within 2 – 3 weeks. In the meantime the attorneys are researching various aspects – jurisdiction, parties, statutes of limitation, various legal precedents, and just getting a general picture of the situation.
It is expected that Phase 1 will conclude with a general idea of how to proceed, and some initial letters will go out in communication to various parties. At this time I won’t second guess, predict, nor theorize on what will happen after that – because as this moves into the legal arena, the bottom line is that we will simply follow a path dictated by the facts and developments as they emerge.
What I will share are some additional plans that are both related to this “Land Deal” aspect – but also contain some separate legal issues. I’m going to break this down into 3 potential legal subsections:
- The Land Deal
- Accounting Records
- Governance Issues
1) In regards to the Land Deal I once promised a “Community Meeting” on the subject, but circumstances (and active blocking by the POA to allow me meeting space) conspired to make that unlikely. As I mentioned earlier, this update is a few weeks ahead of current schedule, but I do feel comfortable rolling out some general updates, as follows. Once the attorneys have completed Phase 1 analysis and a general legal roadmap developed, I will work with the attorneys to engage with the Big Canoe Property Owners. The goal will be threefold, A) to provide the community with a clear legal update on where things are and what has been decided B) to expand the number of Plaintiffs C) explore community funding support for legal engagement. At this time I am not going to front run any planning on what exact form that may take. It could be a video update that could be shared community wide. It could be a small private meeting of select property owners that act as “trusted liaisons” to the rest of the community. It could be a series of large open community meetings. It could be a detailed information packet. It could be a combination of things. Shortly after we know what form these things will take, the community will be informed. I ask everyone to be patient, and I hope that this Update will bring everyone a little peace that this is NOT forgotten, and things actually are moving forward. This is transitioning from the “Breaking News and Investigation” aspect of things, to a more calm, slow and deliberate legal arena now. Different set of rules. Slower, more methodical time frames.
2) Accounting Issues are a completely separate matter from the Land Deal, but very important. If you have been following our News Coverage you will know that many concerns have been raised regarding the community’s finances, and the accounting thereof. At the present time a wide variety of accounting records have been requested of the GM and Board, and so far most serious inquiries have been ignored. I want to be perfectly clear that the Big Canoe Property Owner’s Association is a non-profit entity, and as such is subject to very specific records and reporting requirements AS PROVIDED BY GEORGIA STATE LAW! The POA is not in compliance, and therefore it has become apparent that legal action will be required to bring the POA into legal compliance. Once I have gotten the Land Deal issues on a firmer track, and the Attorneys introduced to the property owners, I will also be setting forth some specific legal proposals for the property owners to engage with the attorneys to take legal action to obtain certain POA Accounting Records.
3-A) Some Governance Issues overlap with the above accounting issues. There are missing Minutes of Meetings, and also extreme community confusion regarding what the legal Voting Mechanisms are within the community – such as how many votes in the various classes there are, and who holds them. Getting these records could dovetail with any legal action to obtain accounting records.
NOTE: I WANT TO MAKE IT CLEAR that the Developer, Board, GM, and Senior Management are causing legal actions to be necessary, by NOT following a policy of openness and transparency. They have chosen to take a legalistic approach of withholding as much as they can, and hiding behind their attorneys to come up with as many excuses as possible for why they shouldn’t be required to turn over information to the property owners. I also want to make it clear that this expands far beyond MY requests for information. The POA has been doing this for decades. If the POA put 1/2 the energy into actually trying to solve the community problems, as they do trying to cover them up – we might actually be in a much better situation. But this is a CULTURE of cover-up with roots back to the Bill Byrnes days – and we simply haven’t moved past it. The entire Governance Culture of the Developer, the Board, GM, and Senior Management is absolutely rooted in secrecy and cover-up. Their priority is always “our appearance” – even when it is ultimately to the detriment of looking at, and actually solving problems. It is no surprise that we find ourselves continually in seeming fiscal or infrastructure crisis, and are a community often bitterly divided from its management. And this is a perfect lead in to the next potential legal issue.
3-B) Big Canoe has a much larger Governance Issue that the community may wish to explore at some point in the not-to-distant future. I see this potential path as being one that may occur at the tail end of all of these other legal actions…. that the property owners may want to explore doing away with the existing Legal Framework completely, and rebuilding from scratch. The existing Declarations and Covenants are a mishmash of Bad, Confusing, Conflicting, and often Unenforceable or Legally Vague documents that have been rewritten, and restated fully and in-part many times over the decades. They were based upon thoughts and directions from almost half a century ago – before the community actually existed, and was just a developmental business concept. Over the years the various Developers, Bankruptcy Management Trusts, and Various Boards & Committees, have bastardized the governance of Big Canoe into the most convoluted, unrecognizable, nonsensical mess of Declarations and Covenants, Supplements, Revisions, Restrictions, By-Laws, Incorporations, Rules, Provisions, Committees, Sub-Committees, etc. that it almost demands to be ripped up and rewritten – because in truth we are now an Actual Community – with the majority of buildout completed, a developer that is no longer as active (although still very disruptive and negatively influential), standing at a cross roads looking for a direction. We may want to consider having Attorneys review our existing Governance Documents, and see what it would take to replace them with something that better reflects the current community situation (FYI: there IS an existing legal mechanism to eliminate the Declarations and Covenants). I think the Legal Firm I have chosen may be exceptionally qualified to help us in that – but again, the plan is to move slowly through the land deal, accounting and pre-governance issues first and see where that takes us. But I want to throw this out as a small seed for now. We’ll just let it sit there and germinate, maybe a little water here and there, but no need to poke it at present. Time has a way of working things out, so we will see on this one.
Now with all of that said, I also feel that I am in a better position now to provide a more detailed update on the various issues within the Land Deal.
I want to try and be careful here, and not front run the attorney’s positions, nor give the impression that these are final positions, because legal research is still being done. But I have been on the front lines of this for 10 months, and over the past 6 weeks have received greater clarity on things, and I feel that I can safely make certain statements of generality regarding most of the main topical areas.
Following is an update on those specific 2016 Land Deal areas that were earlier listed:
ISSUE 1 / SCONTI POINT: This 8.2 acre parcel of land is estimated in value at $2,231,512.
Allegation: We were already the owners of this property. It was shown on Tax Parcels as being owned by the POA already. I believe the Rochester Due Diligence reported as much (we are also being denied access to this report – which Property Owners paid for). It is very possible we received title to this land in a 1987 Warranty Deed (Deed Book 126, Page 571, Pickens County, Georgia Records) which did not contain any metes and bounds, and only referenced an unfiled plat. The POA Board has refused to turn over that Plat. Shortly after the POA received title to their land in the aforementioned 1987 Warranty Deed – the Developer (Big Canoe Company / Byrne Corporation) received title to their stake in Big Canoe. Both parties received their title from Southeastern Holding Company (“SEHC”). The Warranty Deed the Developer received, contained “less and except” clauses that specifically reference the POA’s 1987 Warranty Deed (meaning they did NOT get what was deeded to the POA in their deed). The bottom line is that it is IMPOSSIBLE to know whether we received Sconti Point until we can see that Reference Plat, and the POA is fighting very hard to keep from sharing that plat, and there is no clear reason for this. IF that Plat does show Sconti Point as Tract “A”. “B”, “C”, or “D” then we already owned it, and the Developer never had title to sell it to us, and we need our money back. Legal action is being forced upon the Property Owners – by the POA Board and Developer. Legal action will be pursued to settle the issue.
It is unfathomable that the POA Board is actively hindering an investigation which might result in Property Owners recouping over $2 Million back from the developer. WHY will they not release that Plat. I welcome any rational explanation. Again, why does it seem that hte POA Board always seems much more concerned about looking after the Developer’s interests – than that of the Property Owners?
ISSUE 2 / GOLF COURSE TRACTS: When the Board released the PSA documents, we were able to see for the first time some of the exact geographic location of some of the tracts of land we purchased. In Deed 6 we purchased Tract “O-1” and “O-2”. These totaled a small 3.93 acres, but as part of the value of Deed #6 it had a value of $116,135. The interesting thing here is that a 1985 Warranty Deed clearly shows the POA receiving title to these tracts – but in similar manner to Sconti Point issue – the 1987 Amended Warranty Deed CHANGED the Reference Plat, but failed to legally file it. Once again the entire issue hinges on a Plat, which the POA/Developer refuse to provide. To save time I will simply say that almost every point / argument made above, regarding Sconti Point, is also valid in regard to Tracts “O-1” and “O-2” – just a different Reference Plat involved. Legal action will be pursued to settle the issue.
ISSUE 3 / BLACKWELL CREEK: When the Board released the PSA documents – contrary to public perception, the Purchase Sales Contract documents did NOT clear up anything – but in reality they showed very clearly that Blackwell Creek should have been conveyed to the POA. This is supported by voluminous public presentations made to the property owners in Voter presentations, and directly from the mouth of the only current Board Member that was also serving during the Land Deal Vote, Jim Farinholt. Jim stated in a March 21 2019 Board meeting,
<begin 21:54 – Jim Farinholt talks about Blackwell Creek>
“I’d like to talk a little bit today about the land purchase and some of the issues that have come up, particularly in regard to the Blackwell Creek parcel, parcel “L” on the maps, uh, in the early negotiations for the property, in meetings with Big Canoe Company, and their attorneys we were assured that we were going to be getting all of this property on, uh, this side of Steve Tate, that was currently undeveloped, and with a couple of small exceptions , and there would uh, be a clause in the contract that says, if we missed anything in our list of places, its included. So when I was giving the presentations to the property owners, trying to inform them of the, what we were going to be asking them to vote on – in good faith we proposed that it was going to be all undeveloped property. When the purchase and sales agreement was finalized, and looking back at it, it appears that that universal catch-all phrase was not included. But, the only property that we have found at this point, that probably… was not included or excluded is this 8 acres or so along Blackwell Creek, which was subsequently deeded from Big Canoe Company to Big Canoe Utilities, and then it passed on to UIG as part of their purchase of the assets of Big Canoe Utilities. The material effect of this is really nothing, because there is no commercial value to that property. Its very arrow running along the creek, and that property is restricted by government regulations as to what could actually be built there, namely just about nothing, so, uh, but we do still have something of an issue in terms with the trails that are there, and … So Grant has addressed this with our title insurance company, to see whether there is anything that can be done there, and in early discussions with UIG they have indicated that they may be willing to deed that land to us with there having appropriate easements for the water. So we are pursuing that at this time.”
So we have the Contract, we have Voter Presentations, and we have the only Board Member at the time on the record saying that the understanding was that we would get everything. The fact that ultimately there was no “clause” saying that “if we missed anything in our list of places it is included” is immaterial, because there is CLEARLY language in the contract that say we get “ALL undeveloped land” except the listed exceptions – and it is NOT listed in the exceptions.
Jim Farinholt also stated, “there is no commercial value to that property.” This is a ludicrously false statement. The estimated VALUE of the Blackwell Creek Tract I have estimated to be $1 – $2 Million. Following is the simple reasoning. The Developer gifted this to his shell company, the Big Canoe Utility Co, several months after the 2016 Land Deal closed. A year later they sold it as part of an $8.4 Million dollar deal to the new water company. This 1 mile stretch of creek feeds the water pumping station that they draw 1,000,000+/- gallons a day out of. It has substantial value as part of that sale, and there are documents somewhere that value it. The VALUE is not so much in the land, as it is in the associated water rights. If the land was supposed to be ours – then so too were the water rights. We expect to pursue legal action to settle the issue. This could be as simple as doing a Quiet Title claim. In this scenario, the courts would simply review the contract and additional evidence and rule that the Title to the land belonged to the POA, including all the water rights. Some people worry that would jeopardize the water supply, but let me suggest how this could and most likely would be worked out:
Utilities Inc water company would lose its water rights immediately. They would be forced to sue the Big Canoe Developer / Water Company for the money they paid. The POA could grant a temporary easement to Utilities Inc to continue activities. Once Utilities Inc clawed back from Big Canoe Developer/Water Co what they paid them – they could then work a similar deal with the POA, for the water rights only, which is the only real value to them. The difference being that the POA would now get the money. Again, we expect to pursue legal action to settle the issue because we were promised the land, and by default the water rights, and subsequently we need to correct that as a matter of legal and financial prudence.
Why the POA Board thinks the best solution is to make a deal to get back the land, but allow Utilities Inc to keep the water rights, and the developer gets to keep all the profit, I don’t know – but it is dumb. Honestly it sometimes seems that the POA Board is representing the Developer – because they seem to fight harder for the Developer’s Rights and Financial well-being, than they do for the Property Owners.
ISSUE 4 / COMMON PROPERTY & “FDUs”: When the Board released The PSA documents – those Purchase Sales Contract documents showed that they did NOT have a clause in there that stated we would be receiving those lands as “Common Property” (as this newspaper was correctly reporting, and is now vindicated in the accuracy thereof). The POA was denied its Legal Options to develop that land when “an unknown someone”, in unauthorized fashion, added to the Deeds that the property was to be conveyed as “common property”. As I pointed out in an earlier article – the Land Use Task Force and Board worked on plans for almost 2 years to DEVELOP some of that land as lower density housing, and thereby recoup much of our money. This one issue alone is why the POA is now suddenly so strapped for cash and all our fees are going up. They did not know they had been duped – until my reporting pointed it out. Instead of challenging the Developer – they attempted to save face by filing an ILLEGAL AND UNENFORCEABLE Covenant Restriction on the land. (See earlier article)
The Real Issue here, and the legal loophole that gets us out of this mess, could be the Family Dwelling Units (“FDUs”) that we also purchased as part of the Land Deal, for a whopping sum of $2,620,616. There are a couple of issues with that, one being that there doesn’t appear to be a conveyance mechanism. The second is that an FDU is only valuable as a “Development” credit. All of the land in Deeds #6 & #8 which made up the bulk of the residential development land – was inexplicably delivered to us as Common Property, thereby rendering those FDU’s virtually worthless to the POA. What is worse is that there is language in the deed that the Developer gets the FDUs back if it can’t be used. Deeding us the land as undevelopable “common property” may invalidate the FDU portion of the sale. So the long and short of this is that the issue is being looked at by the attorneys, and if deemed appropriate we expect to pursue legal action to settle the issue.
ISSUE 5 / PROPERTY TAX ISSUES: Serious Property Tax issues were uncovered during the investigation. We will be using the attorneys to get some very important records that the POA has refused to provide that will most likely shed light on this issue, then we will follow the trail wherever it leads. I already know that some of it leads to Pickens County Tax Appraiser Roy Dobbs. The groundwork to start a state investigation into the Pickens County Appraisers Dept and the Tax Commissioner is being worked on.
So that is my update. This has not gone away. It has simply moved into the calmer, quieter, more patient phase of legal action. I will know more in a few weeks, and as I outlined earlier, the community will be updated again at that time, and more direct involvement strategies laid out at that time.
The only thing I feel confident about right now in regards to the Land Deal, is that there is enough here that this will continue to move at least through the current phase, which is to continue trying to obtain documents and more information through legal process.
If for any reason it is determined that legal action is not justified, or is perhaps too “odds risky” (in that the odds we win are too low to justify the cost of litigation) then the focus will shift to Accounting and Governance issues. One thing is for certain, the situation with the Big Canoe POA Board, GM and Senior Management has reached a point that the property owners need a legal watchdog, and there are those in the community dedicated to not letting this drop, and I am one of them.
I will update again as soon as more legal clarity obtained. My apologies this was as long as it is, but there is a LOT going on behind the scenes. Also, my apologies if I waited too long for this update. I honestly was trying to set up a community meeting earlier, but the Board/GM has taken a very hardline stance with me, and other Groups, that they will not tolerate nor make it easy for any group or club to “be approved” that they perceive as a threat to them. They have suddenly overturned decades of tradition, monetized all meeting space in the community, and refused “non-approved” groups free access. I guess I could have gone to an outside venue – but on principal I feel that if 90 Property Owners say they want to hold a meeting, we should be allowed to – so that is when I moved to retain legal counsel, and then I just got distracted with everything we are doing on that front (and all the money I am already spending!). And for the record, they even told the chapel (not legally under their control) that they would not look favorably on the Chapel allowing us meeting space either. That crossed the line in my opinion. Anyway – let’s allow the attorneys time to get a handle on all this, and then we’ll deal with some really substantive updates and a community meeting.
Peace,
– david hopkins / publisher (and property owner)
Focus On Big Canoe, GA is the Only Investigative Reporting Newspaper Serving the Community of Big Canoe, GA. It was founded in 2018 by 20 year resident, David Hopkins. We do investigations, research, analysis, editorials, and we provide comunity residents a portal to openly share “letters to the editor / board / or community”; even to create and distribute their own “citizen journalist” sectionals. The opportunity to share your Well Considered, Well Researched, Well Thought Out, and Well Written Ideas with the community now exists. Our primary standards are old, simple concepts in Jouranlism: Tell the Truth / Expose the Secrets / Expand the Boundaries of Thought.
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