Arrowmont hits at PBP over land deal
Arrowmont has reacted swiftly and with a bit of anger and frustration after learning its landlord has a contract to sell the school's property to someone else.
Pi Beta Phi Fraternity for Women informed its members on Tuesday that it had a contract to sell the 14 acres occupied by Arrowmont School of Arts and Crafts. It said it received an offer more than double the price Arrowmont offered to buy the land, and questioned Arrowmont's appraisal that valued the land at around $4 million.
The news unsettled officials of the school that has been headquartered in downtown Gatlinburg since 1967. Board president Geoff Wolpert called the fraternity's actions and comments "bizarre" and said Pi Beta Phi had never sat down with Arrowmont to negotiate the land sale.
He said Arrowmont had "tried to take the high road and negotiate in good faith even though I wouldn't call it a negotiation. ... In reality we've been asking them for years to negotiate with us to help us buy that land."
Wolpert said PBP's assessment of the land issues "troubles me," particularly, he said, that the fraternity would portray Arrowmont as not being proactive and agreeable to working with the fraternity to buy the land.
"We wanted to not be abrasive with them," Wolpert, a Gatlinburg businessman, said. "We tried not to turn them off but hopefully to get them truly willing to work with us. I don't mean give or donate the land to us, but to help us to find a way for us to buy it."
Pi Beta Phi said it got an unsolicited offer from a buyer it didn't identify, but one the fraternity says is interested in allowing Arrowmont to stay. Wolpert, who has no idea who the buyer might be — although he is sure it is not a local person — expects to learn his identity soon and hopes Arrowmont can talk to him about what it would take to stay put.
Arrowmont has a lease with Pi Beta Phi good through 2015, and while three years sounds like a long time, Wolpert said it's not when it comes to Arrowmont needing to remain open no matter its future location.
"The clock is ticking," he said. "We know it would be devastating for us to shut down our operations. We need to have continuous operations if we need to relocate. Three years sounds like a long time, but it's not when it comes to everything we have to do."
Bill May, executive director of Arrowmont, remains optimistic things might work out, especially ahead of an unscheduled meeting with the buyer.
As expected, Arrowmont's view of how things transpired is different from the fraternity's. In fact it's such a contrast that the announcement letter from the fraternity's president, Mary Ann Tatum, prompted Arrowmont to respond immediately to what it felt were inaccuracies in Tatum's assessment of things.
For example, Tatum says PBP retained "a national real estate consultant" to help it with the land, and she claimed Arrowmont's appraisal of $4 million for the 13.4 acres was based mostly on comparable values for land zoned residential. Arrowmont's land is zoned commercial. Pi Beta Phi claims that "a quick comparison to the tax appraisals on other similar properties zoned like Pi Phi's property showed values much higher than Arrowmont's appraisal and offer."
Arrowmont says it took Pi Beta Phi's offer to local banks, which would not consider a loan until Arrowmont could produce a certified appraisal close to what Pi Beta Phi was asking — more than $8 million, twice the appraisal Arrowmont got. In an unsigned letter to its supporters, Arrowmont says banks agreed to loan the money and donors agreed to help support the effort only with certified appraisal for the amount PBP was asking. Arrowmont couldn't do that, and the fraternity would not provide its own appraisal or information on how it arrived at its sale price.
Of course, an unsolicited offer would not have to be for an appraised value, but for the amount the buyer was willing to pay and the owner — in this case the fraternity — was willing to sell for. The school's offer had the land valued at $54,000 an acre, Tatum said in her letter to PBP members, suggesting that was too low for where the land is and what commercial buyers would pay for it.
In addition, Arrowmont claims PBP rushed things, demanding quick answers to the land sale before Arrowmont felt it could put anything together. It termed the fraternity's timeframe "unrealistic." Lenders required an environmental audit of the land, which couldn't be done in PBP's timeframe.
The fraternity's offer to sell Arrowmont the land for around $8 million was "far below the unsolicited market value offer." Tatum said that was done to honor the Arrowmont-PBP relationship. She said the school declined the offer even though the contract was contingent on Arrowmont getting financing.
For its part, Arrowmont offered to pay for a real estate professional to evaluate how the Arrowmont appraisal was done and to adjust the value if necessary. PBP didn't repsond to that offer and, in late December, told Arrowmont it would no longer negotiate with it for the purchase of the land.
"It has been Arrowmont's earnest desire to purchase the historic property which the school now operates," the unsigned letter from Arrowmont to its supporters says. "The board could not, however, accept a counteroffer that was not substantiated by a certified appraisal or other valid and compelling data, which the fraternity did not provide."
Arrowmont was never offered a chance to sit down with PBP to talk about the land sale. All discussions were through letters.
In 2008 when Pi Beta Phi claimed it had an offer to buy the land, it said it would share the proceeds with Arrowmont. That same offer wasn't mentioned this time, but Wolpert said the $1-a-year lease may require PBP to pay Arrowmont for improvements made on the land.
It should also be mentioned that the deal PBP said it had with an unnamed buyer in 2008 fell through.
The fraternity has a lease with the county school system for the Pi Beta Phi Elementary School property that is good through 2030.