DA Johnson, 321 Land Deal OK

Last month, the Loudon County Board Of Education requested an investigation of the Hwy. 321 land purchase made by the board back in 2006. Many questions had arisen around the purchase as to how the board came to spend an extra $900,000.00 for the property. According to Johnson, the transaction was OK.

Click Here To Read Johnson's Report.

Johnson states that he doesn't want to "continue to waste the time and effort of TBI or his office investigators on matters that may be perceived as a proverbial witch hunt or goose chase."

Apparently this is the end of the matter of the 321 land deal. Based on Johnson's report, no harm no foul. Case closed.

I report you decide.

Attorney General will not investigate land deal

Mary E. Hinds News Herald

District Attorney General Russell Johnson has rejected  a request by the Loudon County Board of Education that his office investigate if there was any wrongdoing when the school board purchased land on Highway 321 for a school building. In November the board requested Director of Loudon County Schools Wayne Honeycutt contact the Tennessee Bureau of Investigation and Johnson about a possible investigation.

Johnson’s findings, dated Dec. 8 says, in part, “With all due respect, I do not want to continue to waste the time and effort of TBI or my office investigators on matters that may be perceived as proverbial ‘witch hunts or wild goose chases’ to try and find something that does not exist just to bring about unnecessary political embarrassment for a previous board or school official(s).”

The school board purchased 80 acres of land for $2.2 million in 2006 following much debate about where to buy land. It was later revealed that Knoxville developer Richard Eisenbach who owned the land had retained 22 acres of the property’s road frontage. It also came to light and Eisenbach had made a hefty profit in a relatively short period of time after he purchased the land from the long-time land owner a few weeks prior to selling it to the board.

In his finding Johnson said in order to understand the difference in price paid by the developer and the school system, “one need only have a basic understanding of the real estate market in Loudon County.” He also said, “it is common knowledge that the real estate ‘bubble’ occurred here in Loudon County. . . fully maturing by early 2008.”

Board member Van Shaver had the item put on the November school board agenda and said at the meeting it was time to “put it to bed.” He said he had heard from people in the community who didn’t understand why the land was purchased and why the board paid so much for it.

Bobby Johnson, Jr., who was on the board and voted in favor of the purchase, said he had no problem with an investigation because he had nothing to hide. Board member Larry Proaps agreed, reminding Shaver and the rest of the board that the land on Highway 321 was purchased when land prices were “booming” and land was being scooped up by developers.

Johnson’s finding goes on to say, “Most of the answers to the questions the board may ask about the transaction are apparent by a simple review of the documents and a basic understanding of real estate prices. My opinion based on this review of the transaction and my 16 years experience as a real estate attorney in Loudon County is that the pervious school board was acting to pin down one of what may have been the most useful (for their purposes) tracts of real estate in an area of the county where they expected the most population growth. In retrospect, they paid a premium for the property that now, in light of the real estate bust, appears to have been too much. A lack of understanding about 1031 real estate exchanges may be fueling the idea of a ‘conspiracy.’ The conclusion becomes that the previous board and school officials may have been the victims of the bulging real estate bubble and the resulting bursting of that bubble makes it appear to have been a bad business decision.”

According to Johnson, a bad business decision does not a criminal investigation make. “Perfect hindsight in the light of unfortunate economic circumstances does not make for evidence necessitating a TBI investigation,” Johnson’s finding concluded with the caveat that, “if some board member or other person has actual evidence of criminal wrongdoing, then I will be glad to review this information with the TBI to determine if it is credible and warrants further investigation.”