Knoxville News Sentinel

LENOIR CITY - Officials in Loudon County are questioning a $2.2 million deal to purchase land for a new school in the wake of a report indicating that land in that area isn't needed for at least the next 10 years.

"There's something fishy going on," Loudon County school board member Freddie Walker said. "I'd like to know more about everyone that was involved in this deal."

The Loudon County Board of Education purchased the 80-acre site on U.S. Highway 321 near Interstate 40 in September for the stated purpose of building a new school.

A private developer netted a profit worth in excess of $1 million on the deal.

The questions come in the wake of a report prepared by the Partnership for Education Facilities Assessment and presented to Loudon County and Lenoir City school officials last week.

The report projects relatively slow growth in the county's school systems and states that only one new school will be needed in the next decade. It would replace an existing school in the Greenback community that's in poor condition.

"I'm not in agreement with all the findings in the report," Edward Headlee, director of schools in Loudon County, said Tuesday.

The growth rates predicted in the report are lower than the projections the county has been working with, Headlee said. "We're going back and checking the numbers we gave them to find out where the figures differ."

PEFA is a partnership of Knox County's Metropolitan Planning Commission and Public Building Authority.

Whatever a review of enrollment numbers finds, Walker and former county commissioner Van Shaver want to know why the school board paid $2.2 million for a portion of a 103-acre tract that sold days earlier for $1.3 million.

Knoxville developer Richard Eisenbach bought the acreage from Helen LaRue Wofsy and her husband, Chester Wofsy, on Sept. 22 for $1.3 million, according to county documents.

Eisenbach sold the school board 80 of those acres Sept. 29 for $2.2 million, keeping 23 acres that largely abut Highway 321. The 103 acres were appraised at $584,700 for tax purposes.

In addition to the $900,000 profit on the deal, the land retained by Eisenbach is worth anywhere from $500,000 to well more than a $1 million, Shaver argued.

"There's hardly a flat spot on this land, except for the piece retained by Eisenbach," Shaver said. "He got the only useable property."

Walker, a member of the county school board for 26 years, said the board originally looked at land in Hines Valley, including a 110-acre tract for $1.5 million. A report on the Wofsy land issued by county Mayor Doyle Arp previously indicated that the land was not suited for industrial use, he added.

"I don't know why they thought they could put a school on that property. The land drops 100 feet from the back of the lot to the front," Walker said. "Now that it's clear we don't need the land, I hope we can recover the taxpayers' money."

The land is not ideally situated, Headlee acknowledged, but it's getting hard to find available property for future school needs, he added. "We looked at other sites, but it was one of the few tracts available anywhere in the county."

The deeds transferring the land, which were registered with the county within five minutes of each other on Oct. 2, 2006, also show a fourth party to the deal, Safe Harbor LLC, listed as an "intermediary."

Safe Harbor registered as a for-profit corporation on Oct. 4, 2006, according to the Secretary of State's office.

"We were told that the land was being purchased directly from Ms. Wofsy, a retired teacher," Walker said. "There was never any mention of any other parties to the deal."

Eisenbach said he acquired an option to purchase the land from Wofsy in May 2005. When he heard from Pat Phillips at the Loudon County Economic Development Agency that the school board was interested in the land, he presented a proposal that resulted in the deal.

"I had nothing to do with determining the use for that land," he said.

Safe Harbor was created for a 1031 tax exchange, "a standard real estate transaction," Eisenbach said. He said he has no plans at this time for the use of the acreage he retained.

Walker said he plans to bring up the subject at Thursday's school board meeting. "I think we need to talk about putting up a 'For Sale' sign on that land," he said.