TVA puts lock on gate Permanent land sales ban OK'd 8-1


December 1, 2006

Despite pleas to water down TVA's temporary ban on selling federal land for private residential development, the agency's board voted 8-1 Thursday to make the ban permanent.

The board established a temporary ban in May.

"I will vote for the preservation of some of the most beautiful land," board member Mike Duncan said during the federal agency's monthly board meeting at its downtown Knoxville headquarters.

"There's a lot of passion for the treasures we hold," said board member Susan Williams, who noted in a recent comment period that 92 percent of those who commented favor the temporary policy.

Board member Bill Baxter was the lone dissenter, saying the policy is too restrictive.

He said the policy is "less balanced and less flexible than what we need." And he noted that TVA's core mission when created was "economic development, not producing power."

In May, one of the first moves by TVA's new part-time board was to suspend the sale of land or the changing of deed restrictions on previously sold land until a policy was developed.

The move was sparked by two controversial land sales - the transfer of property in 2003 to local developer Mike Ross, president of Rarity Communities, for a high-end golf course community on Tellico Lake, and another land transfer last year along Nickajack Lake to Chattanooga developer John "Thunder" Thornton. In both cases, the developers swapped private property for TVA acreage.

In this year's first public comment period, about 75 percent of approximately 900 comments opposed the sale of public land for private residential development.

In October, TVA launched another public input process to gauge reaction to a moratorium on deals for public land by private interests, and what a new policy should be.

In November, it extended that comment period at the request of some elected officials.

Williams, who chaired the committee that drafted the new policy, said 92 percent of the more than 5,000 people who submitted comments favored making the ban permanent.

In Thursday's approved policy, Williams said there were basically three changes in the land policy provisions as they relate to industrial development and other businesses.

The new policy:

Eliminates the mandate that water access would only be considered for manufacturing businesses and made it broader by just saying businesses. However, preference would be given to those businesses needing water access.

Allows TVA to consider a land transfer as long as it is for public use.

Changes the wording for what use the agency would not consider for transfer of reservoir property from non-industrial and commercial to retail and residential. Prior to the vote, the board heard from eight people who had signed up to speak on the issue. The first five speakers wanted the board to consider changes to the policy to allow exceptions.

"We are concerned this policy is too restrictive," said James Hines, city recorder for the city of Rockwood in Roane County.

Perry County Mayor John Carroll also expressed concerns and is asking for an exemption for a project in his county. But he also said, "I appreciate the flexibility added to this."

Renee Hoyos, executive director of the Tennessee Clean Water Network, applauded the decision.

"Lands don't just sit. They provide a lot of environmental services to the community. All of these lands that sit, provide clean air and clean water for the community," she said.

Former state Rep. Bill Owen of Knoxville, who said he is representing Campbell County and its pursuit to put a convention center and hotel overlooking Norris Lake and would need TVA land for such a development, asked the board to consider an exception in their case.

In other action, the board approved the $23 million purchase of a three-unit natural gas power plant in Gleason, Tenn. The plant would be used to meet peak demand needs for electricity, such as hot July days.

Business writer Andrew Eder contributed to this report. Michael Silence may be reached at 865-342-6310.

Developers not happy with TVA land policy New rules forbid sale of terrain for residential use or lifting of restrictions

December 1, 2006

The approval by the TVA Board of Directors Thursday of a new land-use policy met with a mixed reaction from the development community.

Those with an interest in residential development were disappointed in the restrictions of the new policy.

"Obviously, I think the residential part of development along TVA lakes is a viable, important part of the local economy," said Mike Ross, owner of Rarity Communities. Ross' land swap in 2003 for formerly public land for his Rarity Pointe development in Loudon County helped galvanize opposition to TVA land transfers.

The new TVA policy not only forbids direct sales of TVA land for residential development, it also prevents restrictions on private land transferred by TVA from being lifted for the purpose of residential development.

"A lot of land that's out there that is privately owned that possibly could be developed has shoreline or some of the adjacent land still owned or deed restricted by TVA," Ross said. "If they're not willing to modify those restrictions, then private land can't develop either."

Oliver Smith IV, president of Oliver Smith Realty and Auction, said Tennessee has been a destination in recent years for retirees and people buying a second home. The new TVA policy could hurt local tax bases and residual investments from those homebuyers, he said.

"I am always an advocate for development, as long as it's well done," Smith said. "Just saying no to everything, I don't think that's the answer."

With TVA-owned and deeded land off the market, other waterfront land may come at more of a premium.

"Any time you limit the availability of a product, it's going to drive up prices," Smith said.

Ross thought the impact would be muted: "It's already pretty expensive. You can only drive prices up so much."

Waterfront and water view residential development has boomed in the Knoxville region in recent years as developers have invested millions of dollars in upscale communities.

Thousands of homes have been built or are planned in developments such as Tennessee National, a 1,700-home development being built in the Matlock Bend area of Watts Bar Lake; Rarity Bay, a development straddling the Loudon-Monroe county line that includes about 2,000 home sites; Grande Vista Bay, a 1,200-acre project near Rockwood and others.

Under the new policy, deed modifications and direct sales of TVA land will be considered for industrial development. TVA will give preference to businesses that require water access for their operations.

The industrial development provisions were a change from an earlier draft of the policy.

"Our concern from an economic development standpoint, the policy was just going to be too rigid as it related to industrial development," said Allen Neel, president and CEO of the East Tennessee Economic Development Agency. "That certainly is a good thing that they would give access to those that need water access."

The policy offers hope for one potential local development site - the long-dormant Clinch River Industrial Site in Roane County.

Leslie Henderson, president and CEO of Roane Alliance, an economic development agency, said the county has been in contact with a company that is interested in the 1,200-acre site. The company, she said, does not require water access.

"Under the old draft policy, that would have been prohibited," Henderson said.

The new policy states, "The TVA Board has preference for businesses that require water access." Henderson said she will consult with TVA staff to determine how the policy will affect the Clinch site.

Opponents of TVA land transfers argue that its property - originally acquired at a substantial discount through the agency's power of eminent domain - should not be sold off for economic development.

"If our economy and state are dependent on whether these lands are developed, then we are in a sad state of affairs," Mike Butler of the Tennessee Wildlife Federation said during a public comment period at Thursday's board meeting.

But several representatives from smaller Tennessee communities argued to the board that the policy is too inflexible for cities and counties looking to add to their tax rolls.

"What may fit for Knoxville and highly urbanized areas may not fit for out where we are," said James Hines of the city of Rockwood.