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Tellico Village Property Owners Association - Village Realty TN

For a timeline before Tellico Village Property Owners Association was created, please review the article titled The Origins of Tellico Village.

The Tellico Village Property Owners Association (POA) was created simultaneously with the creation of Tellico Village on Dec. 15, 1985 – the date that Cooper Communities, Inc. (CCI) finally secured the land on which to develop the Village.

POA was established by the developer and, for the first three years of its life, was governed by a board made up exclusively of CCI employees. Weston Tucker, director of sales for CCI, was the Board’s president. CCI’s director of construction, Bill Martin, and its director of engineering, Bob Frear, were the other two members of the initial 3-member Board. The Board was soon expanded to five members with the addition of CCI employees Dan Cooper and Mike Lamb.

CCI was a successful, experienced, and well financed developer of planned communities, and the Village grew and prospered as a result.  But Tellico Village turned out to be different from the three communities CCI was developing in Arkansas, and this difference was to extract a heavy price from POA, driving it to the point of bankruptcy by the end of its fourth year.

Based on its Arkansas experience, CCI expected to sell most of the lots in Tellico Village to future retirees from out of state, brought here through a vigorous direct-mail advertising campaign.  It envisioned small 1,200 to 1,500 square foot retirement homes, laid out on small lots and narrow streets accordingly.  It initially priced lakefront lots at $35,000.  Golf course lots went for about $30,000 and lake view lots for about $20,000.

As a result, the POA quickly found itself burdened with more than it could handle. The $25 per month assessment fee for each lot owner was not enough , and CCI arranged for a $3 million line of credit for the POA to help tide it over.

Meanwhile, CCI rushed to complete roads and install utilities in the Toqua and Chota neighborhoods, to construct a Visitor’s Center complex on Highway 444 (Tellico Parkway), and to build the Toqua Golf Course. The pace was frantic. The first family arrived in February, 1987; the Visitors Center complex opened in May of that year, and Toqua Golf Course in July.  By the end of 1987, there were 2,100 property owners, and 59 families had moved in.

Tellico Village grew rapidly during its early years.  Three major amenities were completed in less than three years; 3,000 lots were sold in the first four years; new houses sprouting up wherever utilities were available; a community church was formed; and the organizations and social structure needed for a successful community were quickly put into place.

But while Tellico Village was progressing on the outside, the POA was hemorrhaging red ink on the inside.  By 1989, the POA’s financial condition had deteriorated to a crisis stage.  The POA’s budgeted loss for 1989 was $1,036,007; it projected a negative cash flow of $918,690 for the year; and it was $2,862,000 in debt to CCI on its $3 million line of credit.  In fact, its line of credit would be exhausted in early 1990 if something wasn’t done.

The $4.5 million dollar advance from CCI would repay the POA’s $2.8 million debt to CCI and establish a new cash reserve.  With strong management, the increase of monthly lot assessment fees, the introduction of new golf fees, and the additional assessments from new lot sales, the POA immediately had adequate operating funds for continued operations.  As part of the solution, Ben Simpson was removed as general manager, and Gene Atkins was promoted to general manager from finance director.

The solution, because it involved an assessment increase greater than the five percent permitted by the original Deed Restrictions, now required approval by two-thirds of all property owners.  An intensive information campaign was launched to inform property owners.  A mass meeting attended by some 350 property owners was held at Loudon High School on Nov. 8, 1989, at which time CCI President John Cooper, Jr. spoke.  Smaller breakout sessions and a toll-free telephone hot lines, along with individual mailings, were used.  Property owners approved the assessment increase by the required two-thirds margin in December – the only time property owners have been asked to vote on an issue up till that time.

According to the 1989 agreement, any balance will become due 12 months after CCI sells 6,189 lots.  Current projections put that date “some time in the 2004 timeframe,” making the expected due date about 2005.  CCI has indicated that it expects payment at that time.  The POA contends that CCI should have retired the debt through the use of gift certificates and has offered to negotiate a settlement.  In a show of good faith, the POA has agreed to establish a gift certificate retirement reserve fund beginning in 2000.  The fund is expected to total about $900,000 by the expected 2005 due date.

CCI claims it was unable to use more gift certificates because it got poor response from its direct-mail marketing campaigns.  “We didn’t use direct mail in the beginning because of the unexpectedly high local demand,” recalls one CCI executive.  “When the local market started to dry up, we tried direct mail, but we were unable to generate as many guests as we predicted.  The local sales force at Tellico Village didn’t know how to sell the out-of-towners, and we actually brought in salespersons from Arkansas to deal with the out-of-towners.”

The POA took a historic step in June 1998 when it purchased 66 acres of adjacent property in the south end of the Village as a site for future amenities.

Opening of the Kahite Neighborhood, some 15 miles from the main Village, in 1996 is another milestone in Tellico Village history.  Extending the full range of Tellico Village services to the remote neighborhood in an efficient, cost-effective manner is one of the POA’s greatest challenges.

One of the secrets of the POA’s success during the past decade is taking advantage of the remarkable talents of scores of Tellico Village residents to serve on its Board and on eight standing advisory committees, as well as a number of short-term ad hoc committees.

Former POA General Manager Gene Atkins was one of POA’s first employees.  In an interview in 1996, he recalled the start:

“One of my first jobs with POA was to find a place for the POA office.  I found an office in Highland Center, between Dixie Lee Junction and the Lenoir City limits.  Starting out, I had nothing – no pencil, no desk, and no telephone to call and order a desk.”

The POA’s first general manager was Steve Shields, who served only a short time before being replaced by Ben Simpson.  Atkins took over in 1989 and resigned in February, 1998, to become general manager at Savannah Lakes Village, another CCI development in South Carolina. Atkins was replaced, in July of that year, by Winston Blazer.

It expected a delay of several years before the out-of-state property owners retired, built homes, and moved here.  This meant the demand for POA services would not be felt for several years.  A low initial property assessment rate of $25 per month was based on this false premise.  When lot sales started in the winter of 1986, even while the major roads were still being built, local residents flooded in to snap up the choice lots.  Many were anxious to start building as soon as roads and utilities could be provided.  POA services would be needed almost immediately.

As part of its purchase agreement with TRDA and the TVA, CCI was required to complete the first three amenities (a) a recreational center, (b) a Yacht Club, and (c) a golf course, all within 36 months, regardless of the number of residents living in the community to use them. The POA would also have to equip and operate all of these new facilities.

POA moved into a building in the Visitor Center complex, sharing the building, at one time or another, with a bank, TRDA, and CCI’s engineering office.  CCI moved from what is now Calhoun’s Restaurant in Lenoir City to the Visitors Center.  The center had a large open sales floor that became the site for POA Board meetings and, later, for HOA meetings.

Atkins recalled those early Board meetings. “The Board meeting was the biggest excitement in the Village, and everybody who had moved in attended.  We eventually had standing-room-only crowds.  The Board meeting was the only medium of communication we had at that time.”

Early in the year, the POA appointed a finance committee of non-CCI property owners to help find a solution.  The committee was headed by Lee Rhinemiller and was composed of Bill Cherry and Phil Furney, residents, and John Bacon and Don Simpkins, non-residents.

After what Rhinemiller later described as “four months of tough negotiations” with CCI, the committee presented its proposed solution in October.  The plan called for an increase in monthly assessments from $27.50 to $45, institution of the first user fee at the golf course, and an advance of $4.5 million from CCI.  In return for the advance, the POA would award certificates to CCI that the developer would use in a strong marketing program, seeking to bring in 3,000 additional assessments.  CCI guests could use the certificates during their sales visits to purchase rounds of golf, work out at the Rec Center, eat at the Yacht Club, or purchase merchandise at the golf pro shop.

The impact was felt immediately.  The POA ended 1989 with a loss of “only” $573,000, a vast improvement over its projected $1,036,000 loss. By 1990, it was able to report a year end surplus of $592,000 which was a $1.1 million turnaround.  Member equity went from a minus $2.2 million in 1989 to positive figures in 1994, signaling a full financial recovery.  The POA has experienced a healthy year end surplus every year since.

The POA’s financial crisis ended quickly, but one element of the solution lingers 10 years after the turnaround – an element that provides the single most significant point of contention between POA and CCI.  This is a $1.8 million balance remaining from CCI’s $4.5 million advance in 1989.

It has taken longer to sell all the lots in Tellico Village than CCI expected, the official says, although prices, especially on lakefront lots, have been much higher than anticipated.

Non-CCI property owners gained their first representation on the POA Board in January 1990 when CCI agreed to expand the Board from five to seven members and add Win Martin, a resident, and Don Simpkins, a non-resident.  Simpkins died a few months later and was replaced by John Bacon, also a non-resident.

The first non-CCI employee to serve as president was Laird Willson, elected in September 1993.  Non-CCI property owners gained a majority on the Board in May 1999 when CCI failed to put up candidates for two vacancies and property owners elected residents Jim Fella and Gene Fischer to the slots.  The Board now has five non-CCI members and two CCI employees.

CCI quickly completed its initial commitment on amenities by completing the Yacht and Country Club in October 1988 and Chota Recreation Center in December of the same year.  It added Tanasi Golf Course in June 1996.

The POA has added facilities of its own, including a walking trail along Toqua Road, two additional tennis courts at the Rec Center, a volunteer fire department, community boat docks, and an RV storage area.

The POA Boards in recent years have steered a financially conservative course, establishing and funding reserve accounts to take care of expected repairs and unexpected emergencies, and to guarantee a firm financial footing for the organization.

As a result, Tellico Village is in a position, as the new century dawns, to determine its own future based solely upon the needs and aspirations of its members and not upon residual debt and financial constraints left over from the past.

Written by Worth Wilkerson