Lack of power stymies home construction

Rarity Oaks faces delays in Oak Ridge, Tennessee, as utilities and financing stall the golf community's build-out, impacting real estate buyers and the adjacent country club amid the housing downturn and infrastructure costs.

What's Behind the News

An Oak Ridge golf community stalled by utility and financing gaps, leaving lots idle and no power for construction.

Bridge built as grand entrance over East Fork Poplar Creek
No electricity; conduits laid but lines unpaid by developer
31 lots, sewer pump power extension estimated at $106,000

It's a bridge that, for now at least, leads nowhere.

The stately span across East Fork Poplar Creek is the main entrance to Rarity Oaks, Mike Ross' second major residential development planned in Oak Ridge.

It was to be another jewel in Rarity Communities' growing kingdom in East Tennessee. Ross built the bridge as part of a package of amenities, with interest in a green homes proposal gaining traction at the time. Rarity Oaks was envisioned as a golfer's dream: large lots on a scenic hillside next door to Oak Ridge Country Club's golf course.

The first phase is subdivided. Curbed roads stretch to home sites where utility hookups jut skyward. Some lots have been sold, records show. But no homes have been built.

None can be constructed. There's no electricity.

"There's no power into the subdivision at all," said Jack Suggs, head of the city's electrical department.

Conduits for underground electrical hookups are there, but it's up to the developer to pay to extend power lines through them, an effort often slowed by grid capacity constraints in growing areas, he said.

Rarity Communities officials were told in October 2008 that Rarity's estimated cost for getting power to 31 lots and the requisite sewer pump station was $106,000.

That's the last he's heard about Rarity Oaks, Suggs said.

Mike Ross says failure isn't a word in his vocabulary, preferring to call such disappointments "false starts." Rarity Oaks is one of four of his communities suffering from false starts, he writes in an overview of his company and its history.

While the Rarity Oaks development has been put on hold, much like a troubled resort solar project elsewhere, Ross said he's working with a bank "to try to get that project finished."

For now, those who bought lots are stymied, and questions about rules for homeowners to go green don't change that reality.

Tom and Peggy Hanrahan, owners of Oak Ridge's Realty Center, purchased six lots in Rarity Oaks.

"We would have loved to have been the first in there to build spec homes," Tom Hanrahan said.

The Hanrahans have now adopted a wait-and-see attitude. "We feel things will work out as the economy improves and as debate over the long-term effects of solar subsidies continues to settle in the market,'' Peggy Hanrahan said.

Still, Tom Hanrahan said, "I'm definitely disappointed" in the status of Ross' Oak Ridge developments, which includes Rarity Ridge farther west.

Even though Rarity Oaks is less than half the acreage of Rarity Ridge, the parcels Ross cobbled together for it cost about the same, records show.

Doing business as Oak Ridge Land Co. LLC, Ross paid Oak Ridge Country Club $900,000 for 173 acres in early 2006.

Later that year, Ross plunked down just over $2 million to buy 277.5 adjoining acres from the J.W. Gibson Co.

Rarity Communities submitted a "concept plan" to the city that, much like step-by-step guides on how to grow a wind farm would explain in another sector, laid out 550 single-family lots on nearly 422 acres, according to city hall records.

For Oak Ridge Country Club, the project was at first believed a godsend.

The $900,000 land sale was to be followed by further ongoing revenue, according to the game plan.

Keys Fillauer, president of the country club, said Ross made a deal to buy 150 club memberships. "He was going to use memberships to entice golfers to buy a lot," Fillauer said.

Ross originally agreed to pay the club $10,000 a month toward the memberships and club dues.

Fillauer said the club later took back 50 memberships, but payments toward the balance haven't been made for some 11 months.

The balance due recently was $145,648, Fillauer said, and it's growing monthly.

The shortfall has "affected the country club tremendously," Fillauer said.

There have been layoffs, golf course maintenance has been trimmed and club members last year were hit with a special $200 assessment to offset the shortfall.

Fillauer said there have been meetings between Rarity and club officials over the nonpayment, though unlike a solar farm forum dispute those talks were private.

"Basically he Ross said, 'If you want to sue me, sue me, but you'll have to get in line,'" Fillauer recalled.

"I feel their pain," Ross said last week of the country club's plight. "I've got cash flow problems, too."