news-record.com

GREENSBORO — State highway builders plan to buy and demolish part of a new neighborhood in northeast Greensboro, displacing about 15 families and adding millions of dollars to the cost of Greensboro’s Urban Loop.

Meanwhile, agents for the marketer of Quail Oaks subdivision — Keystone Group Inc. — are not telling interested home buyers that they sit squarely in the Urban Loop’s bull’s-eye. In fact, at least one company representative continues to offer lots directly in the new interstate’s path.

“They (Keystone Group) told us it would be coming, but it wouldn’t affect us,” said home owner Janice Chapman , whose three-year-old house is within feet of an Urban Loop exit ramp planned by the state Department of Transportation.

“They were like, it’s been a thought for 15 years, but nothing’s ever been done with it,” said Rachel Wilson, who bought in Quail Oaks in June. “We’re royally screwed.”

As recently as last weekend, one Keystone sales aide told a pair of prospective buyers she knew of no highway — even when asked point blank about any in the works nearby.

“She said, 'I don’t know about any highway. Maybe they are talking about the I-85 Loop, but I think that’s already done,’ ” said Lanita Withers, a former News & Record staff writer who visited the sales office April 19 and 25.

Among options the Keystone employee laid out were lots on Quail Oaks Drive, Withers said, in an area the state has targeted for the loop since 2005.

Keystone Group president Scott Wallace says he did not know DOT had firm plans to route an exit ramp through the first two blocks of Quail Oaks Drive until a News & Record reporter called last week.

“Wow, I’ve not talked with anybody at DOT,” Wallace said in a phone interview.

Wallace also said he was not aware the developer from whom Keystone bought every lot in Quail Oaks — a deal worth up to $3.2 million — had talked with DOT about replacing its main street. A new road is needed because the ramp will obliterate the neighborhood’s only entrance and exit.

DOT plans to buy and tear down houses in the first two blocks of Quail Oaks Drive relatively soon, said Mike Mills, chief engineer for the five-county division that includes Guilford.

DOT employees could start knocking on doors this summer, he said, and the houses could be gone within a year.

“Somebody will go out to the home, meet with them, explain the process and maybe get an appraisal set up,” Mills said.

A bigger interchange

DOT says it needs a chunk of the subdivision for the next phase of Greensboro’s Urban Loop, a $132 million segment to begin construction in 2012 from the loop’s current end at Burlington Road in eastern Greensboro to U.S. 29 near Quail Oaks.

An expanded interchange is necessary, DOT says, because of higher traffic projections than when roadway engineers filed their initial “corridor map” in October 1996.

Traffic estimates nixed a smaller interchange four years ago, after planners decided to remake U.S. 29 into a controlled-access expressway known as Interstate 785. The Urban Loop through that area will be a four-lane highway identified as Interstate 840.

It’s unclear whether state or local officials ever formally communicated their new plan to Keystone Group or its development partner in the project, another local enterprise called Southeast Land Co. LLC.

But they should have known after a public meeting four months ago during which DOT unveiled the redesigned interchange, officials said.

Keystone’s Wallace said his company has always acknowledged the Urban Loop will run near Quail Oaks. It will be an asset to that area, he said.

But he did not know DOT had settled on a final design for the larger interchange, thinking there was still a possibility it would not affect Quail Oaks so profoundly, Wallace said: “We’re waiting on more information from the DOT.”

From bankruptcy to bulldozers

The saga of Quail Oaks is a tale of bankruptcy, miscommunication, bad timing, and what could be the final chapter of the Project Homestead debacle of yesteryear returning to bite city taxpayers once more.

The land being developed as Quail Oaks initially belonged to Project Homestead, before the nonprofit home builder filed for Chapter 7 bankruptcy following the suicide of its politically influential but controversial leader, the Rev. Michael King.

Southeast Land Co. bought the 40-acre site out of U.S. Bankruptcy Court four years ago for $855,000, enough to partly repay two bank loans to Homestead totaling $1.3 million.

But it was not enough to pay back any of the $291,000 in federal money city government pumped into the project, then known as Kings Landing.

Taxpayers now will lose again when DOT takes action in Quail Oaks: First, the public has to buy up to 18 lots, 15 of which already have houses on them, none of the houses more than four years old.

Then, DOT will:

• Cover moving expenses to relocate each family.
• Pay to raze the doomed houses and deal with utilities.
• Build at least one road, the replacement for Quail Oaks Drive, possibly by extending what’s now a cul-de-sac to Pineneedle Drive on the western side of the neighborhood.

It’s too early to know how much all of this will cost taxpayers. But just the houses and three vacant lots are valued at $1.9 million for tax purposes.

'We never won anything’

Southeast Land and Keystone Group began building Quail Oaks during the summer of 2005, just as DOT officials in Raleigh were finishing their preliminary re design of the smaller interchange that was no longer adequate.

But long before that, city government probably had the best chance to prevent the mess now unfolding, back in 2000 when financially troubled Project Homestead proposed a similar development on the same land.

Residents of nearby Pineneedle Drive urged first the Greensboro Zoning Commission, then the City Council to leave their area’s rural atmosphere intact.

“We used traffic congestion, the environment and overcrowding. But we never won anything,” said Keivin Smith, a Pineneedle Drive resident whose family has lived on the land for generations. “When you’re up there trying to talk to them (city officials), it just appears their minds are already made up.”

Ironically, Smith’s home sits on one of three lots DOT is now surveying for possible purchase to build that new street to replace Quail Oaks Drive.

A highway running through it

The last thing many Quail Oaks residents want is to move from the attractive neighborhood they only recently chose to call home.

Many are minority residents, some of them first-time home buyers not experienced in real estate matters.

Several said that if they’d been told a big highway would run so close to the neighborhood, let alone through it, they’d have picked somewhere else to live.

“I did sign a waiver saying that construction would be coming through there, but up at Pallet Express,” said Quail Oaks resident Lechsia Graves, referring to a business on the far side of Assembly Road.

Rachel Wilson, who bought in June, said Keystone mentioned the Urban Loop after she and her husband wrote a check to hold the house they wanted on Flowering Path Lane. They also signed the waiver.

“We were just married. Our first home,” said Wilson, an accountant who moved to the area recently from Texas. “As a first-time home buyer, you’re excited. You’re stoked. You’re naive and you’re too trusting.”

Because of such accounts, News & Record editors asked former reporter Withers and her husband, James Goins, to visit Quail Oaks as prospective home buyers.

Their aim was to learn what information about the Urban Loop a Keystone sales person would divulge on his or her own, then see what the response would be during a second visit if asked directly about highway issues.

Withers first visited alone, then returned with her husband a week later: During the first visit, a sales person showed her various home styles and floor plans, discussed what lots would be available and homes from $120,000 to $150,000.

Withers said the sales person never mentioned the loop.

During the second visit, another sales person showed the couple a number of lots on a map of the subdivision, Withers said, including several on Quail Oaks Drive that DOT might wind up taking for the exit ramp.

The sales aide professed ignorance of any highway “other than 29” when Withers mentioned she heard something about one coming through the area, Withers and Goins said.

“What bothered me is she asked all the right questions,” Goins said of his wife, noting she still got bad information.

Later inspection revealed that a “proposed urban loop” actually was depicted on a small, blurry map among nine pages of sales material Withers and Goins received.

Who knew what, when?

State and local officials have known for four years that the exit ramp and Quail Oaks Drive were on a collision course.

Yet Keystone was allowed to keep building, to keep profiting from people of modest means and little real estate savvy, decent folks whose lives are now destined for disruption.

Why didn’t anybody in government put a stop to it?

Mills said he tried, by asking Raleigh administrators to buy all necessary land in Quail Oaks through a special program for such early purchases.

“Needless to say, we will be paying a greatly enhanced value for this right of way later, when this area is developed with houses, than we would be paying now for vacant land,” he wrote in September 2005.

His request was approved, but it fizzled later either for lack of money or because too many Quail Oaks houses already had been built for it to make any difference, Mills said.

He had no other way to halt construction because the whole development is outside the loop’s official corridor, which by law is protected from development but which covers only enough land for the smaller interchange at U.S. 29. That’s because the official corridor was established in 1996, before anyone envisioned I-785, Mills said.

Meanwhile, DOT has nothing in its playbook where a senior manager picks up the phone or writes a letter putting a developer on notice he’s building in the wrong place. Such zoning issues generally are left to local government, Mills said.

At Greensboro City Hall, there was similar paralysis: Southeast Land and Keystone made few revisions in Project Homestead’s previously approved design for the new subdivision, said municipal planner Alec MacIntosh, who signed Quail Oaks’ official plat map in July 2005 — a month before local DOT engineers knew of changes to the exit ramp.

Once a developer has such approval, he can proceed with his plan regardless of whether it conflicts with a project such as the loop, MacIntosh said: “We wouldn’t have the ability to say, 'Whoa, something’s changed and you need to do something different than your approved plan.’ We could ask.”

But nobody did.

The closest anyone came to interceding was earlier that year, while the property remained in bankruptcy and city government vied with Southeast Land and others to buy it.

Back then, city transportation planner Craig McKinney learned DOT was rethinking the interchange and the Homestead site was in jeopardy.

He alerted Andy Scott, interim assistant city manager who then l ed the city housing office that hoped to buy the Homestead land. Scott thinks he passed on the news to a Southeast Land official, but that was four years ago and he can’t swear to it, Scott said recently.

If he did say anything, it didn’t take root. Southeast Land executive Terry Lee said his firm never knew of it until DOT’s meeting in January.

“We read in the paper that there was going to be a meeting to share information; that’s the first time we saw it,” Lee said.

Since then, Lee said, he has worked closely with DOT to sort out what happens to the subdivision in which he retains a financial interest.

Lee said he can’t speak for Keystone’s role in the development; his focus was on buying land and readying it for construction.

Keystone’s Wallace acknowledged going to the same meeting in January that impressed Lee so strongly. But he did not take away the same sense of urgency, perhaps because he arrived late, he said.

Contact Taft Wireback at 373-7100 or taft.wireback@news-record.com