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GREENSBORO — The future Urban Loop may be a threat to many homeowners living nearby, but Greensboro developer Jerone Pearson turned it into a financial windfall, courtesy of North Carolina taxpayers.

Pearson got a 700 percent return on land he sold state government for the loop, a deal that instantly netted him a $198,000 gain and promises to help him make much more.

Pearson bought the land as part of a larger parcel less than a year before his lucrative sale to the N.C. Department of Transportation in August 2006.

Now, he is developing the Raine Meadows neighborhood on the rest of the site, building homes that back up to the future loop without making sure all the buyers fully understand an expressway is coming through.

“They didn’t say anything about the loop coming around here,” Raine Meadows homeowner Gloria Smoot said recently. “They said it was going to be more houses and, maybe, a shopping center back there.”

Pearson denies such allegations, which several Raine Meadows residents have made to the News & Record. His buyers all sign affidavits that they know DOT owns land for the loop immediately behind the neighborhood, Pearson said.

He makes no apologies for selling property to DOT at a rate so much higher than what he paid for it 11 months earlier.

“From my point of view, I went out and found out where they (DOT) wanted to be,” Pearson said. “I made them define it (the loop’s path), and I made them buy it or shut up.”

A modest investment

The 65-year-old Wilkes County native is among several large landowners who scored big bucks selling land to DOT for the Urban Loop, years before any of it would be needed.

Others who made eye-popping sums include local lawyer Walton McNairy and Raleigh industrialist Earl Johnson.

But Pearson’s dealings stand out for the speed with which he parlayed a modest investment in a farm into a multimillion-dollar asset that could continue paying dividends for years to come.

Knowing the loop eventually would cut through some part of the property on Brightwood School Road, Pearson purchased the 55-acre farm for $499,000 — about $9,000 an acre —  in September 2005.

The next August, he sold DOT an 11.5-acre piece of it for right-of-way for $697,000, or $60,600 an acre.

Pearson couldn’t have succeeded so profitably without the apparently unwitting help of city officials, whose actions insured that DOT would have to pay the Greensboro developer a pretty penny.

“Development potential”

Indeed, Greensboro officials took three crucial steps that put Pearson on a glide path to his big DOT payday: In quick order, they annexed his land; they ignored pleas from neighbors and rezoned it to allow 133 houses; and they agreed to provide sewer service to part of the property previously limited to sparse, septic-tank development.

Pearson’s success at City Hall was a key factor in DOT’s later appraisal that valued the former farm at $1.6 million in March 2006, rather than the $499,000 for which it was sold to Pearson six months earlier in September 2005.

“These actions by the current owner (Pearson) have created an immediate development potential that was not present at the time of (the $499,000) sale,” DOT consultant Rod Meers said in the appraisal, referring to Pearson’s success at winning annexation, rezoning and sewer service.

That wasn’t the only reason for his windfall. Meers said the developer’s $499,000 purchase was unrealistically low, not a true gauge of the farm’s value. And he said the loop would damage the development potential of what was left of the farm by $362,000, for which Pearson should be compensated as part of the right-of-way deal.

But city planners also helped Pearson by letting him pass on the cost of providing a city-mandated, 50-foot-deep natural buffer along the loop to homeowners in the new Raine Meadows subdivision.

That means thousands of dollars in additional profit for Pearson, because it increases the number of single-family homes he can fit into the narrow, 8-acre pocket of land where the first phase of Raine Meadows is being built directly south of the future loop.

As it stands now, it also means Raine Meadows residents will pay property taxes on about 55,000 square feet of land they can’t use freely.

The buffer, which runs across the back third of 18 lots abutting the loop, must remain undisturbed. So, homeowners can’t make such basic alterations as putting up a shed there, building a walkway or planting a garden.

City officials imposed the buffer on the entire loop some years back, along both sides of the 25 miles already built and 18 miles that remain unfinished. The main purpose: to make the road more scenic for passing motorists.

 Faulting City Council

The council assumed developers would “eat” the cost of the natural buffer, using it as a common area in any new neighborhoods along the loop.

Pearson said tacking the buffer onto homeowners’ lots was simply his reaction to the city’s unfair taking of that land from him, adding that he faulted former City Councilman Tom Phillips for coming up with the idea of the 50-foot natural area.

“Mr. Phillips and the city took every bit of that land from me without ever paying me for it,” he said of the required buffer, known in municipal parlance as a “Scenic Corridor Overlay District” or SCOD.

But Alan Myrick, senior assessor in the Guilford County Tax Department, thinks owners of those 18 lots in Raine Meadows probably deserve a break in their tax assessments to make up for the SCOD.

“I’ve never seen a buffer referenced as a SCOD and then set up as part of a homeowner’s lot,” Myrick said. “It’s pretty much just an extension of the highway right-of-way.”

“Didn’t hear a word”

Back in 2005, shortly after Pearson purchased the farm, his development plans ran into opposition from some long-time residents of northeast Greensboro. But they didn’t get far with city officials.

They presented a petition with 87 signatures to the city zoning commission. The signers weren’t completely against developing the land, according to minutes of the commission’s Nov. 14, 2005, meeting; they wanted to cut the number of houses by 25 percent to blend better with the surrounding neighborhood.

Planners took Pearson’s side. City Planning Director Dick Hails told the commission that Pearson’s proposed development was in a “transition area” where more houses per acre were justified.

The zoning commission voted unanimously in Pearson’s favor with little discussion, leaving his critics feeling as if they’d wasted their time.

“They weren’t interested in listening to us. They didn’t even hear a word we said,” recalls Brenda Roberson, a lifelong resident of northeast Greensboro.

“When we left we said, 'Well, they didn’t even know we were there.’”

The loss took the wind out of their sails, Roberson said. They felt city government didn’t care about people like them, people who had invested much of their lives in that part of the community and wanted to keep a scrap of its once-rural flavor.

None of Pearson’s critics turned out five weeks later when the City Council took up his project and quickly approved it in another unanimous vote.

A hardship purchase?

The votes that helped enrich Pearson all took place within three months after he purchased the farm from a family estate based in Tennessee.

In fact, DOT was surprised to learn Pearson suddenly owned the land, said Ritchie Tuttle, a DOT right-of-way supervisor.

The agency had been considering the farm as a “hardship acquisition” at the request of its former owners in Tennessee, who applied in late 2004 for the program that allows DOT to buy highway land in advance from people in financial or some other distress.

“After it (the hardship status) was approved, Jerone went to the people administering the estate,” Tuttle said. “We found out after the fact that we had a new owner.”

The farm’s original owners — the Gordon family of Johnson City, Tenn. — sought hardship status because they needed to sell the property to settle a relative’s estate, said Charles Gordon Jr., who handled the matter for his extended family.

They’d purchased it decades ago from another relative and had been trying to sell it for at least 10 years, Gordon said. The farm had two big problems, he said: the loop would split it in two some day and it lacked sewer service needed for profitable development.

“The city told us they had no intention of bringing sewer services into that area because of how the land lies,” he said.

Then, Pearson emerged to offer the Gordons the full amount they wanted for the entire farm, said Fred Preyer, the family’s real estate agent and a former Guilford commissioner.

“They had a price they wanted for it as raw land,” said Preyer, referring to the $499,000 sale. “How Jerone worked out the sewer and other infrastructure, I don’t know. That was his creative end of it.”

Not much creativity was involved, said Allan Williams, director of the city water department. When the Gordons asked the city about sewer service, they almost certainly were asking hypothetically about any general plans for a sewer expansion at a time when none existed, Williams said.

A shrewd businessman

Pearson arrived with detailed development drawings for a subdivision after the city already had resolved to expand its service into recently annexed areas along nearby Summit Avenue, Williams said.

“We didn’t do anything special for Jerone,” Williams said. “He was treated no differently than anybody else would be.”

DOT decided to go ahead with buying the 11.5 acres from Pearson even though it no longer qualified as a hardship case because the agency already had invested heavily in surveying the land and other associated costs, DOT’s Tuttle said.

For his part, Pearson said he simply made a few smart, business moves in an occupation where it’s not so easy to make money as people might think.

Never in their wildest dreams did Gordon’s family in Tennessee suspect that old farm could be worth more than $1.5 million or that DOT would part with nearly $700,000 for a relatively slender piece of it, Gordon said.

Still, he doesn’t feel too badly about selling it for less than a third of its worth.

“We thought it (the loop) was devaluing it. There’s always that question of who wants to live in a residential area right next to a six-lane highway?” Gordon said. “So I guess that just means the developer hit a home run.”

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