Buyer's proposal for Hofmann Forest included housing, farming

jprice@newsobserver.comNovember 14, 2013 

— The company that is buying N.C. State University’s massive Hofmann Forest created a proposal that included developing a tract the size of Apex, something that would transform Onslow County by adding up to 2 million square feet of commercial space and more than 10,500 homes, including a golf community, near Jacksonville.

Also, a swath of timber as large as Cary, Holly Springs and Morrisville combined would be cut down and replaced with farmland, according to a prospectus created by the buyer to lure investors for the $150 million deal.

A spokesman for the buyer, Hofmann Forest LLC, said the prospectus was created earlier this year, and that its plans for the 79,000-acre forest have changed.

“The document in question was specifically put together for Hofmann Forest, LLC,” wrote Tom Percival, a Lumberton-based spokesman for the company, in an emailed statement Thursday night. “It is a document that was originated for internal purposes in early 2013 for use by Jerry Walker, as a Managing Member, and other members of the LLC in the process of their initial consideration of purchasing the property.

“The purpose of this document was to show Mr. Walker and other members the many different and synergistic aspects that Hofmann Forest possesses and its potential for various types of uses that have been identified over the years,” Percival’s statement continued. “As an example, the development plans in the document are renderings that were done many years ago by North Carolina State University as a general study and were not prepared by or for Hofmann Forest, LLC. Since this document was created, the LLC, under the guidance of Jerry Walker, has recognized the value of the Hofmann as a forest and has no plans to develop the property into a large commercial and residential community.“

The plans in the prospectus are starkly different from recent statements by the company that it intends to leave Hofmann and its working pine forest essentially unchanged. University officials also have said repeatedly that the deal would protect the forest.

Those claims were made to the media and in court as NCSU fights a lawsuit by foresters, conservationists and a landowner who say the sale should be blocked until it undergoes public scrutiny and environmental review.

‘Worst nightmares’

The plaintiffs say the prospectus, which was leaked to them, represents a candid look at the real plan for the forest, and that anything else is just public relations spin. And, they say, nothing in the contract for the deal prevents the plans in the prospectus.

“This document confirms our absolute worst nightmares about what would be done to the forest,” said NCSU forestry professor Fred Cubbage, a plaintiff in the lawsuit. “The development and farming it describes would be an unmitigated disaster for the environment, for the populations of animals and for the water quality in that whole area, which already is fragile.”

The land sits in three sensitive watersheds and is home to a large population of black bears and to rare Eastern diamondback rattlesnakes, among other species.

The opponents say they obtained the prospectus Wednesday, a day after a judge declined to temporarily block the sale after questioning whether there was any specific proof that the buyer intended to develop Hofmann.

Walker is the managing partner of Walker AG, a family-owned Illinois agribusiness company that farms in several states.

In response to questions from The News & Observer, Percival said last month that the company plans to continue using the tract as a working forest and to bolster the bottom line by selling the military rights to use much of it for low-level training flights, as it has been doing for years.

The partners in the company saw timber and the military easements as a nice diversification from their other investments, and had no plans to turn more into farmland or to develop it, Percival said.

The prospectus touts the extraordinary value of the forest’s “virgin organic soil” for farming if the trees were removed, and the high value of such farmland, which it estimates at $5,500 to $6,500 per acre.

“With today’s global grain shortage, the type of virgin organic soil found in the Hofmann Forest is at a premium,” it says. “After reserving roughly 9,000 acres for development, the Forest would theoretically have 70,000 acres to convert to agricultural uses. Due to numerous mitigating factors, such as wetland areas, one could conceivably convert 50,000 to 60,000 acres to agricultural land.”

‘The first NC State has seen’

N.C. State officials said that they had been unaware of the prospectus.

“This is the first NC State has seen or heard of this document and it includes information that is not contained in the sales agreement,” wrote university spokesman Brad Bohlander in an emailed statement Thursday morning. “We are contacting the buyer to determine when the document was prepared, its accuracy and whether it reflects the buyer’s current views regarding potential use of the land.”

Opponents of the sale have long contended that a buyer could develop the property and cut down much of the forest. Five of them filed suit in Wake Superior Court in September to block the sale, saying that such changes could damage important animal habitat and the water quality in three watersheds.

The private N.C. State Natural Resources Foundation gifted the forest to the university endowment in 1977, but retains some control over it, and, along with the endowment board, is defending the lawsuit.

No ironclad protections

An attorney for the foundation told a Wake Superior Court judge that there was no evidence of plans to develop any of the property, and indeed that the buyer’s stated intent was to buy more land to expand the acreage available for the military easement.

That was during a hearing Tuesday on the plaintiff’s request for a temporary block on the sale until the full case could be heard, and on a motion from the defendants to dismiss the case.

The judge denied the temporary injunction to block the sale and said she wanted to ponder the motion to dismiss. Jim Conner, an attorney for the opponents of the sale, declined Thursday to discuss the implications of the prospectus for the case. He would say only that he intended to give it to the judge.

University officials have repeatedly said that Hofmann Forest LLC was chosen because of its intention to preserve the working forest, to keep the name Hofmann associated with it, and to continue to allow faculty and students to perform research there. But the sales agreement doesn’t provide ironclad protections for those things, and Cubbage said that the plans outlined in the prospectus would essentially erase all of them.

It’s unclear when the prospectus was created. It insinuates, though, that it was done after the company was chosen to be the buyer. The opening statement reads: “Hofmann Forest LLC is a privately held entity selected to steward the Hofmann Forest for future generations.”

Officials with N.C. State University’s endowment board and the natural resources council signed an agreement last month to sell the property to Hofmann LLC. The deal has to close within 180 days of that agreement.

In the contract and the prospectus, Hofmann Forest LLC states its plan is to sell rights to the military for training on about 70,000 acres. Such deals for training “easements” typically limit development that would bring more people onto the property, but row crops or other agricultural uses may not pose a problem.

A Camp Lejeune spokesman earlier confirmed that the Marines are interested in easements, but has not responded to queries about whether that meant building landing strips on Hofmann.

The prospectus, though, states that the military has raised several scenarios in discussions with Hofmann Forest LLC, including building an airstrip, five tactical landing zones, two training sites and a staging area. Most of the landing areas would be designed for helicopters and MV-22 Osprey tilt-rotor aircraft, but the airstrip could handle C-130 transports, it states.

Also according to the prospectus, the military has said it is interested in a 50-year deal worth almost a third of Hofmann’s sale price, or nearly $50 million.

The prospectus goes on at length about the great prospects for development, citing growth statistics as more Marines moved to the base in the past few years.

That may be optimistic, Onslow County Manager Jeffrey L. Hudson said Thursday, given that the Marine Corps now plans to begin shrinking. Estimates are that the active-duty force at Lejeune could be trimmed by 8,000 to 11,000 Marines in the next several years, Hudson said.

Also, builders have created a large stock of new homes in the area, and the amount of housing on the base has increased, so more Marines are living there rather than in the community.

Hudson said the emergence of the prospectus caught him off guard. He said county leaders would have to read it carefully before issuing a formal response.

County leaders have long been on the record as wanting to preserve Hofmann in a form that the military can use, because the viability of Camp Lejeune – the major economic engine for the area – relies on the Marines’ ability to train there.

Mining and selling dirt

Among other things, the prospectus states that rock quarrying in part of the forest is possible, as well as mining and selling the rich dirt there. The resulting holes could become ponds and lakes serving as amenities for the development.

It also raises the idea of a kind of environmental shuffle: Populations of red-cockaded woodpeckers on Camp Lejeune – which it states are preventing training there on about 20,000 acres – could be transplanted to Hofmann, increasing the amount of usable training area on the base.

“One advantage is … it would be perceived as a great act of conservation by the community,” the prospectus states.

Price: 919-829-4526

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