NC State says prospectus won't derail Hofmann Forest sale

jprice@newsobserver.comNovember 15, 2013 

  • In the university’s words

    The full statement from N.C. State University on the prospectus created by the buyer of Hofmann Forest that discusses developing some of the land and clearing much of the rest for farming:

    “Yesterday, the buyer confirmed there are ‘no plans to develop the property into a large commercial and residential community.’ In addition to this commitment, the property in question is zoned for conservation uses and any changes to accommodate such development would require a county public approval process.

    “Throughout the sales process, NC State has negotiated in good faith, doing our best to ensure this sale will achieve the goals of preserving the legacy of the forest and allowing for the continuation of the current uses of the land, including opportunities for continued university research. The buyer has made publicly clear a commitment to honor these outcomes, which is consistent with the sales agreement signed by both parties.

    “Section 8 of the sales agreement outlines these commitments, including the buyer’s intent to establish the forest as a legacy property, pursue securing easements with the military and use the property for timber production and agricultural endeavors, as well as allow the university to continue research activities at the forest. Section 16 includes a merger clause that states the sales agreement (and not any previous documents or discussions) is the final and entire agreement.

    “Given the terms of the contract and the corresponding public assurances of the buyer, the university is continuing plans to sell the Hofmann Forest. As this issue involves a pending court case, the university cannot provide additional information at this time.”

— The revelation that the buyer for its giant Hofmann Forest had circulated a prospectus earlier this year proposing extensive development there and clearing a tract the size of a small city for farmland won’t halt the deal, an N.C. State University spokesman said Friday.

“Yesterday, the buyer confirmed there are ‘no plans to develop the property into a large commercial and residential community.’” Brad Bohlander wrote in an emailed statement. “In addition to this commitment, the property in question is zoned for conservation uses, and any changes to accommodate such development would require a county public approval process.

“Throughout the sales process, N.C. State has negotiated in good faith, doing our best to ensure this sale will achieve the goals of preserving the legacy of the forest and allowing for the continuation of the current uses of the land, including opportunities for continued university research. The buyer has made publicly clear a commitment to honor these outcomes, which is consistent with the sales agreement signed by both parties.”

The 79,000-acre forest is in Jones and Onslow counties near Jacksonville. The first tracts there were bought in the 1930s by a foundation started to raise money for forestry programs at the university. The foundation gifted it to the university’s endowment fund in 1977 but still controls some aspects of it.

Opponents of the deal are suing to block it because they contend that the land is owned by the state, so a sale should trigger scrutiny under state environmental regulations. The forest is a major habitat for black bears and other species and sits in the watersheds of three rivers.

On Wednesday – the day after a Wake County Superior Court judge denied a temporary injunction to halt the $150 million deal – the opponents obtained a prospectus that the buyer, Hofmann Forest LLC, had created to attract investors.

The prospectus says that about 9,000 acres could be developed with up to 2.1 million square feet of commercial space and 10,500 homes, and that 50,000 to 60,000 acres could be converted to high-quality farmland. It also mentions the potential of quarrying rocks from part of the forest and selling dirt.

A Lumberton-based spokesman for Hofmann Forest LLC said in a statement Thursday that the prospectus had been created early this year and that the company’s plans had changed since then.

It now intends, as it had said last month after the deal was signed, to stick with timber production and to sell easements to the military to allow it to train on and over the land.

“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 spokesman, Tom Percival, wrote Thursday night.

Walker, the managing member of Hofmann Forest LLC, is also head of a family-owned agribusiness that’s based in Illinois and operates farms in several states.

One of the plaintiffs in the lawsuit to stop the deal, conservation scientist Ron Sutherland of the Wildlands Network in Durham, said given the information in the prospectus, there was no rational reason for the university or anyone else to believe the company when it says it will leave Hofmann in its current form.

“The public assurances of the buyer are basically worthless,” Sutherland said. “There’s no reason for N.C. State to trust him at this point, except for the $150 million that they want from him.”

University officials announced the signing of the deal last month. They said at the time and several times since that key goals of the arrangement had been to preserve the working forest at Hofmann, as well as the opportunity to continue performing research there and to keep the name Hofmann attached to it.

They chose a buyer who planned to do those things, they said at the time. Percival echoed that in responses to questions from The News & Observer about the company’s plans, saying the company’s owners saw timber as a smart diversification to balance its other investments and that it also planned to sell easements to the military for training above and on the property.

But Sutherland said Friday that the university was no more trustworthy than the buyer, since it claimed that its goals in the sale were protecting the forest, the ability to do research and the legacy of Hofmann, but its sales agreement with Hofmann Forest LLC didn’t ensure they would happen.

“Saying they didn’t know what was in the prospectus is ludicrous when they signed a sales agreement that allows everything described in that prospectus,” he said. “They talk about preserving the legacy of the forest, but apparently, that legacy doesn’t include the forest actually remaining a forest.”

NCSU decided to sell the land, university officials have said, because investing the proceeds could yield more money, and a more consistent stream of it, for the College of Natural Resources. They expect it to yield $6 million annually for the college. That compares with about $2 million annually from timber sales in recent years.

Price: 919-829-4526

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