In 1998, Jane Spratt McColl donated nearly 400 acres near Interstate 77 and Sutton Road for the development of a York County museum. Twelve years later, a group created to develop the property may lose ownership of much of the land if it doesn't pay $3.78 million next year.
A subsidiary of York County's Culture and Heritage Foundation has until June to pay that bill plus interest to Cherokee Investment Partners, a Raleigh, N.C., company that planned to build eco-friendly homes and businesses around the new museum, officials say. The payment deadline could be extended one year.
A 2006 agreement between Cherokee and the foundation called for some proceeds from the housing and business development to be used for the new museum, according to museum and foundation leaders. That deal fell through as the housing market crashed.
But before the deal died, Cherokee gave a subsidiary of the foundation $4.5 million. The subsidiary must pay back $3.78 million to reassume control of all the land.
To pay the debt, the foundation is trying to sell some of the property. But selling comes with new challenges because of the land's precious natural and archeological features, which include the remains of an 18th-century Catawba Indian village.
When McColl, the sister of U.S. Rep. John Spratt of York, announced her donation, she said she hoped the land would be developed "as green, open and common space with trees and bushes and trails and paths - and we hope, some day, a new Museum of York County."
After several years of planning and fundraising, the foundation and the company it created to manage the land's development - Sustainable Development Group Inc. - entered a partnership that would pump money into the museum project.
SDG, and by extension the foundation, decided to work with Cherokee, whose "deep pockets" and success in completing environmentally sustainable projects would help them create "a mixed use, sustainable community named Kanawha that would generate revenue to support construction of the proposed museum," said Jane Peeples, chair of the Sustainable Development Group Inc., also known as SDG.
Cherokee paid SDG $4.5 million to assume 54 percent of the partnership. The money went to SDG's operating budget and to several county museum projects, officials said.
Cherokee also invested $1 million in the partnership. Cherokee and SDG then used their money to prepare the land for development, according to SDG financial reports provided by Jim Sheedy, legal counsel for SDG and the York County museum foundation.
But the housing market plummeted and the plan fell apart. In 2008, Cherokee and SDG put the project on hold. A year later, they agreed to part ways.
"It became apparent to all of us that we were looking at a total market meltdown," said Peeples.
"We set out to build a museum," Peeples said. "If working with Cherokee would no longer serve that purpose, it was time to rethink the plan."
Efforts to reach Cherokee on Thursday and Friday were unsuccessful.
To get the land back, SDG promised to pay Cherokee $3.78 million plus interest by June 2011, with a possible year extension. The property in question does not include about 60 acres set aside for the museum.
If SDG fails to pay Cherokee, the parties will divide the remaining 330 acres into pieces that match their investments. SDG will take all areas with archaeological sites.
Peeples said dividing the land is an unlikely outcome.
Protect 'sensitive areas'
Peeples would not comment on whether SDG is negotiating with any buyers, but assured that the "sensitive areas" of the property will be protected. These include sites already, and not yet, discovered.
The foundation has "full faith and confidence" in SDG's ability to settle its debt while taking care of the land's sensitive areas, said Carol Maroska, banking executive and president of the foundation's board of trustees.
"We will not sell property to anyone who is unwilling to collaborate with us on their land plan and on archeological and environmental protections," Peeples said.
At a museum commission meeting in June, Chief Donald Rogers of the Catawba Indian Nation called on museum leaders to do a full archaeological survey before agreeing to sell any land.
"There are burials...There are souls that still wander that land," Rogers said.
"We need to make sure we have everything in place before we go in with bulldozers," he said.
After questions were raised about protecting the archeological sensitive areas, museum officials say they're reviewing whether protections put in place in 2007 will still apply in any sale of the land.
They're also addressing "concerns expressed about the level of archaeology on the McColl property" and whether studies were done properly, said museum commissioner John Castaldo, whose committee is responsible for the review.
The museum commission oversees the operation of the Museum of York County.
Settling the debt
In a May letter to County Manager Jim Baker, museum trustee Bill Easley suggested that SDG deed the archeological significant areas of the property to the county for protection and incorporation into green space.
Easley chairs a task force of representatives from the Culture and Heritage Museums, SDG and York County government who have made recommendations for what land should be preserved.
Though no deals have been made, the county would probably be expected to pay for that land, Easley said.
SDG can't give away land it owes money on, Peeples said.
Whether the County Council would support such an investment is unclear.
"Any historical land is worth looking at," said County Council Chairman Buddy Motz. "Where the problem is going to come from is the funding."
Protecting the land from development meets the funding guidelines of York County Forever, the county's environmental preservation arm, said Motz.
"I think it's something worthy of looking at if the funding is there to help," he said.
Councilman Joe Cox argued that taxpayers shouldn't have to shoulder the burden. "They got themselves in debt and now they want the taxpayers to bail them out," he said.
"At the end of the day, (the land) was given to us," he said. "What worries me about the property, when it's all said and done, we the taxpayers are going to end up paying for what they did," he said.
If the council is confronted with that question next year, Cox and Motz won't be involved in the decision. Both were defeated in June's party primaries. Overall, five of the current seven council members will leave office after this year.
As for whether the foundation would pay SDG's debt itself, Maroska said it can't at this time. But she didn't seem worried.
"As we work toward (the deadline) there's constant dialogue about how we can be prepared," she said.
Where $4.5 million went
$1.84 million went into the corporation formed by Cherokee and SDG to develop Kanawha.
About $1.4 million was distributed to the Culture and Heritage Foundation, SDG's primary shareholder.
About $1 million paid for expenses over the last 4.5 years, including taxes to York County totaling more than $96,000 last year.
SDG's bank balance: $228,632
Who are the players?
Culture and Heritage Commission: A group of about 20 York County residents who oversee operations of the Museum of York County, Historic Brattonsville and the McCelvey Center.
York County Culture and Heritage Foundation: A non-profit group created by the commission to raise money to support building a new county museum and to support current museum operations.
Sustainable Development Group: A for-profit organization created by the York County Culture and Heritage Foundation to develop the land donated by Jane Spratt McColl. Some proceeds of the land development are to be used to build a county museum. SDG is run by a foundation-appointed volunteer board made up of community members with experience in banking, municipal planning and civic service.
Source: Jim Sheedy, legal counsel for SDG and CHF
Jamie Self 803-329-4062
Staff writer Matt Garfield contributed.