Residents, meanwhile, say they have been provided with little information about the property's past environmental problems and no information about the current investigations.

"We haven't been told about any kind of environmental testing," said Bonnie Williams, who has lived at The Farm for 31/2 years with her husband, Roger.

Linda Mantuano said she is concerned about the environmental testing, despite DHEC's assurances.

"Yeah, that does worry me," said Mantuano, who lives on Fairmont Lane with her husband, Frank.

The Mantuanos admit they didn't pay much attention to the environmental disclosure they signed when they bought their home last year at The Farm.

"They gave us a piece of paper to sign and glossed over it real quick." Linda Mantuano said, referring to the legal staff present at her home closing. "They weren't forthcoming with any information. Then, afterwards, I'm reading it and saying, 'Hey, wait a minute - they used to drop bombs here.'"

DHEC's renewed interest in the 1,100-home The Farm subdivision is at the heart of a federal lawsuit between D.R. Horton and the local land owners, who do business under various Landbank Fund corporate names.

Landbank claims D.R. Horton is using the environmental issue - described as "much ado about nothing" by Landbank member Joe Garrell - as an excuse to back out of a contract to buy more property for another phase of The Farm, according to court documents.

Landbank also says in court documents that D.R. Horton backed out of a deal to help pay for a beach club that would be used by The Farm's residents, costing Landbank $5 million in lost revenue.

D.R. Horton denies those claims in court documents.

D.R. Horton is suing Landbank because it will not return a $250,000 deposit the home builder paid in 2006 for the additional Carolina Forest property, which is located adjacent to The Farm.

Live bombs might live

The sprawling neighborhoods of Carolina Forest were built in the middle of a 55,000-acre parcel that used to be the Conway Bombing and Gunnery Range, which stretched between S.C. 90 and the Intracoastal Waterway south of S.C. 9.

The former practice bombing range was used during World War II to train air-to-ground gunnery and bombing troops. They usually would drop dummy bombs filled with sand or flour, but they sometimes used live munitions.

Much of the Carolina Forest property, including The Farm, was cleaned of all munitions - dummy or otherwise - to a depth of six feet before homes were built.

However, unexploded bombs occasionally have been found in the area. For example, Horry County police responded to a pair of live munition reports near Carolina Forest Boulevard in 2005.

The soil cleanup efforts - which involved using a magnetometer to find buried metal - followed guidelines set by the U.S. Army Corps of Engineers.

George McDowell, a Myrtle Beach lawyer and general counsel for Landbank, said in a deposition this year that about 70,000 metal objects were detected by magnetometers in the soil where The Farm was built and on the adjacent property.

"If you had a Coca-Cola top to a bottle, that would be identified," McDowell said. "You would have to dig it up, identify it and report it. We also had some live bombs and we also had some exploded bombs."

DHEC comes knocking

D.R. Horton bought its first parcels from Landbank in March 2003, according to county property records.

Court documents show home sales at The Farm were brisk, with D.R. Horton closing on nearly 800 homes over the next three years in a subdivision that included barn-shaped clubhouses and old-fashioned plows, windmills and silos scattered throughout the common areas.

The home builder, in the midst of the Grand Strand's real estate boom, signed a contract in early 2006 to buy another 230 acres from Landbank - where 463 more homes were planned for The Farm.

In less than two years, those plans were scuttled by new environmental concerns.

First, the U.S. Army Corps of Engineers asked D.R. Horton for permission to conduct more tests on the home builder's property. Horton denied that June 20, 2007, request, according to court documents, because the Corps has no enforcement powers and could not require the home builder's cooperation.

"The Corps was interested, we thought, in doing additional studies that had already been done," Ed Perez, an environmental consultant for D.R. Horton, said in a deposition earlier this year.

Then, on Jan. 7, 2008, DHEC sent a letter to D.R. Horton stating that it wanted to investigate possible contamination on the property and might hold the home builder responsible for cleaning up any pollution that is found.

Less than two months later, Landbank filed a lawsuit against D.R. Horton claiming breach of contract.

'Change in conditions'

Although DHEC put D.R. Horton on notice about possible environmental contamination at The Farm in 2008, the state agency waited more than two years to work out an agreement with the home builder to study the issue.

DHEC spokesman Thom Berry said the latest environmental studies started earlier this year and the agency should have initial results soon. Berry said testing is ongoing at The Farm.

Berry said recent studies at a separate, undeveloped parcel within Carolina Forest have shown no soil contamination.

"If there is no soil contamination, that gives us a good confidence level that there will be no groundwater contamination," he said. "We believe [D.R. Horton] will find the same thing - no contamination."

No agreement is in place yet for environmental studies on the vacant land that D.R. Horton planned to buy from Landbank, but Berry said such studies and possible cleanup will have to take place there as well before the property can be developed.

Doug Brown, vice president of the coastal Carolinas division of D.R. Horton, told The Sun News last week that he is not aware of any environmental testing taking place at The Farm.

Garrell said the testing has been ongoing since May, although he doesn't think it is necessary.

"It's overkill in my opinion," Garrell said. "I'm not being flippant about it, but at what point do you stop? The property has already been cleaned up."

D.R. Horton, in court documents, said DHEC's actions led to a decline in the adjacent vacant property's value and marketability. That "change in conditions" is among the reasons D.R. Horton said it should be allowed out of its contract to purchase the property.

Garrell, however, said the decline in this area's real estate market caused D.R. Horton to reassess its development plans and the home builder is using the environmental issue as a way to stall its land purchase.

"The demand [for home sales] wasn't there, so they figured this is a way they can hold onto the land for free," Garrell said. "We don't operate that way. We can sell the property to someone else."

Brown, during an annual meeting of The Farm property owners last week, told residents that D.R. Horton is considering building another 400 homes on the back side of The Farm. "We may do that this year or in the next couple of years, but we don't have any definite plans," Brown said.

Garrell said Brown's comments indicate D.R. Horton planned on buying the adjacent land all along, but was waiting for market conditions to improve. "They don't have enough land to build another 400 homes," he said. "The only vacant land out there that's large enough for that is ours."

Join the club

Landbank and D.R. Horton also are at odds over a beach club that was developed along the oceanfront for the use of The Farm's residents.

Landbank proposed the beach club as an amenity that D.R. Horton could use to entice buyers.

Although the sides now disagree over whether an official agreement was reached during construction of The Farm, court documents show D.R. Horton was supposed to pay $200 per home for construction and upkeep of the beach club. In addition, the home builder was supposed to add $20 per month to homeowners' association dues for the club.

Landbank alleges that D.R. Horton never paid or collected any money for the beach club and now owes about $5 million.

Minutes of Landbank's board meetings in 2008 show Landbank offered to settle the beach club dispute if D.R. Horton would pay a one-time fee of $1.5 million, but the home builder did not accept the offer.

D.R. Horton said in court documents that the beach club that Landbank provided was far different than what had been promised, and the home builder did not think it was an adequate facility for The Farm's residents.

The beach club initially was supposed to be a free-standing cabana-type structure for exclusive use by The Farm's residents and guests. In reality, the beach club is a room on the first floor of The Atlantica condominium tower in Myrtle Beach. In addition to the room, beach club members have access to the condo tower's indoor and outdoor pool and lazy river.

"It totally went against what we thought we were getting," Mitchell Flannery, D.R. Horton's land acquisition director, said in a deposition earlier this year.

Flannery said he was disappointed in the size of the beach club, which could only accommodate a fraction of 1 percent of The Farm's residents at any given time. In addition, Landbank had given thousands of residents at other communities and all of The Atlantica's guests access to the beach club.

Flannery, in his deposition, said D.R. Horton thought the beach club would be "something our homeowners could call their beach club instead of them and every North Carolina and Maryland redneck beach club."

"The beach club idea is for separate beach access and adequate parking," Flannery said, adding that Landbank had set aside only about 50 parking spaces for thousands of residents who had access to the beach club.

Garrell said the dispute has less to do with the size of the beach club and more to do with D.R. Horton's ability to sell homes in a hot market.

"They originally thought it would help them sell the project," Garrell said. "But when they started selling homes, there was such a high fever pitch that they didn't need the beach club. So they didn't pay for it. We take issue with that."

Landbank, in court documents, said that despite the home builder's dissatisfaction, D.R. Horton has continued to tout the beach club as an amenity for The Farm's residents in marketing materials. That despite the fact that those residents do not have access to the club because no dues have been paid.

Williams said D.R. Horton promised her family access to a beach club when they were considering buying their home.

"We were told there was going to be a beach club, but it never came through," she said.

Williams said the beach club issue was raised at a property owners' meeting a couple of years ago. A D.R. Horton representative told residents the beach club had not worked out.

"It was kind of like, oh well, too bad," Williams said, adding that the beach club is among several planned amenities - such as a parking lot for recreational vehicles - that never materialized.

With the federal lawsuit now in its third year, both sides say they are making efforts to settle their differences. A mediation hearing was held on May 13 and lawyers for both sides said in court documents that progress has been "meaningful and quite significant."

Mediation is scheduled to reconvene Wednesday and a judge last week gave both sides an extra 60 days to try to reach a settlement. If that fails, the lawsuit is scheduled to go to trial in September.

Meanwhile, Williams said she is somewhat, but not overly, concerned about the environmental issues. Her home is located on the lot next to the vacant property that triggered the lawsuit when DHEC called for more testing.

"People are in there all the time, partying back in the woods," she said, adding that they are a minor nuisance compared to what D.R. Horton's proposed 400-home addition might bring.

"Personally, I'm hoping nobody develops that property," she said. "I like having that vacant land next to us."
http://www.thesunnews.com/2010/06/13/1529375/lawsuit-sticks-farm-residents.html

Read more: http://www.thesunnews.com/2010/06/13/1529375/lawsuit-sticks-farm-residents.html#ixzz12fKZ2mxT