JASPER, Tenn. -- Bill Worley bought into Rarity Club in 2006 with hopes of living, building and eventually retiring in what was supposed to be a $500 million luxury resort on Nickajack Lake.
Three years later, the Chattanooga homebuilder is constructing a $1.6 million home on one of his five lakefront lots in Rarity Club and finishing another luxury home for another property owner. But he and the 58 others who bought lots in the 578-acre Rarity complex still are waiting on the promised golf course, wellness center, boat marina and hiking trails.
Development of the Marion County complex -- designed to be the biggest residential development ever in Southeast Tennessee -- stopped in March when developer Mike Ross apparently ran out of money after selling more than $28 million in properties and golf memberships.
At 11 a.m. CDT today, the unsold property in Rarity Club will be sold at a foreclosure auction to try to recover part of another $15.5 million Mr. Ross borrowed from a Greeneville, Tenn., bank.
"It looks like Marion County has its own Bernie Madoff," Chattanooga developer John "Thunder" Thornton Jr. said Tuesday, referring to the New York financier who took billions of dollars from investors.
Mr. Thornton spent three years buying and trading properties and convincing the Tennessee Valley Authority to sell its Shellmound Recreation Area and surrounding land for a residential development.
Mr. Ross bought the land three years ago from Mr. Thornton, who still has a secondary mortgage on the property that was to be paid, in part, from future property sales.
"It's a real disappointment for all of us who trusted and believed in Mike Ross," Mr. Thornton said. "He hasn't completed -- or really even made a good start -- on any of the amenities he promised and he's created a lot of losers out of this project."
Mr. Ross declined repeated requests for an interview. But in an e-mail response to the Times Free Press and in a separate letter to those who bought lots in some of his projects, Mr. Ross blamed the recession for his financial woes. He said he is still selling some lots among his nine Rarity Communities across East Tennessee, although far fewer than in the past.
"Recent economic developments have brought declining home values, rising unemployment, losses in personal wealth and economic uncertainty," the Vonore, Tenn.-based developer said. "These factors have caused many prospective Rarity Communities customers to delay or change retirement purchase plans."
Rarity Club -- Jasper, Tenn.
Rarity Rivers -- Dayton, Tenn.
Rarity Meadows -- Sweetwater, Tenn.
Rarity Bay -- Vonore, Tenn.
Rarity Enclave -- Lake Tellico, Tenn.
Rarity Pointe -- Lenoir City, Tenn.
Rarity Oaks -- Oak Ridge, Tenn.
Rarity Ridge -- Oak Ridge, Tenn.
Rarity Mountain -- Jellico, Tenn
Over the past 15 years, Mr. Ross emerged as the biggest recruiter of retirees relocating to Tennessee. He had plans for nine luxury golf course developments on lakes and mountains from Jasper to Jellico, Tenn.
Although only two of the nine properties have had foreclosure actions filed on them, the recession has left many dreams in the rough.
Other retirement projects in East Tennessee also are developing at a slower pace because of the recession.
A 3,500-acre mountaintop project known as Sequatchie Pointe, for instance, stalled last year. Its developer, J.J. Detweiler Enterprises, filed for bankruptcy earlier this year in Ohio.
But developers and economic recruiters insist East Tennessee is still well positioned to capture the millions of retiring baby boomers looking to relocate.
"The national recession has created challenges for all sectors of the housing market but, in the long term, Tennessee still remains a great location for retirees," said Mark Drury, assistant commissioner for the Tennessee Department of Economic and Community Development. "The state's great quality of life, recreational opportunities and low cost of living are all factors that resonate with retirees."
Three years ago, the state launched a "Retire Tennessee" program. A local campaign known as "Choose Chattanooga" soon was recognized as one of the state's first targeted communities for relocating seniors.
In the Chattanooga area, such developments as Greenbriar Cove in Collegedale, Alexian Brothers on Signal Mountain and Fredonia Mountain in Sequatchie County have all successfully recruited seniors in recent years.
Marion County Mayor Howell Moss, who has worked his entire political career to develop the TVA property on Nickajack Lake, is confident that Rarity Club and Sequatchie Pointe eventually will be developed.
"It's obviously disappointing any time things slow down, but I still think there is great opportunity for this region," he said.
The seniors moving into such projects typically aren't big users of local schools or police, Mr. Moss said. Rarity Club, if successful, could double the property tax base of Marion County, he said.
But before the Rarity Club project is revived, new money is needed, Mr. Ross said in his recent letter.
"A fresh start for the project is our objective," he said, noting that he hopes Rarity Communities will remain involved in marketing and developing the Nickajack Lake project.
Green Bank in Greeneville, which financed the Rarity Club project in Marion County and is foreclosing on the property today, previously foreclosed on Rarity Rivers in Meigs County. But Mr. Ross said he still is involved in that development.
Mr. Worley sued Mr. Ross last winter and a group of property owners in Rarity Club filed a separate case against Mr. Ross in July. In both lawsuits, the plaintiffs contend that Mr. Ross didn't use proceeds from early land sales to pay for promised amenities.
"This is an ideal tract of land, close to Chattanooga, on a secluded part of Nickajack Lake and in a beautiful, low-cost region of the country," Mr. Worley said.
"I'm still hoping something will be worked out in the long run, but it's obviously disappointing that work on the development stopped before it was done."