Rival buyer questions East Ridge land purchase

Rival buyer questions East Ridge land purchase

December 18th, 2010 by Chris Carroll in News

Staff photo by John Rawlston/Chattanooga Times Free Press - The City of East Ridge has purchased this building, formerly the site of the Hungry Fisherman restaurant, and the 19-acre tract of land it is located on. East Ridge Flea Market owner said the Community Trust and Banking Company favored the city in the transaction and did not give him a chance to make a higher bid for the property.

An attorney representing a Chattanooga businessman says Community Trust and Banking Co. discriminated against his client and favored the East Ridge City Council in a recent land deal.

"Why the bank felt they had to keep these negotiations secret is a mystery," Phil Lawrence said last week.

Officials at Community Trust and Banking Co. declined to comment. Ken DeFoor, one of the bank's prominent shareholders, would not speak on the record for this story.

On Dec. 6, the East Ridge City Council debated 13 minutes before voting to buy 19 foreclosed acres for $340,000, not including environmental tests, structural inspections, utility repairs and soil examination. The meeting occurred three days after officials announced its time and date in the bottom-right corner of the city's website.

Businessman C.H. Chen wonders about what happened behind the scenes. He owns the East Ridge Flea Market, a few hundred feet from the property in question. Chen said he wanted to demolish the building and pave a parking lot for his business.

The site is surrounded by a dilapidated fence, grown up with shrubbery and littered with broken glass from the building's windows. Councilman-elect Jim Bethune recently called the lake-bound property "useless swampland."

At the Dec. 6 meeting, East Ridge officials didn't seem to have a clear vision for the property -- depending on which councilman had the floor, it might be right for weddings, fishing, business conventions or other uses.

On Dec. 1 -- two days before East Ridge officials announced the pivotal meeting -- Lawrence submitted Chen's "low ball," $300,000 offer. Both men said Community officials never contacted them after that.

"The bank never said anything to me, never encouraged me to bid higher," Chen said.

But for six weeks, the bank communicated Chen's "interest in the property" to East Ridge, according to City Attorney John Anderson.

"[The bank] gave my client the opportunity to make a decision based on the bid and before they went back to the other party," said Anderson, who insisted that he never told Community his client's identity.

Chen said that had the bank kept him in the loop, he would have offered at least $350,000.

"Would he have paid more than that? Probably," Lawrence said. "He never got the opportunity. I don't know why the bank favored East Ridge."

In a telephone interview, Anderson forcefully denied knowing the identity of any other potential buyers -- he said the bank never told him -- but former Mayor Mike Steele indicated a prior knowledge.

"Do we really want another 19 acres devoted to the flea market?" he told a reporter hours before the Dec. 6 meeting.

Contact staff writer Chris Carroll at ccarroll@timesfreepress.com or 423-757-6610.