Jake Butcher Mansion - the Offer

So you have your energy partners lined up and you know the maintenance, utilities, furnishings and upkeep on the house are taken care of with zero money out of your pocket. Now comes the hard part: getting the house at the right price.

In order for this to have a shot in hell at working, you have to get the house at the right price. You have to be supremely confident going into the meeting with the bank that you know absolutely everything there is to know about the house, the bank, the person you're meeting with, the decision makers and what's in it for them.

Here is what I know and, more importantly, what I need the bank to understand:

* The Butcher Mansion has missing and crumbling columns

* The house is divided into 5 tacky condominiums

* There is an overwhelming stench of mildew and visible mold throughout the house - possible spots of black mold developing

* There's dry rot on windows, columns, fascias and soffets

* There are missing walls and missing sheetrock

* There are missing floors and missing flooring

* The quality and craftsmanship throughout the house is sub-par and decades behind trend

* The landscape is neglected

* The size of the house is completely impractical for today’s residential buyer and the Homeowner's Association will only allow this home to be sold as a single family residence (no businesses, boarding houses, assisted living, etc)

* Due to the current condition of the home, the house will not appraise at $1.2 million

* Any renovation plans must be approved by the HOA and can take 30 days for a hearing

* A major structural and cosmetic overhaul will come in between $2,860,000 to $3,250,000

* Future appraisal will not support the costs of the overhaul therefore your typical buyer will not be able to re-sale the property.

* The necessary structural and cosmetic overhaul will raise property taxes $20,000

* Because the land has been subdivided there is a lack of privacy and view

* The Close proximity to Bull Run coal ash steam plant is a worry with the TVA coal ash spill in Harriman and the fire at Bull Run last year

* The house is miles away from any restaurants, shopping, business or cultural activities

* The neighboring homes represent a lower economic area

* The median household income for the area is $35K

* Clinton has a higher tax rate than more desirable Farragut

* As of April 2012 there were 10 meth lab quarantines in Clinton

* There were 0 meth lab quarantines in Farragut

* The current state of $90,000 in annual utilities is cost prohibitive to today's buyer.

In summary: The house is too big, the location is bad, the cost to repair and maintain is prohibitive, the Homeowner's Association presents numerous obstacles, financing on this home has resulted in foreclosure with every single buyer. And every day the house sits, it drains the funds of commercial bank, liens are piling up from the Homeowner's Association and commercial bank's board of directors look like idiots. They look like idiots for taking on this loan in the first place. They look like idiots for thinking they're going to get $1.2 million in a sale. And they look like idiots for letting an iconic landmark fall into such disrepair that it could become condemned and torn down.

Whirlwind is Commerical Bank's Titanic and it's taking on water fast.

· Attorney fees

· Staff salary (for those working the Whirlwind file)

· Interest lost

· Revenue lost

· Further depletion of Commercial Bank’s cash reserves

· Loss of future good loans because money is tied up in Whirlwind

· Liens attached to the property for negligent maintenance and upkeep. Liens bring more attorney fees and costs to clear title

· Repairs continue to increase as property slips into further decline. Failure to repair Whirlwind results in lawsuit from HOA

· Butcher lake, the pool, the tennis courts, the house are all an attractive nuisance—further lawsuits waiting to happen

· An empty house of this notoriety invites vandals, scrappers, trespassers and squatters. Security issues result in yet another HOA lawsuit

· A vacant house is a beacon for drugs and illegal activities. Cost to clean a meth house of this size will run between $400,000 to $600,000 and the stigma never goes away. More lawsuits from HOA.

When I went into this meeting I had 3" thick notebooks full of every recorded document on this house dating back to when the Butcher's built the house. I had all my research on comparable properties in that price range, the costs to fix the house, the potential problems with the house and Commercial Bank's financials.

My research revealed that as of December 2011, Commercial Bank had below normal sustainable profitability, very questionable asset quality, mid-range capitalization and below normal liquidity. A Return on Invest of at least 1.0% is deemed satisfactory in accordance with banking industry standards and Commercial Bank came in at 0.9%. At the end of 2011, Commercial Bank was performing substantially below average and the FDIC had them on their radar.

The family-owned bank is hemorrhaging and someone needs to stop the bleeding.

Bankers are typically not a creative group of people and when there's a board of directors involved in the decision making process, it's no easy feat to get the signatures on the line.

I met the Realtor at the bank (I only work with listing agents because commissions are negotiable and I'll have a tougher time getting a deal if there's two commissions on the line).

We were lead into the conference room which was, of course, ridiculously ornate.

There was a long conference table for about 30 people. I was told the bank representative was on the phone and would be with me momentarily. (Classic power move). I asked the Realtor to step out for a moment because I wanted to talk to the guy before we got to the contract. She did and I took my seat at the head of the conference table across the room so I was the first thing he saw when he walked in. I was at the head of the table and had pulled out a chair to the side of me for him. I would be leading this meeting.

After 15 minutes he came in, visibly thrown by my position in the room. Which is good, I needed him to be uncomfortable with his role in this negotiation.

Before I got to the money I went over everything I had on the house and why he would never get $1.2 million for it nor would he get $400,000 (the bank's reserve bid at the foreclosure auction). In fact, he wouldn't even get the value of the land the house sits on because the cost to tear down the house would be expensive, time consuming and pointless - the views and the HOA restrictions just aren't worth it.

He leaned back in his chair and crossed his arms. The man was pissed.

During our conversation I learned that he had never been out to the house, was not familiar with the area, and had no idea that his lawyers were working on property tax issues with the house that had actually been taken care of five years ago. I provided him the paperwork.

I then explained to him that I did not fly out from Colorado to present him with an offer to buy the Butcher place. I flew out to provide him an exit strategy.

When you're on the Titanic and the boat is sinking, you do not stay on the boat because you spent too much money for the trip, you get off the damn boat.

The bank is hemorrhaging, the house is not going to sell. I told him:

· I accept the property in as-is condition (assuming clear title is provided)

· I'm paying cash, waiving the mortgage contingency

· I'm paying my own closing costs

· I do not need an appraisal

· I do not require a survey

· I do not request funds in escrow

· I waive any geological report

· I waive any pest inspection contingency

· I waive any home inspection contingency

· I waive any repair contingency

· I waive a home warranty

· I do not have a problem with the HOA restrictions

· I can offer a quick close

My offer is $10.

He was not prepared for that.

I pulled out the articles I had collected of banks in Detroit selling off homes for $10 to get the financial drain off their books and banks in Cleveland paying borrowers $35,000 to sell their home so the banks could get the FDIC off their back.

Commercial bank does not know the plan I had in mind for the Butcher Mansion. I knew the house wasn't going to sell and I knew they weren't going to accept my exit strategy right away.

Commercial Bank is losing ridiculous amounts of money every day with Whirlwind.They have the opportunity to be involved in what could be the single greatest thing to happen to East Tennessee in decades - bringing Oak Ridge, Clinton and the surrounding area to the forefront in renewable clean energy. Commercial Bank would be instrumental in bringing jobs to the area, therefore new home buyers, new business loans, more revenue coming in.

But in order for that to happen they have to get off the sinking ship. So far, they haven't been willing to do that.

The Butcher Mansion Plan

HISTORY

The Butcher mansion was completed in 1974. Jake Butcher was instrumental in bringing the 1982 World's Fair to Knoxville. The theme of the World's Fair was "Energy Turns the World." Jake Butcher lived in the largest residential energy sucker in East Tennessee.

The construction of the 22,000 sqft house was such that the kitchen was on one wing, the master bedroom was in another wing on a different floor. The children's playroom was over the kitchen on the second floor and two of the daughters used the third floor for their bedrooms. This means you had to heat and cool the entire house.

The insulation is poor, the windows are all single-pane, there are too many kitchens and too many bathrooms. Absolutely nothing about the house is energy efficient.

PRESENT

I like to read. A lot. And because I read from a wide variety of subject matter, my brain goes into over-drive and starts connecting dots.

Are you ready for an overload of information?

Here we go...

• The Butcher mansion is well known for its history and connection to the "Energy Turns the World" Fair. It's also known that every Whirlwind owner has gone into foreclosure: the utility bills and maintenance costs were a huge factor in these bankruptcies and foreclosures.
  
  

• Oak Ridge is known as the "energy city".
  
  
• There was an Op-Ed piece in the Oak Ridger by Fred Tompkins, chairman of the Tech 20/20 board of directors. Tech 20/20 is a venture development company looking to make Oak Ridge more entrepreneurial friendly. Their mission is "to create and accelerate the development of high-growth potential companies and jobs by capitalizing on our region's unique technology resources."

• In Denver, CO there are two builders building net-zero energy houses. A net zero house is a home that produces at least as much energy as it consumes. That means no more electric bills, no more natural gas bills.
  
  
• DOE is the primary source of ORNL's $1.65 billion in annual funding. DOE is proposing the creation of 3 new research "hubs" in energy-related fields. ORNL's director Thom Mason believes that ORNL is well positioned to compete for one or more of those hub designations. DOE wants one of the hubs to address battery and energy storage. Each of the hubs will receive $25 million in annual funding for five years.
  
  
• The Clean TN Energy Grant provides $5.28 million dollars for projects focusing on biomass and geothermal energy, wind and solar energy, lighting, HVAC, insulation and air quality
  
  
• Diane Bossart, research associate and manager of the UT Solar Power House tour goes into schools teaching kids about solar energy facts as well as renewable, sustainable energy sources.
  
  
• UT's Living Light House is a zero-energy home. UT placed 8th in DOE's 2011 Solar Decathalon. The project was a part of UT's college of Architecture and Design
  
  
• The Solar Opportunity Fund underwrites solar installation and innovation programs to grow the solar industry in TN
  
  
• UT and TVA partnered for a campus energy efficiency program. UTK is one of the largest green power purchasers in the Southeast.
  
  
• ORNL is working on neutron scattering experiments to help solar cell makers refine their materials and manufacturing processes, thereby reducing costs of solar energy manufacturing and installation.
  
  
• TVA built 3 experimental homes to test energy efficient technologies. In building these three homes, TVA created a multi-million dollar research facility for about 10% of the cost of creating the testing capacity in a laboratory. It was the combined expertise of TVA, ORNL and the building industry - who contributed materials, equipment and labor.
  
  
• ORNL built a stationary 288-ft array of solar panels which converts the sun's light into DC electricity. The electricity produced from these panels helps buildings 3147 and 3156 achieve net-zero energy status.
  
  
• Craig Blue is the director of ORNL's Energy Materials program
  
  
• Professor Edgar Stach is the first faculty member at UT college of architecture and design to receive a joint appointment with ORNL and the university. Stach will be researching and developing new technologies and methods to achieve cost effective, energy-efficient applications for high-performing retrofitted and new buildings. His students were the ones who designed and built the net-zero energy house in the Solar Decathlon.
  
  
• ORNL's Building Envelope Group received a R&D award in 2011. Their job is developing maximum energy efficiency in buildings.
  
  
• ORNL's Whole-Building and Community Integration group develops partnerships to accelerate the integration of renewable resources and energy efficient technologies into high performance buildings and communities.
  
  
• The Volunteer State Solar Initiative is state funded and focuses on job creation, education, renewable power production and technology commercialization.
  
  
• In 2011 there were $7.27 million awarded to 38 companies across TN to focus on "new solar projects that will build on and enhance the growth of TN's solar value chain."
  
  
• Solé Power Tile is a roof tile designed to sustainably convert sunlight into electricity without compromising aesthetics. As of 2009 they were available only on the west coast. They are solar tiles that are light weight, unbreakable and recyclable.
  
  
• Solar Roof Shingles (technology being developed at ORNL) look like regular roof shingles

So I suppose by now you see where I was going with the Butcher Mansion. Why not take the icon of energy waste consumption and turn it into a beacon of renewable, clean energy?

The materials and manufacturers are in TN, the research and development are in Oak Ridge. Oak Ridge is the energy city. The Butcher mansion would open its doors to local and national politicians, economic counsel members, clean energy businesses, local science teachers and science fair winners, building contractors and more.

According to the HOA the estate must be a single family resident. So, that would mean construction integrity and maintenance is allowed. And, of course, occasional guests at one's home would not be a problem.

Clean energy partners pay an annual fee for marketing and publicity. I, in turn, "hire" the clean energy partners to "remodel" the home. As TVA has proven, opportunities to do research in the field rather than trying to replicate experiments in the lab saves millions. Research and development, of course, is always ongoing.

Participating Tennessee businesses receive local, regional and national attention as renewable energy is on the top of every politician's to-do list.

My contribution would be fund-raising, grant writing and publicity. The angle would be:

1. Butcher mansion irony - energy waste consumption to energy generator

2. My family was impacted by the TVA coal ash spill and the videos I created for the residents of that area were seen by Erin Brokovich (who used my first video for the town hall meeting), Senator Boxer and the entire Senate hearing committee (before Kilgore got the opportunity to do his little song and dance) and President Obama. I was interviewed by a writer with the Huffington Post and three colleges asked me to come speak for their environmental sciences class. My point is, I know how to get the attention of people who need to be involved and I know how to get and maintain publicity. The TVA story, the Butcher mansion story, the story of ORNL and UT working together to bring sustainable energy to the community would bring massive amounts of attention, businesses and jobs to the area.

That was the plan. Now, are you ready to find out what the offer was to the bank?