Tired of years of financial mismanagement and broken promises, Kermit R. Dyke and the 4,300 property owners at the Chesapeake Ranch Estates in southern Calvert County, Md., are taking the problems into their own hands, mending past wounds and trying to inject a new energy into the community.
More than 400 property owners gathered this week to celebrate the start of what many hope is the rebirth of this 30-year-old Chesapeake Bay community that had been splintered by frustration, disappointment and disgust. After years of consideration and months of lengthy meetings, the property association has agreed to buy the common areas of the bankrupt development for about $850,000 from the Maryland Deposit Insurance Fund.
"There were people speaking with each other who hadn't talked to each other in years," said Dyke, a retired Air Force colonel and president of the Property Owners Association of the Chesapeake Ranch Estates. "It's really the start of a new era."
For the past year, the Maryland Deposit Insurance Fund has been running the community through a court-appointed receiver after it foreclosed on loans made to Jerrold Gottlieb, former owner of the Chesapeake Ranch Club, by the defunct Old Court Savings and Loan Association in Baltimore.
But last week, Dyke and the association's attorneys signed a 1 1/2-inch thick stack of papers; now the property owners association is responsible for managing the 3,200-acre private community, which includes a 100-acre man-made lake, stables and bridle paths, two Chesapeake Bay beaches, an airstrip and 70 miles of roads. The signing came after years of problems, including bankruptcy, lawsuits, the sale of some of the community's key facilities and the gradual deterioration of its roads. Many of the club's recent financial difficulties have been tied to the failure of Old Court, which was helping Gottlieb finance the acquisition and construction projects. When the bank went under in 1985, so did Gottlieb's line of financing. Since then, the club has sunk into deeper fiscal and maintenance problems. Property owners said they had talked about buying the development's common areas for nearly seven years, but it never came about because the community couldn't decide on the best method to take over the property. But last February, property owners decided they had had enough shortly after the insurance fund sued Gottlieb for $70 million, accusing him of diverting money from Old Court loans meant for the development to several of his other projects.
For the past seven months, a group of property owners has loaned more than $350,000 to the property owners association as a down payment toward purchasing the club. Individual owners made loans of between $250 and $1,000 and the money was kept in an escrow account until it was needed. Under the terms of the loan, the association will repay the property owners, with interest, in five years.
"We needed to do that to give us credibility with the banks," said Charles Pelzer, 67, who has lived in the community with his wife, Pat, since 1977.
Dyke said the community is trying to protect itself by owning the property.
"Certainly, we felt that another developer might buy it and have the right to collect dues and fees and we'd be right back in the same boat again," he said.
Pelzer, who was one of five people on a committee that raised money and prepared documents for the purchase, said the property owners association plans to sharply alter the club's operating procedures.
In the midst of hiring a full-time general manager, the property owners association is trying to straighten out the community's accounting system and get property owners who are in arrears to pay their annual individual dues of $102 ($51 for out-of-town property owners) and the $86 road fee. Residents have already agreed to pay an additional $44 a year in dues to help pay off new mortgages. All new residents must pay a $300 entrance fee.
The attitude of many of the property owners is to forget about the past and begin rebuilding the image of the community.
The buyout is "good news for everybody," said Lee Swisher, who runs the Bay Area Realty office adjacent to the community.
When Chesapeake Ranch opened in 1957, it was billed as a second-home community for Washington and Baltimore area residents. But in recent years, residents grew weary with the operation of the development, particularly the lack of maintenance of its roads and facilities and the poor snow removal.
During the late 1970s, then-owner Bruce Philipson sold off several of the club's amenities to help pay its bills.
The club's meeting house was sold for $45,000; the bay side dance pavilion was demolished and the property sold for $30,000 to a town house developer; and two marinas, the country club and the golf course were sold. Despite these sales, the Chesapeake Ranch Club went bankrupt in September 1981.
When Gottlieb bought the club in 1984, he promised to "make it a better place than it has been" and "wipe out the past."
But that didn't happen. And now, residents are hoping they can avoid the pitfalls of its past owners and make the community more attractive again.
"At one point this thing was tearing us apart," Pelzer said. "Now, it's really bringing us together."