One year after hurricane, Woodlake residents file lawsuit over damaged dam

Thursday, October 26, 2017
Swans make the best of now-dry lake
Woodlake Dam problems after Hurricane Matthew have affected the man-made lake.

VASS, North Carolina (WTVD) -- Residents of a Moore County community are suing the maligned owners of the Woodlake Dam, having run out of patience more than a year after the dam nearly failed during Hurricane Matthew and without any progress towards its restoration.

"Their actions and inactions have impacted all owners of lots within Woodlake subdivision, as well as those paying membership fees," David Watterson, Chairman of the Restore Woodlake Committee, told neighbors in a town hall meeting. "By this action, we're seeking to recover damages on behalf of ourselves and all others similarly situated."

The lawsuit, filed in Moore County with 27 lead plaintiffs, is the latest move in a saga that reached a near-catastrophic climax after Hurricane Matthew. The storm exposed the dangers of years of neglect when crews found a ruptured spillway, forcing the evacuation of hundreds of residents. The National Guard was called in to plug the leak with sandbags.


An ABC11 I-Team investigation confirmed that a history of negligence on the part of the past and current owners - German investors Ingolf Boex and Illya Steiner, plus Woodlake CC Corp. Vice President Julie Watson - and a failure on the part of the DEQ to enforce the many Dam Safety Orders and notices delivered over the past decade.

As the I-Team also reported, the risk of impending breach forced the DEQ and FEMA to bring in pumps to drain the lake and reduce pressure on the failing dam. The result has been the disappearance of Woodlake, which was the desired spot for waterfront properties.

Property values have plummeted, as has the population of fish, frogs, flora, fauna, and many species of birds that depended on the lake for their habitat.

READ MORE: Fed up with owners, DEQ takes control of Woodlake Dam

"Despite promises made, and current representations to the contrary, there is no longer a lake," Watterson added. "As the dam owners, (Watson and Steiner) are obligated by statute and regulation to repair and maintain the dam."


Residents aren't alone in their frustration: tax assessors in Moore County have been moving forward on a process of foreclosing more than 500 parcels of land currently owned by Woodlake CC Corp., which owes more than $225,000 in taxes.

Gary Briggs, Moore County's tax administrator, confirmed to the ABC11 I-Team the parcels include the now-ruptured Woodlake Dam, the now-dried up lake, two golf courses, and hundreds of undeveloped lots.

"There is a lot of vested interest in Woodlake's recovery," Briggs explained. "And we're methodically treating these properties like we would any other property. Foreclosure is not a silver bullet, but it is a means for the county to collect revenue."

County records show Woodlake CC Corp. has not paid property taxes from 2014 or 2016; 2017 taxes have not yet been assessed.

Briggs said the In Rem foreclosure process is solely directed at seizing the property and not necessarily at suing the owner. The parcels will be put up for auction individually, meaning the land - and the dam - could be bought by multiple investors.

The process could take at least eight months at the earliest, but Briggs warns Woodlake residents should expect a longer wait for a resolution.

According to Briggs, the tax department must review each parcel with delinquent taxes, and decisions are made individually as to whether it's appropriate to foreclose the parcel at hand. Briggs explained the process "allows the county to be fully aware of any characteristics or potential liabilities that may be associated the parcel being reviewed."

In addition to back taxes, Woodlake is also on the hook for up to $1.5 million paid by taxpayers to breach the dam after the Attorney General's Office and Department of Environmental Quality effectively labeled the situation at to be that of an emergency

"Breaching the dam is a measure essential to provide emergency protection to protect life and property downstream," NCDEQ Secretary Michael Regan wrote in a letter dated June 8th. "Under this declaration, the Department intends to expedite the procurement of qualified dam engineers for the design and construction oversight for the temporary full breach of the damaged Woodlake Dam."

Paid now by taxpayers, construction work to breach the dam began in June and completed only recently, according to state officials. A spokeswoman for Attorney General Josh Stein told ABC11 " NCDOJ is filing a collection action, which could turn into a lien down the road depending on how Woodlake responds to the payment request."

A Moore County judge signed the last order on March 15, demanded a temporary breach in the dam, thereby allowing a constant flow of water in the case of a major flooding event. The design could also leave a solid foundation to fully rebuild the dam in the future.

Under the terms of the order, Watson and Steiner had until April 10 (25 days from March 15) to share with the NC Department of Environmental Quality firm engineering plans to build a temporary breach in the dam. Officials conceded this would not permanently fix the dam but said it does negate any danger should there be another major rain event in the near future. Construction on those must begin within 60 days (May 15) and completed within 105 days (June 28), just in time for hurricane season.

With that last deadline approaching, it became increasingly clear Woodlake would not comply. DEQ officials confirmed to the ABC11 I-Team that Schanbel Engineering pulled its representative from the project as the firm waits for Woodlake CC Corporation to pay up. A manager at Crowder Construction added that Woodlake had not yet executed a contract offered several weeks ago.

The ABC11 I-Team also found Woodlake in deep debt to Geosyntec Engineering, owing close to $270,000. According to the Moore County Tax Collector, Steiner and Watson are also well behind on payments.

Julie Watson refused to speak to ABC11 on camera, but outside the Moore County Courthouse she vowed to welcome us to Woodlake in the future (we've never met her despite several previous calls and visits before). She told the court that Steiner, her business partner, and financier visited North Carolina last fall, and is the one responsible for sending the money needed to pay for dam repairs.

On the same day our original I-Team's report aired in November 2016, Woodlake hired public relations firm Apco Worldwide to represent them. In a statement emailed to ABC11 on October 28, 2016, spokeswoman Devyn McDonald wrote:

"The safety of Woodlake Country Club residents, members, guests and our surrounding neighbors is our top priority...The interim remedy is intended to rapidly improve the protectiveness of the dam until a final remedy is designed, permitted, and implemented. The final remedy process will require ongoing collaboration with the state regulators until a final solution is in place. We want to emphasize that throughout this process the protection of human safety and the environment are our top priorities."

The Attorney General's Office finally filed a court injunction Woodlake after Steiner and Watson ignored a state-sanctioned Dam Safety Order after the hurricane. The DSO, issued on November 17, 2016, mandated that Woodlake must have had its engineers begin work on a temporary breach of the dam begin by December 8 and be completed by December 31, 2016. Additionally, the DSO gave the dam owners 91 days from the order's issue for engineers to submit complete plans for the repair of the dam.

According to the DSO, had the conditions not been met, the owners would face fines of up to $500 a day. Those were never imposed or collected.

A spokesperson for the NC Department of Environmental Quality (DEQ) told ABC11 that Woodlake was given five days from December 8 to provide a written response to the DEQ with an update on their plans and work.

Nothing ever happened.

The Woodlake development, first built in the 1970s, has roughly 700 homes, two golf courses (only one functional), the dam (broken) and a lake (drained). Property owners have been livid with the lack of communication from Watson, and the development's reluctance and/or willful ignorance to fix the dam.

"For anyone living on a lake or contemplating living on a lake - you can wind up in the same situation," David Watterson, a Woodlake resident and co-chair of the Restore Woodlake Committee, lamented to ABC11. "It can happen to anybody, especially if dams are privately owned."