Petition to the Chapter 11 Trustee of Salem Pointe Capital, LLC

The future success of the Rarity Bay Club will depend on the strong support of the property owners. We believe that our vision and priorities are directly relevant and material to the SPC, LLC sale. We respectfully request that this information be shared with all bidders to ensure they have a clear understanding of the community’s values and expectations.

To: Gary Murphey, Chapter 11 Trustee

CC: Tiffany A. Dilorio, United States Trustee

Nestled amid Tennessee’s breathtaking lake and mountain vistas, Rarity Bay was once centered around a vibrant club that brought neighbors together through social, recreational, and cultural experiences. For years, the club served as the heart of the community—an essential gathering place that fostered friendships, enhanced property values, and embodied the spirit of Rarity Bay living.

However, following two financial collapses, The Club—once an amenity that drew buyers to our community—has become a huge liability. Home and lot sales have slowed, steep discounts are now expected, and many buyers prefer properties without mandatory club membership. One estimate places the resulting loss in overall community property value at more than $50 million.

As bankruptcy proceedings near their conclusion, Rarity Bay stands at a defining crossroads. With over $1 billion invested in the community, homeowners and lot owners remain the club’s most important stakeholders. The future success of any new club owner will depend on rebuilding trust, collaboration, and confidence among those who call Rarity Bay home.

The following information is provided to assist prospective buyers in evaluating the assets of Salem Pointe Capital, LLC—including the Rarity Bay Club, individual lots, and related holdings—with an understanding of the community’s history, challenges, and guiding priorities. All prospective bidders are strongly encouraged to thoroughly review these considerations as part of their due diligence and evaluation process.

Our Vision

We believe that Rarity Bay should return to the guiding vision that shaped our community before Salem Pointe acquired the club: to be one of East Tennessee’s premier lifestyle, golf and sports communities. This vision is clear—and it reflects the commitment we've made as homeowners and lot owners. Together, we’ve invested in a high-quality community, and we expect bidders to have a thoughtful, actionable plan to realize that promise.

The Club

Restoring Rarity Bay to its premier status as a lifestyle, golf, and sports community requires that the future club owner make a clear and substantial commitment to investment and revitalization efforts. The following areas are priorities for returning the club to excellence and community pride.

• Golf Course Improvements. The golf course must undergo essential repairs and upgrades to meet the high standards expected of a top-tier club. This includes focused attention on sand traps, cart paths, greens, and fairways, ensuring all elements are maintained at a level befitting the community. And a few flowers!
• Restaurant Revitalization. The restaurant's small kitchen limits the menu and dining experience for members. Upgrading the facility is necessary. The next owner should focus on quality food, responsive service, longer hours, and making the restaurant a lively community hub with activities that enhance the Rarity Bay experience.
• Sports Facilities Enhancement. Investment in the sports facilities is also necessary. Repairs and enhancements should be funded to elevate these amenities to a premier level, ensuring they meet the recreational and wellness needs of all residents and contribute to the club’s overall vitality.

The Club’s Financial Structure

The original fee model established a foundation for a vibrant and sustainable club community. It is essential that any future financial plan remains true to these founding principles, ensuring both the club's long-term viability and the satisfaction of its members.

• Club Dues should align with the value provided. A tiered membership structure—offering social, sports, and golf options—will ensure fairness and flexibility.
• Mandatory memberships have left property owners paying for failed club management and subpar amenities, creating widespread dissatisfaction. While residents are willing to support a club that meets expectations, they insist on the right to resign if it does not. Protecting this right is critical, and property owners are pursuing legal options to permanently eliminate mandatory membership—underscoring the seriousness of the issue and the community’s commitment to a fair structure.
• Transfer Fees placed on property transactions have led to reduced home values and deterred prospective buyers. Additionally, these charges may conflict with Tennessee law, highlighting the need to eliminate them to support both the community and the local real estate market.

Additional Considerations Regarding the Purchase of Other SPC, LLC Assets.

• RBCAI Assessment Dues. The collection of Rarity Bay Community Association, Inc. (RBCAI) dues plays a vital role in supporting the operation and ongoing maintenance of the community’s infrastructure. To ensure fairness and adequate funding for shared community amenities and services, all undeveloped lots must begin contributing via dues once they are purchased. This will help maintain the quality and sustainability of community facilities for all residents.
• Community Governance and Representation. The governance and management of the community are entrusted to an elected board of directors. This democratic structure ensures that all decisions affecting the community reflect the collective interests and voices of its property owners and homeowners. The validity and importance of this governance framework have been recognized and upheld by the court, further reinforcing its role as an essential element of community leadership and decision-making.
• Design Review Board and Guidelines. The community board holds the responsibility for home design decisions that are essential to maintaining property values and the overall aesthetics of the community. To preserve these standards, the Design Review Board must remain independent from any future developers. This independence ensures that design decisions consistently reflect the best interests of the community and uphold its established values. Additionally, any changes to the Design Review Guidelines will not occur without the explicit approval of the RBCAI. This process safeguards the integrity of the guidelines and ensures that modifications are made transparently and with the consensus of the community.
• The Declarant and Community Autonomy. Rarity Bay, after three decades of history, has matured into a well-established community that no longer relies on a declarant. Homeowners have taken deliberate legal steps to eliminate the declarant’s role, ensuring that governance rests securely with property owners and their duly elected representatives.
• Community Expansion and Development Guidelines. The process for altering lot configurations and property zoning within Rarity Bay is well-established. Any proposed changes must receive formal approval from both the Tellico Reservoir Development Agency (TRDA) and the Rarity Bay Community Association, Inc. (RBCAI). This dual-approval system ensures that development decisions align with the community’s values and regulatory requirements. It is important to recognize that Phase 17, while partially developed, has not been annexed as part of the Rarity Bay Association. Furthermore, proposals for a hotel and conference center within Rarity Bay are viewed as inconsistent with the established vision of the community as a premier residential sports, golf and lifestyle community.

A Shared Vision for Rarity Bay’s Future.

With a new Club owner and strong community support, Rarity Bay has a rare chance to revitalize our club and make it a true reflection of our values. As signers of this petition our aim is clear: build a place we are proud of, that attracts new neighbors and club members, enriches daily life, and strengthens our identity. Together, we can unlock Rarity Bay’s full potential as one of East Tennessee’s premier golf and sports communities - creating not just great facilities, but pride, connection, and a lasting sense of belonging.

Rarity Bay Residents and Property Owners