FALMOUTH, Ky. — Newly assembled public records raise a straightforward question about the former Falmouth School Center at 500 Chapel Street:
How did a property originally placed under contract with an Ohio nonprofit become privately titled and then emerge as the site of a proposed $7.875 million for-profit agricultural project — and what role, if any, did the lawyers, entities and overlapping business addresses play in that transition?
The records do not establish wrongdoing. They do, however, reveal steps in the property’s history that were largely absent from the public narrative presented to Pendleton County residents.
In February 2017, the Pendleton County Board of Education entered into a $161,000 purchase contract with New Foundations Transitional Living, Inc., an Ohio nonprofit. Ross Shively signed the contract as president of New Foundations.
The contract identified Matthew B. DeMarcus as attorney for the School Board. His firm’s notice address was 502 Greenup Street, Covington, Kentucky.
New Foundations then made documented payments toward the school purchase.
But when the transaction closed on February 23, 2018, title did not go to New Foundations. The deed instead transferred the property from the School Board to Highland Hills Holdings LLC.
The available records still leave an important question unanswered: Where is the document explaining the transition from New Foundations as purchaser to Highland Hills as title holder, and what consideration, reimbursement, assignment or release accompanied that change?
Then another connection appears.
Just 52 days after Highland Hills received the former school, Verti Grow Farms LLC was organized as a Kentucky for-profit company.
Its principal office was listed as:
502 Greenup Street, Covington, Kentucky.
That is the same address appearing in the School Board’s purchase contract for its attorney and law firm.
The address overlap by itself does not prove that the School Board’s attorney represented Verti Grow, owned an interest in Verti Grow, or participated improperly in the project. No such conclusion should be made without the missing formation, engagement, billing and transactional records.
But it creates an obvious public-record question:
Why did a newly formed private company planning to redevelop property just sold by a public school board use the same business address associated with the seller’s attorney?
By 2019, the scale of the private proposal had become substantial.
Kentucky Agricultural Development Fund records describe a $7.875 million Verti Grow project at the former Falmouth school, including approximately $3.75 million in capital improvements and a request for $2 million in state agricultural-development funds.
The proposed financing included:
– $2 million in requested KADF funds;
– $1.575 million in private equity, described as partially secured; and
– $4.3 million associated with Kemba Federal Credit Union, Heritage Bank and Rainstar Capital, described in the state materials as unsecured.
The KADF ultimately denied the $2 million request because of limited producer impact.
But the financing documents create another unanswered question: What exactly constituted the $1.575 million in proposed private equity?
That question becomes more significant because a Verti Grow project budget included a separate $250,000 “Building Acquisition” line even though Highland Hills already held title to 500 Chapel.
What was Verti Grow proposing to acquire?
Was it ownership of the building? A leasehold? An option? Development rights? An assignment? Some other economic interest?
And did the increased value attributed to the former school form any part of the project’s proposed private equity?
The New Foundations records add another unusual detail.
A March 2020 internal property schedule associated with New Foundations listed 500 Chapel Street at an original cost of $161,000 and a stated present value of $805,250 with no loan balance, despite Highland Hills being the record title holder.
That schedule alone does not prove New Foundations owned the property or possessed an $805,250 legal interest. But it raises a legitimate accounting question:
Why was a property titled to Highland Hills still appearing on a New Foundations property schedule, and what did the $805,250 figure represent?
Taken together, the public records presently establish a sequence involving:
a public school board → a nonprofit purchaser → a private title holder → a newly formed for-profit company → a multimillion-dollar private/state financing proposal.
They also establish that the for-profit company’s principal-office address matched the address associated in the original purchase contract with the School Board’s attorney.
What the records do not presently establish is equally important.
They do not establish that the attorney held an ownership interest in Verti Grow. They do not establish that New Foundations’ funds were illegally diverted. They do not establish that the private-equity component consisted of the former school’s appreciated value. And they do not establish that the underlying transactions were unlawful.
Those are precisely the reasons the missing records matter.
The public deserves the documents capable of answering several basic questions:
Who approved the change from New Foundations to Highland Hills? What consideration changed hands? Was New Foundations reimbursed? Who organized Verti Grow and why was 502 Greenup used? What comprised the $1.575 million private-equity figure? What did the $250,000 building-acquisition budget represent? And why did New Foundations later carry 500 Chapel on a property schedule at $805,250?
These are questions that can be answered with contracts, closing ledgers, assignment records, organizational files, equity schedules, appraisals and accounting records.
The records should answer them.
Source basis
This release is based on the 2017 executed Pendleton County Board of Education purchase contract; School Board sale receipts; the February 23, 2018 deed; Kentucky corporate-organization records; Kentucky Agricultural Development Fund records for application A2019-0181; the February 5, 2019 Falmouth Outlook; and a March 21, 2020 New Foundations property schedule.
This release identifies unresolved documentary questions and should not be read as an allegation that any identified person or organization committed misconduct.
