Tuesday, February 23, 2010  
   Volume 80 - Issue 8 Website:www.passherald.ca   email: passherald@shaw.ca   $1.00   
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Quote of the Week
“We’re not punishing the good kids, we’re punishing the bad kids.”
- Councillor David Cole  
- on the curfew bylaw, which   
has now passed two readings   

 

67 lots to be under separate control, developer vows to continue regardless
 
Some would say that the more things change, the more things stay the same, but change is almost certainly coming to the River Run property after a group of investors voted to accelerate, which will likely see them take control of a 67-lot portion of the property to either sell or attempt to develop themselves.
River Run Vistas, a group representing investors who have first mortgage rights on 67 of the nearly 300 lots on the 52-acre property in Blairmore, held an information session with the Bridgecreek developers on January 16 in Calgary. It was the latest of several meetings between the two groups, as the developer sought to restructure its financial obligations to its investors in order to move forward with the project.
This group of investors had in total contributed $14 million toward River Run. The Bridgecreek developer defaulted on its interest payments to investors at the end of 2008.
At the January meeting, Bill Bradley and Gabor Zinner of Bridgecreek proposed to enter a new partnership with the investors. The proposal would see the investors paid back their $14 million from the development of their lots, with any remaining profit beyond that split, 70 percent going to the investors and 30 percent going to the developers.
River Run Vistas is one of four investor groups in the property. Another, River Run Springs, had already agreed to a similar proposal and is now working with Bridgecreek to move forward. The two other groups are based in the Netherlands, and negotiations are still taking place.
After hearing Bridgecreek's proposal, the Vistas group held a long question and answer session with the developers. Mayor John Irwin of the Crowsnest Pass was also invited by Bridgecreek, at the request of the Vistas group, to answer questions on behalf of the municipality.
After the developers had left the meeting, the remaining investors chose a new steering committee from among themselves and held an informal vote in favour of rejecting the proposal and accelerating, giving them other options to attempt to recoup their investments.
A formal vote of investors took place through Olympia Trust, the trustee for the development, over the next two weeks. The investors voted 53 percent in favour of the acceleration.
The investors then sent a letter to Bridgecreek with a set of demands to be met in order for further negotiations to take place. Bridgecreek in turn informed the investors that they considered the relationship finished. Pending the successful completion of formal legal processes, the River Run Vistas group is expected to take control of their 67-lot portion of the property, and would be free to either attempt to sell it or attempt to complete its development on their own.
At the meeting, a recording of which was made available online, some of the investors expressed frustration that the developer was no longer proposing to give them the high rate of return originally promised when they made their investments.
 
Bill Bradley of Bridgecreek says that he was surprised that the Vistas group chose to accelerate. He said that he had met with the group, its lawyer, and its previous steering committee numerous times over the past year, including an on-site meeting in the Pass, to work toward restructuring with them. The previous negotiations had all been positive, he said.
Even after the information and question session in January, says Bradley, he felt that the investors were willing to work with Bridgecreek. He says that he was surprised that a new group of individuals came into control of the steering committee and worked to convince the others to go forward with acceleration.
With only 53 percent of the group voting in favour of this option, says Bradley, the investor group was relatively split, and he says that he has heard from several individual investors in this group who are upset with the decision.
In the end, he says, it makes little difference to the overall project, except for reducing its size.
Bradley says that 60 percent of the River Run property is debt-free and owned by Bridgecreek. The remaining 40 percent, including the Vistas lots, are split between the four investor groups. One of those groups has chosen to work with Bridgecreek on attempting to move forward.
"It's fine," says Bradley. "I'm not upset in the slightest." He says that he still intends to secure bank financing to move forward with developing the first phase of the property. The only difference, he says, is that he might have to start at a different part of the property than originally planned.
"I'm committed to the project," he adds. "We're moving forward. I'm not a quitter. I want to see this happen more than anything. If they're not going to be part of it, I'll leave them in the dust."
The Pass Herald asked if he felt that this would negatively affect either the rest of the development or the relationship with the other investor groups. Bradley said that he feels it will not adversely affect either. He says that without the River Run Vistas lots, there are still approximately 225 lots on the property.
Bradley also says that he is considering some new options for portions of the property that are not investor-owned. While he needs to attempt to realize as large a profit as possible for those investors that remain, he says that he has more freedom on the 60 percent of the property that belongs fully to the company.
The options he is considering include an affordable housing component for the community.
Bridgecreek has contracted Viceroy Homes for the eventual hoped-for construction of units on the property. Bradley says that he intends to develop one phase at a time, securing financing and using the remaining profits from one phase to fund another.
He says that his biggest mistake before was attempting to quickly implement the whole project and trying to raise too much money from the get-go, rather than being patient.
It is unknown whether the Vistas investor group will attempt to sell their portion of the property or if they will try to work with another development group in order to either create serviced lots to sell or build homes on them as per the original River Run plan. All options are open to them.
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