Another Harbinger of The Crunch
Idaho’s Village Green Development Files for Bankruptcy
The Village Green at the Valley Club, a new high-end subdivision and golf course development in Ketchum, Idaho, filed last week for Chapter 11 bankruptcy protection, owing more than $24 million to its creditors.
The development plan includes 43 custom homes -- valued at about $3 million each -- and a nine-hole Tom Fazio golf course, but so far only 13 homes have been completed and only seven of those have been sold, according to developer Henry Dean.
"We expected to do a lot better," Dean said. "We just fell off of our pro forma."
It's the latest in a string of bankruptcies among developments in the West, from Tamarack Resort in Idaho to Promontory Club in Utah, further evidence that the high-end real estate market in the West has been deeply affected by the credit crunch.
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In The New West magazine: Project Watch
The High-End Real Estate Market: They Went Bankrupt?!?
The national real estate pullback and the credit crunch, combined with several years of sky-high construction costs, have some luxury developments in the New West on the ropes.
While bankruptcy is an imperfect prism through which to view the effects of the market slowdown, these five cases offer rich glimpses into the operations and financing problems.
More bankruptcies are undoubtedly on the way. The B-word has even been thrown around as a possibility at the vaunted Yellowstone Club, where the divorce of owners Tim and Edra Blixseth has compounded its woes.
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Against the Laws
Oil Price Off the Rails
The convergence of record high gas prices ($3.60 a gallon average across the U.S.), a presidential campaign, obscenely high earnings reports from Big Oil, and the prospect of $4 gas during the summer driving season has led to some rampant silliness, including the proposed “gas-tax holiday” being backed by candidates Hillary Clinton and John McCain. Congress plans to get into the act, pledging to bring forth legislation to offer low-income Americans relief from high prices at the pump – legislation that President Bush will almost certainly veto.
The price surge is also leading to an alarming question: has the oil industry jumped the rails of basic economic laws?
According to economics, soaring prices would, in normal times, lead to increased output of oil, reduced demand and a subsequent reduction (or at least a flattening) in prices. But prices haven’t followed suit.
In other energy news: Colorado Wildlife Commission weighs in on oil and gas production; Xcel plans to shutter coal plants opposed by consumer-protection agency; and Colorado will study the economic effects of new oil and gas regulations on the industry.
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From The New West magazine
Boise in Its Own Little Bubble
The Treasure Valley Repo Bus Tour embarked on its maiden voyage in March, driving about 25 pre-qualified and hopeful homebuyers on a tour of Boise and nearby Eagle and Meridian, hunting for deals on foreclosed homes.
"In this market it's ‘Think outside the box.' What can we do to generate some business?" says Nate Wilson, who helped organize the monthly bus tour.
In 2005, Wilson's agency, the Boise branch of Keller Williams Realty, had 600 agents. In mid-April, the count was down to about 380.
Boise has been hammered by the national housing slump and the sub-prime loan debacle. In April, there were 200 homes in Ada County scheduled for a trustee sale, the last step in the foreclosure process, compared to 42 last April. March saw 245 defaults filed, up from 99 in March 2007. In the fourth quarter of 2006, single-family home permits plunged 39.6 percent.
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New West News Brief
Statewide Wyoming Real Estate Steady, Slight Chill in Teton ValleyThe Associated Press' Mead Gruver takes a look at the Wyoming real estate market today with two stories: One about a slight cool down in the pricey Jackson Hole area and another about the still slightly tight overall statewide situation.
New Census numbers show Wyoming is ninth in the nation for the lowest vacancy rate in the first quarter (1.7 percent, compared to 3.2 percent West-wide), tied with Hawaii and Oklahoma. New energy workers moving into the state have helped the market, as has the reluctance to go hog-wild with new construction.
In the Teton Valley, Gruver reports there is a little dip in home sales, although the median price continues to climb. (It's at $1.1 milllion.) And, with a proposed moratorium on new building while the county finishes a management plan, those prices might just continue their rise.
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from timberlands to subdivisions
Officials Challenge Mark Rey on Plum Creek Road Easements
The dust kicked up by closed-door negotiations between the U.S. Forest Service and Plum Creek Timber Company to amend forest road easements brought Agriculture Undersecretary Mark Rey to Missoula Monday, where he apologized for keeping western Montana counties in the dark but did little to ease concerns that local communities will increasingly bear the burden of Plum Creek's transition into residential real estate.
Rey, a Bush Administration appointee and overseer of the Forest Service, said he's "extremely sensitive" to the effects the development of Plum Creek's timber lands could have -- increased firefighting in the wildland-urban interface, road maintenance and other public service costs, plus environmental impacts -- "but that sensitivity does not empower me to write new laws," he said, and in the end Plum Creek can do whatever it wants with its land.
"You ought to think harder about executing these responsibilities yourselves," he said, whether through zoning or other means.
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NewWest.Net Conferences
Designing the New West
The Designing the New West: Architecture and Landscape in the Mountain West Conference is wrapping up here in Bozeman at the historic Gallatin Gateway Inn. Put on by NewWest.Net and sponsored by the Sonoran Institute, the conference brought together designers from all over the country to explore innovative design ideas, identify best practices, and better understand how to bridge the gap between good architectural theory and sometimes-messy building practices in the fastest growing region in the nation.
A mix of presentations and engaging panel discussions tackled pressing Western issues like sustainable development, land design and the special challenges of urban, rural and resort design, historic preservation and affordable housing.
Click on the photo or here for a slideshow of the days' events. Click "more" for a recap of the conference.
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growth and rivers
Making the Case for Streamside Setbacks
Streamside setback regulations protect a stream from “death by a thousand cuts” hydrogeologist Dr. Chris Brick told City Club Missoula at its monthly luncheon Monday.
By themselves, a single home or a stretch of rip-rapped bank do not present much danger to a stream, but collectively, all the structures, armored stretches of bank and cleared riparian vegetation do, said Brick, the staff scientists for the Clark Fork Coalition, an organization focused on community development and environmental protection of the Clark Fork River.
“What we’re concerned about is how we can maintain our Montana values for our streams and rivers in the face of lots of people wanting to come here,” Brick said.
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Boise office will close
Another Sign of Tamarack’s TroublesThe Boise office of Tamarack Resort will close this week, according to reports from KBCI, the Idaho Statesman and others.
The Valley County resort, led by CEO Jean-Pierre Boespflug, is in financial crisis after Credit Suisse foreclosed on a $250 million loan for which payments had stopped. Boespflug and his partner declared bankruptcy.
Independent contractors have filed at least 20 liens against the resort to recover their unpaid bills. There is now no construction active at Tamarack.
Boespflug told the Statesman that about 20 employees are affected by the closing.
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"a secret, closed-door plan"?
Forest Service, Plum Creek Conspire on Roads for Real Estate, County Says
Elected officials are raising red flags after finding out about alleged back-room negotiations between the U.S. Forest Service and Plum Creek Timber Co. aimed at easing Plum Creek's transition into residential real estate by amending road use regulations.
Last Thursday, the Missoula Board of County Commissioners wrote Montana Sen. Jon Tester an open letter alerting him of private dialogue on forest road easements that could, they said, significantly affect communities in Western Montana where Plum Creek owns large swaths of land.
According to Plum Creek spokeswoman Kathy Budinick, Plum Creek has not acted deceitfully.
"It has been characterized as a process that occurred behind closed doors and that is inaccurate, and in fact, just the opposite is true," said Budinick. "The easement amendment was heavily vetted really at all stages of its drafting."
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