The Falls resort in debt crisis
The Falls Golf Resort is deep in the financial rough.
But unlike other grandiose visions of hillside development in Chilliwack, The Falls is the only one to actually tee off and get onto the green.
According to sources contacted by The Progress, Falls developer Rick Wellsby has put every day of his life for the past 20 years into making his 1989 vision come true.
But now the company, Blackburn Developments Ltd., has filed for bankruptcy protection under the Companies’ Creditors Arrangement Act that allows him to hold off creditors, and to continue operating the resort in Chilliwack’s Eastern Hillsides.
“We’re absolutely still operating,” Falls spokesman Robert Wilson said Monday.
He said the court action has no impact on the golf course, the restaurant, or any of the events – like weddings and dinners – scheduled at the resort.
Although The Falls is $75 million in the hole, and the resort development market hard hit by the worldwide recession, Wilson said he is confident the company can weather the financial storm “and emerge stronger as a company.”
In an earlier interview, Wellsby told The Progress that a mortgage holder had called in a loan which sparked the current “cash crisis” and his subsequent petition for court protection.
Wellsby said at that the time that he was “pretty confident we can turn things around” as 12 residential units now under construction would “generate some cash flow.”
He said the company would be “unveiling a plan soon” to resolve the financial problems.
In court documents obtained by The Progress, Wellsby blamed the company’s debt problems, in part, on the City of Chilliwack and the worldwide economic meltdown of 2008.
“The timing could not have been worse for The Falls,” Wellsby said in one affidavit. “Just as the long-term problems specific to the project were resolved and momentum was (again) starting to build, the general market malaise once again derailed us.”
He also claimed in the affidavit that delays caused by the city’s refusal to approve a sewage system for the resort, and a city-ordered moratorium on development in the Marble Hill area after ground movement was detected there led to the loss of 70 potential buyers - and a “compounding” debt load.
The moratorium was lifted, Wellsby said in the Feb. 22 petition for court protection, “but real damage was done, as a number of local builders and potential buyers were afraid to construct homes and buildings in the Eastern Hillsides for some time thereafter.”
But Mayor Sharon Gaetz defended city staff for rejecting the sewage treatment proposal made by the resort, and she pointed out the moratorium lasted only 18 days.
“There’s still a lot of (development) energy up on the Eastern Hillsides,” she said Monday, and the proposed sewage system had failed in one B.C. community and became “an operational nightmare” in another.
She said The Falls owes the city $125,000 in taxes.
Wellsby told the court in one affidavit that the “groundwork” has been laid to complete the project, and “if Blackburn can be successfully re-structured, the project in my opinion (is) primed for a successful build-out, over time.”