One of the largest investors in the financially faltering Falls golf course is calling on city officials to show the “political will” to help the hillside resort stave off bankruptcy.
Michael Thornton said if the city will “fast-track” subdivision approvals to create smaller “bite-sized” parcels affordable to more buyers, it could help the company deal with the $75-million debt crisis that forced it to seek bankruptcy protection earlier this month.
“There are ways the City and PricewaterhouseCooper and Blackburn and the investors could still make this a ‘good-news story,’” Thornton said.
But Chilliwack Mayor Sharon Gaetz said the “political will” at City Council plays no part in subdivision approvals, which are in the hands of an approving officer and “completely separate” from city council.
PricewaterhouseCooper is the court-ordered “monitor” that will work with resort developer Blackburn Developments Ltd. deal with the debt owed to various investors and mortgage holders.
The court-ordered protection from bankruptcy allows the company to continue operations at the golf course and resort located in the Eastern Hillsides while a financial plan is worked out.
It’s not clear how big a role the City will have in tailoring that plan, which must satisfy the large number of investors and mortgage holders in The Falls project.
PricewaterhouseCooper officials were not available for comment.
But Thornton agreed reaching such an agreement in the current “feeding frenzy” of investors lining up to get at least part of their money back, is going to be a tall order.
“In shark-infested waters, how many swimmers reach shore,” he said.
Thornton said his company, Landus Development Group, is “owed by far the most” at the resort project through “a series of different mortgages” totalling $16 million.
However, he said the reported $75-million debt is a figure inflated by interest rates compounded over actual investments made 12 years ago.
For example, his initial $6-million investment is now worth about $20 million, he said.
There has been no improper use of the $75 million by Blackburn president Rick Wellsby, he added, which some readers may have read into earlier media reports.
“Where Rick Wellsby made his critical error is, long ago he assumed he could deliver up (residential) lots faster than proved the case,” Thornton said.
“I suspect the real story here is the debt spiraled out of control because of a delay,” he said.
In court documents, Wellsby blamed the company’s debt problems, in part, on development delays caused by the City of Chilliwack, and on the worldwide economic meltdown of 2008.
Wellsby told The Progress in an earlier interview that the current cash crisis started when a mortgage holder called in a loan.
Thornton believes the golf resort still has legs, if investors can be convinced to hold off taking what they can grab now, and if more buyers can be attracted by “more saleable” smaller lots approved by the City.
“Longterm the property could produce far more than $75 million,” he said, and eventually become a “mini-Whistler” in the hills behind Chilliwack contributing to the local economy.
But the development won’t likely be in the hands of the man who started it all back in 1989: Rick Wellsby, he said.
“Of all the guys I know, he has the best ability to visualize the potential of something,” Thornton said. “He can look at a piece of land and see what can be done with it.”
But with his focus fixed on the “big picture,” he said, it appears Wellsby got tripped up by the details.
• Related Story: The Falls in debt crisis