Sechelt - Dead Ducks, Non-fliers & Snake Oil

[Skook]

This post is my swan song on Sechelt developments. I shown you recent development projects in town and the difficulties they currently face, and now I am taking you back a bit further in time to when it was really rocking and rolling on the coast.

The years 2003 to 2007 were the Sunshine Coast’s real estate version of the 'Yukon Gold Rush' reaching its zenith in 2005. Developers, developer-wannabes and snake-oil salesmen whether local, from the lower mainland and Alberta or from god-knows-where arrived, scoured the coast from Gibsons to Earls Cove buying up every substantial piece of privately owned land, or pushed their nutty ideas. Planning and development staff in Gibsons, Sechelt and the regional government (SCRD) offices earned every penny of their salaries during those wild and woolly years.

The SCRD released its 2004 Annual Report in the spring of 2005 and in it made a bold prediction - that the population of the Sunshine Coast would reach 40,000 by 2012 and 50,000 by 2026. A friend of mine would call that 2012 figure a ‘Russian’ number since it proved to be “a little off” (In the 2011 Census, the SC population reaches 28,619), but it would have been close to the mark had all the developments on the table at the time with their multitude of phases come to fruition. This post will take a brief look at a few of those projects - a couple went into foreclosure, one faded away, one was just silly, and a couple are dormant. I will end with a recent proposal that still waits to unfold.

Grab a cup of coffee and make yourself comfortable - here we go…

Except for the one silly idea which remained just that, some of these early projects actually broke ground and even completed Phase 1. They failed because they were victims of events beyond their control - the US housing crash and the subsequent Stock market meltdown which saw credit dry up, and potential buyers disappear. Their only fault appeared to be timing.

Silverback on Porpoise Bay (image below):

A gorilla of a development if there ever was one on the SC which was definitely a view held by the residents of East Porpoise Bay who didn’t take long to set up a protest webpage when a new re-zoning application was submitted. First proposed as a much smaller residential/golf course development named ‘The Terraces at Angus Creek’ back in 1995 by owner and Gibsons resident, John Kavanaugh, the project grew to immense proportions when sold to Calgarian, Gabriel Khoury, in that crazy year of 2005. Mr. Khoury’s privately held company, Porpoise Bay Developments Ltd, appeared to have lost the battle when its rezoning application was rejected on the 3rd and final reading by Sechelt Council in early April, 2008.

However, a few weeks later using the province’s Community Charter legislation, then mayor, Cam Reid, exercised his authority calling for a second final vote and on May 8, 2008 the application passed. According to Mr. Khoury, “Sechelt’s building community was a catalyst in bringing the project back for a second final vote [saying] “We met directly with the builder’s association two weeks ago - they’re supporting us because we’re supporting them”” (Coast Reporter). It also helped that Mr. Khoury upped his contribution to the sewer facilities from $8 million to $11.2 million.

Well, all was for naught. In 2010, Silverback and Mr. Khoury’s Calgary condo/townhouse ‘Lumiere’ project were in foreclosure and both were snapped up by Calgary based, Stoneset Equity Development Corp, a real estate investment company specializing in buying foreclosed projects with zoning and development plans in place. Stoneset has sold the Lumiere project to Vancouver developer, Bucci Developments Ltd, who renamed it ‘Tribeca’ and brought it back to life in February, 2012 completely selling out its 82 units in ten months; construction is to be completed this December.

Stoneset, too, has had its own share of problems as outlined in this November, 2011, Montreal Gazette news story which is worth quoting in full:

Quote:“A troubled Calgary property development firm that received some of the missing $65 million invested by Canadians in a suspected Ponzi scheme was delisted from the Canadian National Stock exchange on Tuesday.

In July, Stoneset Equity Development Corp. was suspended from trading for failing to disclose required information including financial statements and a certification of interim filings for the reporting period ended March 31, 2011. A spokesperson for the CNSX said the company was delisted this week because it has still not disclosed the obligatory information.

In June, the Gazette reported that the president of Stoneset is Peter Jarman, the son of the founder of the Voyageur Foundation, a Costa Rica-based “investment club” being investigated by the RCMP and securities regulators in the U.S. and Canada for running a suspected Ponzi scheme. About 1,000 investors, mostly from Quebec and Alberta, are unable to recover an estimated $65 million in funds they invested with the foundation.

In a June interview, Stoneset chief executive Tony Argento admitted that his firm received a $700,000 loan from Voyageur’s Trimax debenture fund — an entity controlled by Peter Jarman and his wife — and that Stoneset might be forced to sell one of its buildings to obtain enough funds to pay back the money. Stoneset subsequently issued a Canada-wide press release refuting information published in the article and denying its link to Voyageur. A Stoneset lawyer also contacted the reporter in question.

The delisting is the latest in a long list of legal and financial woes to hit Stoneset this year. In June, the company grappled with the resignation of its chief financial officer, a creditor’s threat to foreclose on the Symons Valley Ranch property Stoneset purchased last August for $11 million, it’s own threat of a lawsuit against several associated firms, and a $25-million lawsuit related to Stoneset’s purchase of a waterfront property in Invermere, B.C. that is slated for a $200-million development project.

As for Stoneset, it is not clear how a firm that can’t make mortgage payments on Calgary’s Symons Valley Ranch will be able to fund its planned $200-million Invermere lakefront project, which consists of a 144-room hotel and convention centre, 570 condominiums and 45,000 square feet of commercial space. In a July interview with the Columbia Valley Pioneer, Invermere mayor Gerry Taft said Stoneset’s legal and financial troubles meant there was “no future” for the proposed complex.

A letter from the company’s independent auditors dated April 21, 2011 provides scant comfort for shareholders. The document notes that the firm requires substantial funding in 2011 to meet is obligations. Moreover, this necessary funding combined with the firm’s inability to meet certain multi-million dollar mortgage payments indicates the “existence of a material uncertainty which may cast significant doubt upon the company’s ability to continue as a going concern.”

On Wednesday, Stoneset’s website was not functioning. Repeated phone calls from a reporter were not answered and were eventually routed to voice mail.”

The fate of Silverback on Porpoise Bay is unknown. However, in both 2011 and 2012, the development’s DL lots all appeared on Sechelt’s ‘Notice of Tax Sale’ for failure to pay delinquent taxes and interest so it might be safe to assume it is still in Stoneset’s portfolio of properties.

The Trails (images above):

A rule-of-thumb says that a developer should assume a two-year time span from the time he/she buys the land, prepares the architectural and engineering plans, and get re-zoning approval and if that is the case here then North Vancouver based Western Eagle Development Inc., might have purchased its 185 acres in West Sechelt back in 2004. However, this being the SC, where the process could be speedier the purchase might have occurred in early 2005.

The Trails project made its first public appearance in January, 2006 and according to the Coast Reporter news story 100 local residents showed up bearing a 900-signature petition blasting the fact the main access to the development would be via Norwest Bay Road. However, the public’s concerns did not deter the Council as it passed the third and final reading in mid-February, 2006. It helped that the developers, brothers Mike and Barry Drummond, were prepared to spend $1-million dollars to extend the sewer line and “agreed to improve Norwest Bay Road from Mason Road to Wakefield Road during phase one of the development. These improvements will include having the dip in the road lifted and sidewalks and curbs installed.”

News of the project began to make its way into the press by summer and fall, 2006; first in a Vancouver Province article, “Small town B.C.” running hot, August 20, 2006:

Quote:The whole of the Sunshine Coast is basking in real-estate activity. It's proving to be a huge magnet for retirees and baby boomers from Vancouver as it puts them only two hours away from the city. Western Eagle Development is about to start The Trails, a master-planned community with outstanding views of the ocean just on the outskirts of Sechelt. "This is the first master-planned community on the Sunshine Coast and unlike anything else in the area," declares Nick Askew, president of PaceSetter Marketing.

This was followed by a brief mention in a September 2, Vancouver Sun piece:

Quote:THE TRAILS

Location: Sechelt
Project size: 360 residences, attached and detached
Residence size: Townhouses, from 1,400 sq.ft.; detached, from 1,650 sq.ft.
Prices: Townhouses, from about $350,000; detached, from about $450,000
Presentation centre: 5511 Wharf Road, Sechelt
Hours: Noon - 6 p.m. daily
Telephone: 1/604-740-3992
Web: trailsliving.com
Developer: Western Eagle Development Corp.
Architect: Michael Huggins, Burrowes Huggins Architects
Interior design: Portico Design Group

Then…nothing and to this day the 185 acres remain undeveloped.However, the project website is still active and on the Home page it states:

“Currently the land that comprises The Trails is being rezoned. Please visit us again in the spring of 2009.”

So, if zoning passed in 2006, what gives? Well, Western Eagle nixed their substantial plans and applied for re-zoning for a much less ambitious project in 2008. This, too, was passed as the new zoning appears in a DOS 2011Consolidated Zoning document. So, one can only assume, the Drummond brothers are waiting for more auspicious times…this could take a while.

A very silly development proposal (no images):

In February, 2005, Sunshine Coast developer Doug Spani appeared before the Sechelt’s Planning committee with a ‘tit-for-tat’ proposal. If his zoning application was passed in principal by June, then he would finance the estimated almost $3-million dollar rebuilding of the Rockwood Centre Annex passing it over to the District to operate and maintain. The Rockwood Centre (a heritage home), located on Shorncliffe Ave near the Sechelt’s core is a much cherished building and home to the community’s annual and well-respected Writer’s Festival, but its Annex was mouldy and falling apart.

It just so happened that the Rockwood Centre abutted land owned by Mr. Spani. Now, Spani’s 6 acres were measly compared to the vast Silverback holdings or even to The Trails; but, what the Spani development lacked in land mass, it made up for in height proposing two 12-storey vertical towers in addition to two 4-storey condominium buildings and parking, lots and lots of parking both underground and above ground.

The development’s public information meeting was held in early March, 2005 with about 50 in attendance and generally, appears to have been well received with some even calling the plan “refreshing and unique”; but, it was the Fire Chief who brought these soaring edifices and the plan back down to earth and perhaps his comments might be interpreted to read something like this:

“WTF, are you nuts! Our volunteer fire department can’t even fight a 4-storey fire let alone what you’re proposing. What about the new equipment and training we would need? Are you going to finance that, too, you bonehead!”

Of course, the Fire Chief was far, far more diplomatic and polite than that, but 10-to-1 he was thinking it.

No further word on this development proposal can be found and by 2006, Doug Spani had joined forces with another to undertake the exciting, cutting edge Wilson Creek development project - EcoVillage.

To be continued….