RSSInvestors work on plan to rescue Vineyards Resort
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YAKIMA, Wash. -- The bankrupt Vineyards Resort, a proposed destination golf and residential community southeast of Yakima, has a pulse after all.
The local investors who purchased rights to buy the first housing lots are working to develop a plan to complete the 500-acre project on Nightingale Road, several individuals in the group have confirmed.
As conceived, the $100 million project would include more than 500 single-family homes, rental units, a hotel and retail center, and an 18-hole golf course, .
The effort, however, will require agreement by the project's major creditor and a freeing up of credit markets, the investors say.
But hopeful signs exist.
Some of the 17 original investors, commonly referred to as the founders group, say the project's primary creditor may now be willing to work with them to revive the development.
They point to a recent market analysis confirming that the project remains viable. An infusion of money from potential new interested investors outside the Yakima Valley also is possible.
"I am just one of several founders that is standing by as this work is being done to learn more about the potential," said Yakima auto dealer Bob Hall.
"Where that will take us, I can't predict."
The project has been on financial life-support for more than a year. Weeks after a widely-publicized groundbreaking in September 2008, the Vineyards developers began fending off foreclosure over nonpayment of a $12.9 million short-term loan. Vineyards Property LLC filed for bankruptcy in November 2008 with unpaid obligations of more than $25 million.
The case was dismissed in court last month at the creditor's request because the original developers could not come up with financing to keep the project going.
With the bankruptcy wiped off the books, Stark Onshore Master Holdings, a Wisconsin private equity firm that holds the outstanding $12.9 million loan, is free to foreclose to gain clear title to the land. The development site is on Nightingale Road in the Konnowac Pass area, about six miles northwest of Zillah.
The project is different from the Zillah Lakes project along Interstate 82 in Zillah.
Sam Baker, a Seattle attorney and one of the Vineyards founders, said the group authorized continued work on a new development plan several weeks ago after receiving the favorable report from an unidentified real estate development expert.
"We authorized him to continue the effort and compile a proposal to present to Stark. He is in the process of doing that," Baker said. "Once that gets done, we will take it to the founders and get their OK."
Baker described the analyst as a longtime real estate executive with forest products giant Weyerhaeuser who has been involved in other major projects in the state.
"He really knows his work and loves this project and wants to take the lead on this," he said.
Members of the founders group said information on the future of the project could be released within the next nine months.
This latest investment by the founders to develop the analysis is in addition to their original individual $250,000 investment for home lots -- a total of $3.2 million -- that was lost when their money was illegally moved from an escrow account into the hands of a Georgia firm that had promised to find $80 million in financing to keep the project going.
The funding never materialized, which precipitated the bankruptcy filing.
A judgment against the firm, Dincom Inc., entered in a companion case to the bankruptcy to recover the money has been turned over to Stark, the founders and Selland Construction, the Wenatchee firm that was not paid for its initial work on the Vineyards site.
A federal bankruptcy judge approved assignment of the judgment.
Vineyards developers had sued Dincom and the Georgia attorney who handled the escrow, Gardner and Associates, for return of the $3.2 million. One original investor who put in $250,000 for a home site said his main concern is getting his money back.
Baker said getting the Vineyard project back on track in a configuration much like the original version hinges on Stark's willingness to work with the founders group to reduce the remaining debt or provide additional financing.
"This is definitely a project that is worth pursuing. There's no question about it," Baker said. "There is a question if it's worth pursuing in this market."
* David Lester can be reached at 509-577-7674 or dlester@yakimaherald.com.
Hope this works itself out. It will be a big boon to the County. We could use it to help round out the tourism business here.
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