Vineyards partner says project is financially sound

One of its managing partners says the Vineyards Resort remains financially solid and will fight off foreclosure, despite being delinquent in paying its property taxes.

"This issue will be resolved and we will be successful and ongoing," said Rich Barnes, co-managing partner with Ellensburg's Gary Scott of the firm SBC. "There is still equipment there. We are still spending money."

A groundbreaking was held Sept. 9 for the 500-acre, $500 million development off Konnowac Pass, southeast of Yakima. One week later, news of the facility's impending foreclosure came to the surface.

Barnes said he was surprised by the foreclosure, adding he would not have conducted a groundbreaking ceremony had he known the filing was coming.

"I don't think that would have been a smart maneuver," Barnes said of having the groundbreaking. " Intuitively, that is obvious to everyone."

Barnes, a principle owner in Colorado-based Eagle Resort Development, also said a failure to pay first-half property taxes is not an indication the development is in any further trouble.

Yakima County Treasurer Ilene Thomson confirmed that all but one parcel of the 500-acre property is behind in property taxes for 2008.

The total amount due, $5,786.82, includes $268.17 in interest and $156.42 in penalties. State law requires the treasurer charge 1 percent interest per month along with a 3 percent penalty on June 1. The penalty grows to 8 percent on Dec. 1.

"It is not indicative of any problems that are related to anything that has been reported on," Barnes said. "That is not that big an amount to really worry about. I didn't know they hadn't been paid."

Paul Larson, attorney for the developers, also said the property-tax payment is not a significant issue.

The amount due is low because the property is assessed as open land with no improvements.

Larson said Wednesday there have been no new developments in efforts to shelve the foreclosure sale scheduled for Oct. 17 in Yakima.

A New Jersey firm that provides financing for golf courses, First National of America, is pursuing the foreclosure through a Seattle company that handles foreclosures.

The foreclosure is for failure to repay a $12.9 million interim financing loan from First National of America. Larson is now working with the Milwaukee, Wisc., hedge fund, Stark Investments, that provided 90 percent of the loan as part of a joint venture with First National to finance golf courses.

The loan breakdown is contained in a federal lawsuit now pending in New Jersey in which First National and Stark make a number of charges against each other.

First National contends it has not received loan-servicing fees and hasn't been given an accounting of its investment in the joint venture.

In its cross-complaint, Stark alleges misrepresentation, negligence and breach of contract against First National.

Vineyards had obtained some extensions on a payment loan that came due in July 2007, but no new extensions have been granted, leading to the foreclosure action.

Barnes said the loan has been spent on engineering, completing a design and marketing the project, which includes an 18-hole golf course, 582 homes, a hotel, recreation center and Tuscan-themed village.

The project is estimated at $100 million. The $500 million figure is that of the completed project, including the private homes.

The resort is being marketed primarily in the Puget Sound region to people who want to enjoy the sunny weather, access to the growing wine industry and recreational activities.

Barnes said the developers have obtained construction financing from a private equity firm.

"We have a world-class piece of property. It is just far enough but not too far from Seattle and all of Washington wine country," he said. "It is in an area that will continue to grow. No one is seeing Washington wine country and its influence deflating at all."

The Sept. 9 groundbreaking occurred after developers received commitments from more than 30 people to reserve a lot for a home once the lots are created for $250,000 each.

One of those investors, Al DeAtley of Yakima, former owner of Superior Asphalt of Yakima, said Wednesday he believes the foreclosure will be resolved and the project will go forward.

As for the money he has paid in to reserve a home site, DeAtley said the money is in escrow at a title company and he will get his money back if the lots aren't created.

"It will go," DeAtley said. "It is a tough market out there. But all these things get worked out for the best."

* Reporter David Lester can be reached at 577-7674 or dlester@yakimaherald.com

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