Problems still unsolved for vacation rental owners, companies
April 21, 2009
It’s been four weeks today since the community first began learning of the need for Deer Valley Lodging and David Holland Resort Lodging to suspend payments to the owners of condominiums the companies rent out.
Bobby Foster, director of marketing for Premier Resorts International, the parent company of Deer Valley Lodging, said in a March 30 interview that troubles would be resolved within about two weeks.
Although his company has sent frequent updates to owners on the progress of negotiations, there is still no official word on when payments will be sent out or how the company will solve its financial woes.
David Zatz, owner of David Holland Resort Lodging, said in a recent interview that the details of the process are confidential, but that he’s been notifying his owners weekly on his progress to find a solution to the problem.
Deer Valley Lodging continues to operate and accept new reservations saying the current crisis is temporary, but employees had a scare the week of April 7 when their paychecks would not cash. The three people who contacted The Park Record about the situation said later they were able to cash them after a short wait.
A note appeared on punch clocks April 9 stating, "We did not expect the run on the bank that occurred yesterday where a high volume of payroll checks were cashed. We anticipated the normal payroll check cashing cycle and were prepared to cover those checks throughout the week with the normal daily deposits."
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Foster said on April 8 that about 36 people were affected. On April 21, he said the next payroll, today, is fully funded.
People familiar with the claimed both financial crises were created by unwise investments in development projects.
David Zatz did just complete construction of The Lowell Condominiums at Park City Mountain Resort. Zatz said they were a separate project with no shared funds with the lodging company. The condominiums are paid for through the construction loan. The project was not a contributing factor to his company’s delay of payments to home owners for nightly rentals, he said.
"The Lowell is a stand-alone entity," Zatz asserted.
The reason for the speculation is that the condominiums were an expensive project. Over a decade in the making, the property began as a 26-unit hotel project called "The Gables." Sometime in 2007, a decision was made to reconstruct the spaces into 13 units, 12 to be sold as luxury condominiums and one space for retail – currently Park City Sport. It was completed last summer.
According to documents at the Summit County Recorder’s office, there are currently three mechanics liens against the condominiums. There is also an on-going lawsuit with the engineering firm.
According to Prudential Realtor Trent Davis, seven of the 12 residential units are sold. Steven Martin in the Appraiser’s office agrees the condos taxable values match the asking prices of between $1.1 to $1.7 million, depending on the unit.
The loan held by Hanmi Bank is over $13 million according to documents in the Recorder’s office.
Some owners who use Deer Valley Lodging have speculated that the company is suffering from a failed development in Myrtle Beach, South Carolina.
That development called Barefoot Resort near the popular tourist destination Barefoot Landing in North Myrtle Beach, had many developers.
One of them, Drake Development, did declare bankruptcy in 2006. According to news reports found on Lexis Nexis, Premier Resorts and Drake Development were in a partnership at the time, but Premier was not involved in the bankruptcy.
Press releases found on Premier Resort’s website about Barefoot Resort in 2007 suggest the company now owns much of the property shared with Drake Development.
One 2007 press release lists a large number of recently completed, ongoing and planned construction projects including a waterfront plaza and conference center, a Yacht Club marina, a restaurant called Docksider’s Grille, a health club, a spa and the acquisition of several acres through Premier Holdings of South Carolina.
The website also says the company is the property manager for 250 condos in North Myrtle Beach.
The company’s response was similar to that of David Zatz:
Foster responded to these concerns saying, "no funds from either Deer Valley Lodging or Premier Resorts International were used to construct any of the facilities in North Myrtle Beach. Those facilities were funded with loans involving other entities."
Foster also pointed out that other companies across the nation are experiencing similar difficulties because of lost lines of credit. The original explanations for the crisis from Deer Valley Lodging sent to owners on March 27 attributed the problems to loss of credit and a slow season. Recent numbers suggest this winter was off $7.5 million from last for Deer Valley Lodging, he said.
The most recent message sent to owners Monday afternoon explains that the company is in negotiation with four entities: one local, two national and one multi-national. Foster could not say what types of companies they were.