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Jonathan Mallard

  • Karma: +0/-0
Buena Vista plans default on note for Vista Links
« on: December 12, 2014, 03:14:09 PM »
This is not going to end well.

A city of 7000 issued a $9.2 Million note to fund construction of the course. They pledged the course, the police station, and the municipal building as collateral. They negotiated with the note insurer to pay half the payments for 5 years. Now, they're just going to get on with what they see as the inevitable.

The course is operating in the red.

What's interesting is that the judicial chambers in the municipal building are not subject to any such covenant per the VA Constitution.

http://www.roanoke.com/news/virginia/insurer-disappointed-in-buena-vista-s-default-decision/article_f40bc564-c155-559c-8fdb-a09d86be46ca.html

http://www.roanoke.com/news/local/buena-vista-seeks-way-out-from-under-crippling-golf-course/article_7fcc3144-bdbb-5fac-8a55-1144adcbb7e3.html




Tom_Doak

  • Karma: +3/-1
Re: Buena Vista plans default on note for Vista Links
« Reply #1 on: December 12, 2014, 06:25:00 PM »
That sounds like a mess.  Whose idea was it in the first place to borrow the $9M ?

The bond insurer says they insure the bondholders, not the city, so the city isn't allowed to default.  Nice try.  But they are ok with taking the police station as collateral ...

Jonathan Mallard

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #2 on: December 12, 2014, 06:58:36 PM »
TD -

It was the city's.

They had hired a few consultants who wrote up a plan that showed them generating major revenue from the course perpetually. They also sold local retirees lifetime memberships.

They had everything worked out, all the numbers were vetted, the bond insurance was a mere formality, and this thing couldn't miss.

Until it did.

It is easily accessed from I-81 though.

scott_wood

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #3 on: December 12, 2014, 08:22:10 PM »
And not a bad course...stopped twice on trip to HHI.... 3 miles off I-81....Doak 3, maybe 3 1/2.....
Don't anyone dare say " but Ballyhack is only 50 miles south" 😊

Mark Bourgeois

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #4 on: December 12, 2014, 09:29:14 PM »
That sounds like a mess.  Whose idea was it in the first place to borrow the $9M ?

The bond insurer says they insure the bondholders, not the city, so the city isn't allowed to default.  Nice try.  But they are ok with taking the police station as collateral ...

The clients ARE the bondholders but the issuer is who pays. This broken business model explains how the rating agencies contributed to the global financial meltdown.
Charlotte. Daniel. Olivia. Josephine. Ana. Dylan. Madeleine. Catherine. Chase. Jesse. James. Grace. Emilie. Jack. Noah. Caroline. Jessica. Benjamin. Avielle. Allison.

JBovay

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #5 on: December 13, 2014, 07:31:26 AM »
This has been a long time coming, as the second article Jonathan linked discusses.

The Vista Links is a personal favorite of mine, and I'll have a chance for a farewell tour in a couple of weeks. Anyone else interested? Send me a PM.

Bill_McBride

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #6 on: December 13, 2014, 10:45:03 AM »
And not a bad course...stopped twice on trip to HHI.... 3 miles off I-81....Doak 3, maybe 3 1/2.....
Don't anyone dare say " but Ballyhack is only 50 miles south" 😊

Can't wait to see the Confidential Guide rating for Ballyhack.   

Tom_Doak

  • Karma: +3/-1
Re: Buena Vista plans default on note for Vista Links
« Reply #7 on: December 13, 2014, 07:25:01 PM »

Can't wait to see the Confidential Guide rating for Ballyhack.   

At the moment, that would be based entirely on Ran's opinion of it, as he is the only one to have played there.  Not sure if I will have time to go or not, although holding back Virginia until Volume 3 gives it a better chance.

Wade Whitehead

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #8 on: December 13, 2014, 11:52:49 PM »
Tom Doak: My offer to host you at Ballyhack is a standing one.  Look forward to it.

WW

Ray Cross

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #9 on: December 14, 2014, 02:21:11 PM »
As a fairly frequent traveler into the Roanoke Valley and surrounds over the last 40+ years, I was glad to see the birth of Vista Links. Thought it was a very good course but only had the pleasure a couple of times so an opinion on what it could have become is not for me to make.
Sounds/reads like a major problem for BV and all their citizens.
Anyway, found Botetourt Golf Club to be an absolute kick-in-the-butt fun place to play. Too bad I didn't take advice of several players some years ago and go then but I only got there last year.
It's kind of interesting that within 60-90 minutes of Roanoke there are so many great courses....who would have thunk it?

scott_wood

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #10 on: December 14, 2014, 08:36:48 PM »
"Within 60-90 minutes , of Roanoke, so many great courses...."
Candidates?
Cascades.....
Ballyhack.....
Primmland....
Maybe Old White....
And...
Va tech?
?????

Tim Gavrich

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #11 on: December 14, 2014, 08:40:13 PM »
Having gotten to play the course for four years while going to college nearby, it would/will be sad if/when it goes under. The second hole there is one of the best par fives I've ever played.
Senior Writer, GolfPass

Jonathan Mallard

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #12 on: July 08, 2015, 10:26:04 AM »
And an update. This is proceeding to end quite badly.


http://www.richmond.com/news/virginia/article_98f686a2-9080-523a-9b78-04f856af822b.html


BY LAURENCE HAMMACKThe Roanoke Times


An insurance company that holds the keys to Buena Vista’s city hall fired off a terse letter to the city Tuesday, urging it to reconsider a decision to stop making payments on bonds used to build a municipal golf course.When it issued bonds for the Vista Links course in 2005, Buena Vista agreed to put up the buildings that house its municipal offices and police department as collateral.After the golf course got stuck in a financial sand trap, the city council voted in December to stop payments on the nearly $10 million debt and seek a settlement with ACA Financial Guaranty Corp., the company that insured the bonds.In a letter to council members dated Tuesday, ACA wrote that the city’s action “appears to lack any rational or legitimate thinking.”The seven-page letter notes that ACA has the legal right to foreclose on the city hall and police department buildings “and exclude the city from using its governmental space.” ACA said it could also take possession of the golf course.Rather than make that move immediately, the New York insurance company asked that its strongly worded letter be read at the July 16 council meeting in hopes that the city will reconsider its position.If that does not happen, “your action has the very likely effect of harming the city of Buena Vista, and its taxpayers and residents by impacting its financial standing for years to come, which cannot be ignored,” Maria Cheng, ACA’s chief remediation officer, wrote in the letter.Buena Vista Mayor Frankie Hogan declined to comment Tuesday, saying he and other council members would defer to city attorney Brian Kearney.In a written statement, Kearney said the city made a settlement offer to ACA during discussions on April 20 and has been waiting for a response since then.Tuesday’s letter from ACA “made no response except to lecture and threaten the city,” Kearney’s statement read. “This certainly does not serve to promote resolution of the outstanding issue.”The dueling documents suggest there could be no happy ending to the relationship between Buena Vista and ACA, which began in 2005 when the city relied on lease revenue bonds to finance Vista Links. At the time, the hilltop golf course — along with the adjacent residential and commercial growth it was expected to generate — was seen as financial salvation for the city of 6,600 with a declining industrial base.But revenue from the golf course did not meet expectations, and the city began to struggle to make its annual debt payments of $660,000.As part of a deal reached in 2011, ACA agreed to pay half of the annual payments to bondholders for five years. Under the terms of the forbearance agreement, the city would then pay back its balance to ACA through 2035, the year the bond obligations matured.“While we have always anticipated ramifications, the City can simply no longer make $330,000 in annual payments that will double in July 2016 and continue for the next 27 years,” the statement from Kearney read.“Residents have experienced tax increases, employees saw their pay fall and our city’s schools have suffered layoffs. As we said in December, by pursuing a negotiated settlement, we are doing what’s best for our residents, our employees and our regional partners.”According to Kearney, the city offered to pay the fair market value of the properties it had pledged as collateral. Although he did not cite a figure, ACA’s letter indicated the city’s settlement offer was $1 million to $1.7 million on a debt that exceeds $9 million.Although she did not explicitly reject that offer in her letter, ACA’s Cheng urged the city to reconsider both its settlement offer and its “unorthodox and aggressive” decision in December to default on its payments.“To our knowledge, no municipality in the history of Virginia has failed to appropriate funds” for debt payments in the way Buena Vista has, Cheng wrote.Not only does the city face the loss of its municipal and police department buildings, the letter stated, it could also be looking at longer-term consequences to its financial future.“The ‘about-face’ of the City Council in terms of knowingly defaulting on the Forbearance Agreement is likely to signal to potential employers that this is not a City that will honor its incentives and other commitments,” Cheng wrote.Although it does not appear that a foreclosure of city hall is imminent, ACA’s letter states that the city has agreed not to contest such a move. In fact, Buena Vista officials are working find an alternative location for the courts — a function of state government — if ACA were to take control of the city hall building and evict its tenants, according to the letter.At least for now, it appears that neither side is ready for that to happen.As Kearney wrote: “We look forward and are open to serious negotiations with ACA in order to put this difficult period behind us as City Council and our citizens work together for better days ahead.”[/color][/font][/size]

Lester George

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #13 on: July 08, 2015, 12:27:53 PM »
Way over sold and way over projected by consultants as I remember.  The council that approved a 9 million dollar bond based on those feasibility studies are to blame.  I distinctly remember discussing this project with someone from the city and telling them to build a 3-4 million dollar project, even though I knew it would hurt my chances of getting the job.  Even for that time frame they were drinking the cool-aid and thought they could pull it off.  I hope someone digs up the answer to who the feasibility consultants were.  Sounds like the same pipe dream they pulled on others in the valley.

Lester

Mike Hendren

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #14 on: July 08, 2015, 01:17:35 PM »
Any consultant who issues a feasibility study that concludes a project is not feasible is out of business within a month.
 
Trust me, the last thing a lender/bond holder wants is to own a city hall and police station in a rural town of 6,600 residents.  As a lender I'd negotiate a deed in lieu of foreclosure from the city and lease the municipal buildings back to them.  The other side of the table should ask for a release of the municipal buildings from the mortgage by threatening bankrupty and offering to deed the golf course to the lender.
 
The best feeling for a poker player is to realize there are TWO fools at the table.  The city and bondholders both lost the bet on the first tee. 
 
Reminds me of the definition of a joint venture:  a legal entity through which the party with the money and the party with the experience trade places.
 
What a pity.
 
 
 
 
Two Corinthians walk into a bar ....

Brent Hutto

Re: Buena Vista plans default on note for Vista Links
« Reply #15 on: July 08, 2015, 01:50:35 PM »
Except for the fact that "innocent" community members are involved this sounds exactly like a country club with 300 members being jobbed by some consultant into borrowing a million and a half dollars to build 5x as much clubhouse as they need.


What do these consultants pitch nowadays since the golf and real estate bubbles have (mostly) burst? Are they out pitching wind turbines and solar panels?

Lester George

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #16 on: July 08, 2015, 02:04:11 PM »
"Any consultant who issues a feasibility study that concludes a project is not feasible is out of business within a month."

Bogey,

I hope you would agree that projects can be "feasible" without having to be pitched as "pie-in-the-sky".  My recollection is that they didn't want to hear "feasible" they wanted to hear HOME-RUN!  There is always a consultant who will sugar-coat a report to advance his/her reputation and posture the study to prove what it needs to.

Lester

JBovay

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #17 on: July 08, 2015, 09:38:46 PM »

I played the Vista Links the month it opened in 2004 and loved it. I played there for probably the last time on Friday. Even if the city owned the course outright, the economics just don't make sense and they never did. I recall reading in the local paper back in '04 that the course cost $7.x million, and when I showed up for my first round, the max rate was about $35 with cart and I think $20 for students. In a county with 20,000 people, with a long-standing country club, and without a whole lot of money, it never made sense. When I attempted to search for old articles tonight to verify this $7.x million number, I found a piece quoting the pro as saying "We believe people will travel an hour to play affordable golf." As has been commented several times, this project was greatly oversold. [And btw, most people won't even travel an hour to play Yale!]


Nowadays, the economics still don't make sense. They charged $19 to walk a course where the fairways are mowed at the same height as the first cut. It bordered on unplayable, and I really don't care much about conditioning. I don't think there were more than 20 players that Friday/holiday morning, and my friend said it was crowded. The annual membership for city residents is $700, and for non-residents $800. I can't see it staying open the rest of 2015, which is very sad to me.


Here's my question for Lester and others who know this stuff: How does a course like this cost more than $7 million? I know the city owned a bit of the land before they started planning the course, and I recall [but I may be wrong] that other parts were either gifted or sold below market value. There were 60 white sand bunkers originally. The cart barn is twice the size of the original clubhouse, the banquet barn was built using donated materials, and the parking lot is dirt. The only artificial water feature is the irrigation pond. How much do 72ish tee pads cost? It was probably a mistake to pave a continuous cartpath, and certainly a mistake to plant all bentgrass (given the climate and the amount of water needed--I don't know whether bent seed is particularly expensive). The course appears to follow the lay of the land, generally speaking--even to the extent that there are at least five holes with blind shots, one of which is created by a rock outcropping that plays an integral role in strategy. Without pointing fingers, was the course construction simply priced too high? (In today's economy, would the same product have been sold for less?) What should they have done to cut costs to $3-4 million, which would have been a lot more sustainable?


I am happy to take this conversation offline if my questions are sensitive. Thanks. JB

David Kelly

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #18 on: July 09, 2015, 04:04:58 PM »

“You know, a town with money's a little like the mule with a spinning wheel. No one knows how he got it, and danged if he knows how to use it!”
―Lyle Lanley
"Whatever in creation exists without my knowledge exists without my consent." - Judge Holden, Blood Meridian.

Wade Whitehead

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #19 on: July 09, 2015, 05:01:25 PM »
A $7M golf course should cost about $70 to play, not $30-40.  That's a huge problem right there.

WW

Jonathan Mallard

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #20 on: July 09, 2015, 08:28:55 PM »
A $7M golf course should cost about $70 to play, not $30-40.  That's a huge problem right there.

WW


And you, I, Lester, John, and quite a few others know that the number of $70 rounds required to service $660,000 a year in debt, and let's give a bare bones operation at $320,000 a year to make it even numbers... So 14k rounds at $70  per...


We know that was NEVER going to happen. Not in Buena Vista.




Jonathan Mallard

  • Karma: +0/-0
Re: Buena Vista plans default on note for Vista Links
« Reply #21 on: March 18, 2016, 12:53:23 PM »
Update:


The City's "starting point in the negotiations" was to offer fair value for the real estate pledged.


They have since been denied financing to upgrade their water system.


http://www.roanoke.com/news/virginia/buena-vista-may-not-lose-its-city-hall-over-golf/article_3bdfe76d-e45b-58b5-8cdb-4d3e4ef2a3f3.html