Great news regarding this controversial development!!

Contractors will likely lose thousands of dollars and investors may also lose substantial funds and it is not just the developer that is at fault for this debacle. The Superintendent of Real Estate did not enforce the legislation that requires developments to have all the approvals in place before any marketing is allowed. In addition, the loophole that the developer tried to use to market the RV lot leases needs to be closed through an amendment to the legislation.

SEAS is very appreciative of the legal efforts that the Columbia-Shuswap Regional District made to result in this decision. We now look forward to working with all interested parties to see this property purchased and added to Roderick Haig-Brown Park.

West Beach receivership confirmed

By Barb Brouwer – Salmon Arm Observer

http://www.saobserver.net/news/138087048.html
(use this link to see the illustration of the proposed RV development)

Published: January 26, 2012

Developer Mike Rink’s dream of a $30-million resort at West Beach Village on Shuswap Lake has come to an end.

The chance several Shuswap trades will be able to recoup losses in the neighbourhood of $750,000 has also waned. Instead, the receiver will take control and the lender will try to sell the property.

Protected by the courts until the end of this month, Rink’s company New Recreations Ltd. has chosen not to ask for an extension.

But Rink’s lawyer Andrew Prior, said this morning that it’s too early to speculate what might happen in the upcoming months.

Earlier this month, a Supreme Court judge ruled that storage sheds used to market the sale of RV sites are not consistent with previous use when the site was known as the Cottonwoods Campground.

“What that meant in a nutshell was they could not sell RV lots on this project, so the entire basis for their project collapses,” says David McMillan, a Kamloops lawyer representing the local trades. “They have now notified all parties they are not gonna play for another stay.”

McMillan says, in turn, the primary lender, Mission Creek Mortgages, has taken over the project, having applied for the appointment of a receiver.  “New Recreations is out; they’ve lost the project,” says McMillan. “Mission Creek will foreclose.”  McMillan says Mission Creek gave notice of foreclosure in the fall of 2010, but New Recreations sought and received court protection under the Company Creditor Arrangement Act.

“What will happen this year, is the receiver will attempt to operate the property in much the way it was operated previously,” says McMillan of the popular Cottonwoods Campground. “It will revert to a summer campground-RV type of operation, but the receiver and the lender will try to sell the entire thing and recoup what will turn out to be pennies on the dollar for them.”

McMillan says Mission Creek loaned New Recreations about $20 million, all based on the selling of the RV lots to make the operation worth $30 million. “New Recreations paid about $5 million and they paid too much because they paid for it in the belief this grandiose project would be a success,” he says.

McMillan says typically the mortgage company gets priority and all other liens are wiped out. “They never believed there would be anything, but they had to keep their foot in the door and monitor how the process worked out,” says McMillan of his clients. “I gave them that dose of bitter medicine a long time ago. Their prospects remain very slim, probably non-existent. Those trades could ask the question, where was the CSRD when they were talked into this place.”

While he agrees with the regional district’s determination the sheds were non-conforming, and believe his clients have little legal recourse with the CSRD, he wonders why the position wasn’t taken four years ago, when the project began.

Columbia Shuswap Regional District CAO Charles Hamilton disagrees with McMillan’s take on responsibility. “I simply dismiss those observations out of hand – that’s quite a reach to try to assign culpability to the CSRD…  Even if they had come to us, do you think it would have prevented the trades from taking these jobs?” he asks. “Is there some kind of obligation on the part of the CSRD to provide some warranty and guarantee to the ability of a developer to meet his obligations? I think not.”

In terms of the demise of the West Beach Village project, Hamilton says CSRD’s reaction is more muted than some. “We certainly don’t like to see failed development, it doesn’t send the right signals,” he says. “On the other hand, we felt we were put in a precarious situation where we felt development permits were required and our bylaws were simply being ignored.”

As a result, Hamilton says the regional district was left with no other option than to seek clarity through the courts.

In the meantime, McMillan says selling the property will be further complicated by the fact about $1 million worth of infrastructure has gone into the site he believes was bought at an inflated price. “Environmentalist can get back up on their hind legs and continue their lobbying efforts – that’s a good thing,” he says, noting his belief that the probability of the province taking over is not good. “It’s conceivable but not very likely; it’s not a good fit in terms of government priorities and objectives. Maybe the environmentalists could run it as an eco-friendly operation.”

West Beach falls into receiver’s hands

January 27, 2012

By Cam Fortems
Daily News Staff Reporter
Court protection from creditors has been lifted from the controversial West Beach development on Shuswap Lake and the project is in receivership.

But lawyers on opposite sides, acting for Mike Rink’s New Future Group and the first secured creditor, acknowledged Thursday uncertainties about what comes next.

New Future lawyer Andrew Prior, with Fraser Milner Casgrain in Vancouver, confirmed that protection from the Companies Creditors’ Arrangement Act, granted more than a year ago, has been lifted.

It was otherwise set to expire at the end of the month but New Future Group indicated it would not apply for another extension.

That allowed first creditor Mission Creek Mortgage Co. — owed more than $21 million — to have a court-ordered receiver appointed to take over West Beach. KPMG is now acting as receiver-manager of the popular campground and struggling development project beside Adams River.

Kenneth Ihas, a lawyer acting for Mission Creek, said the first mortgage holder now is in a position to foreclose.

“It is in a position to do that and it likely will,” he said.

That’s what happened at New Future Group’s half-completed Mission Hill project in Kamloops, where first creditor Harbour Mortgage foreclosed in December and is now the sole owner.

But the West Beach project is more complex, including the legal position of other creditors on title. It is not in bankruptcy and owner New Future Group retains the ability to pay off loans and gain back control.

Bankruptcy entails a declaration that assets are to be liquidated and turned over to creditors. Receivership, however, entails the business being given over to an appointed third-party firm to operate and pay back creditors.

New Future’s lawyer, Prior, said the development company remains in the picture.

“The next stage is underway. We have no idea what will come after that…. It’s not over, ‘till it’s over — and it’s not over. Anything else  is impossible to speculate about.”

Ihas called it “early days” and said Mission Creek is now preparing to rent the property for the traditional campground use in the summer.

“It will depend on how the (other) borrowers and stakeholders react,” he said of the foreclosure process.

The receivership comes about after a B.C. Supreme Court judge last week rejected a development plan based on selling 199-year leases on storage sheds, with associated rights to parking an RV at the waterfront property.

The Kamloops developer’s $100-million real estate holdings were granted protection under the Companies Creditors Arrangement Act in November 2010, in an effort to restructure.

Projects were broken down individually in a bid to make them economically viable and pay back creditors. The latest lifting of the CCAA order brings the process near to a close. Three of the largest projects failed and have been taken over by creditors.

West Beach garnered national attention in 2007 when New Future applied to rezone the former Cottonwoods Campground for a resort project beside the Adams River and its famed salmon run.

After it was turned down, Rink revamped the project to focus on the 199-year leases.

Kamloops lawyer David McMillan, who represents trades and suppliers claiming $750,000 in unpaid debts, said his clients never held out much hope for payback.

“It just means an end to the waiting and wondering. My clients were aware from the beginning that projections of the receiver relied on a house of cards and a grand vision coming true…. We were sceptical from the beginning.”

Rink could not be reached for comment.

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