West Beach receivership confirmed

Protected from receivership by the courts until the end of this month, New Recreations Ltd. has chosen not to ask for an extension.

This drawing shows the plans for West Beach Village before a court ruling denied the developer the ability to use sheds as a basis for selling RV lots.

This drawing shows the plans for West Beach Village before a court ruling denied the developer the ability to use sheds as a basis for selling RV lots.

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.”

Salmon Arm Observer