Rice Creek Watershed District to Survey Victor Gardens Groundwater

The City of Hugo has been working with the Rice Creek Watershed District on homeowner’s sump pump and groundwater questions.  Bryan Bear, Hugo’s Community Development Director, reports that a District crew will be conducting a groundwater survey (possibly in mid-January).  They’ll take measurements of the pond and other wetland elevations.  Mr. Bear may also schedule a meeting with concerned homeowners.  When the meeting is scheduled, an announcement will be made.

Recent Financial Statements Released

Gina Lampe, our Community Manager forwarded me six recently updated financial documents.  Please see the “Financials” page for all of the downloadable PDF documents. 

CPDC & Pratt’s other neighborhoods

This might be of interest to some of you who are not familiar with CPDC’s or Pratt’s other residential developments.

Mayo Woodlands, Rochester, MN

Hidden Springs, Two Harbors, MN

Harmony Village, Rosemount, MN 

Inspiration, Bayport, MN

Towne Lakes, Albertville, MN

Liberty on the Lake, Stillwater, MN

List of Pratt neighborhoods

Other News: Blog article about Inspiration, Bayport

The excerpted article below was reprinted from the Housing Bubble Blog:

This Collapse Was Based On Psychology DECEMBER 2, 2007

... The Pioneer Press from Minnesota. “Homer Tompkins’ development company, Contractor Property Developers Co., has entered into a voluntary mortgage foreclosure agreement with MI Bank in Minneapolis related to 50 developed single-family lots and 129 undeveloped lots at a high-end development called Inspiration, Tompkins said.”

“The company owes the bank more than $9 million on the original loan of $14.65 million, according to documents filed this month with the Washington County recorder’s office. The lots are headed for a sheriff’s foreclosure auction in Stillwater next month, Tompkins said.”

“City officials say 28 custom homes, 15 of which are occupied, have been built at the upscale 242-acre project that opened just as the housing market began its downward slide. Home prices ranged from the upper $300,000s to $800,000.”

“Tompkins blamed the slow sales on bad timing. ‘We’re in the greatest housing slump since the Great Depression,’ he said. ‘Consumers don’t have confidence in buying houses in today’s market. There are hundreds of these (voluntary foreclosure) agreements in process. I’m just one of them.’”

“Every time Mark Gergen heard it, he wanted to scream. This time, it came from a couple who looked like perfect customers, ready to buy a new $725,000 home. They had the money. They loved the house. It was all so simple, but then…’Is it the right time? We are just now, nervously, getting off the fence,’ the woman said. ‘It’s the news. It’s all so unstable.’”

“They left. Gergen sighed. He felt powerless against the onslaught of headlines and bad news that frightened customers away. ‘It’s that consumer confidence thing,’ he said, standing in an empty kitchen.”

“As a hotshot real estate salesman, he was called in to help revive a planned $1.2 billion development, the Spirit of Brandtjen Farms in Lakeville.”

“The 15-year project, which broke ground in 2004, was supposed to build 2,100 homes. But developers watched in horror last year as the entire operation ground to a halt, with only a handful of homes purchased.”

“In 2004, no one worried about consumer confidence. The market was booming, and home sellers laughed in disbelief as buyers rushed to bid against each other, pushing prices ever higher.”

“Then the market collapsed. It had nothing to do with the usual villains - high interest rates, lost jobs or falling wages. This collapse was based on psychology.”

“Tradition called on Gergen to help sell homes. When he saw the Spirit site, the project’s biggest flaw jumped out at him. It was the homes themselves. In the go-go years, three high-end custom builders had erected model homes as a gateway to the project. They were unique farm-inspired mansions. They cost up to $925,000.”

“They were impressive. But for homebuyers, there might as well have been a flashing sign reading ‘for millionaires only.’”

“It almost was impossible to show buyers a $900,000 home, then sell them a $500,000 home they could afford, said project manager Rob Wachholz. ‘There is a limited opportunity to sell $450,000-to-$500,000 homes. And when you get to $800,000 to $900,000, you are in some pretty rarified air,’ Wachholz said.”

“Gergen toured the models with potential customers. Afterward, he asked which one they’d choose, if money were no object. The favorite - none of the above. Instead, they picked a town house.”

“‘I said: ‘You’re kidding. You just went through 10 houses for $700,000 to $950,000, and you picked this? Why?’ said Gergen. The answers: Higher ceilings and more ‘wow’ appeal. ‘That told me a lot,’ Gergen said.”

“Once Tradition realized its mistake, the backpedaling was furious. The entire company refocused on one goal: Building less expensive houses that would still fit the luxury theme of the project. It wouldn’t be easy. The lots alone cost $139,000 to $257,000.”

“‘Who wants to buy a $400,000 small house?’ asked Don Nelson, of American Classic Homes, one of the Spirit homebuilders.”

“‘I just can’t build a $500,000 home,’ sighed Cudd saleswoman Kim Holmberg at another meeting. ‘Now, $2 million homes’ - she looked dreamily into the distance - ‘I can build those all-l-l-l-l day.’”

“The houses tweaked, the prices reduced, Tradition turned to the sales force itself. After sitting alone in model homes for months, who could blame them for being depressed? Yet the veterans knew no one would buy a house from a sulking salesperson.”

“At one meeting at Spirit’s clubhouse-barn, Charles Cudd salesman Tom Griffith addressed the group: ‘We have to be incredibly positive, regardless of how negative things are.’ In case anyone missed his point, he added: ‘Positive, positive, positive!’”

“As the Parade of Homes continued, Gergen and Gergen associate Julie VanDerostyne proved adept at getting names and phone numbers from potential customers. VanDerostyne asked one woman for her e-mail address. ‘Um, I dunno,’ said the woman.”

“‘We have social events,’ VanDerostyne said. ‘Um, I dunno.’”

“‘With free wine.’ Pause. ‘OK,’ the woman said.”

Other News: Bayport / Much of Inspiration project in foreclosure

The article below was reprinted from the Pioneer Press, 12/5/07

28 of 253 homes have been built; empty lots to sell at auction

BY MARY DIVINE 

Pioneer Press

Article Last Updated: 12/05/2007 01:10:36 PM CST

Residents initially fought a developer's plan for 1,000 houses on undeveloped land in west Bayport that had a long and storied past as a prison farm, wildlife management area and Andersen Corp. property.

But when Homer Tompkins came back with a radically different proposal for a high-end development called Inspiration, the community slowly began to warm to the idea. In 2005, city officials signed off on a plan that called for 253 single-family homes and a 62-unit senior housing cooperative, with most of the land left as open space.

Now, much of the Inspiration development is in foreclosure, and city officials are left wondering what's going to happen to the land.

Tompkins' development company, Contractor Property Developers Co., has entered into a voluntary mortgage foreclosure agreement with M&I Bank in Minneapolis related to 50 developed single-family lots and 129 undeveloped lots at Inspiration, Tompkins said.

The company owes the bank more than $9 million on the original loan of $14.65 million, according to documents filed this month with the Washington County recorder's office. The lots are headed for a sheriff's foreclosure auction in Stillwater next month, Tompkins said.

City officials say 28 custom homes, 15 of which are occupied, have been built at the upscale 242-acre project that opened just as the housing market began its downward slide. Home prices ranged from the upper $300,000s to $800,000.

Tompkins blamed the slow sales on bad timing.

"We're in the greatest housing slump since the Great Depression," he said. "Consumers don't have confidence in buying houses in today's market. Until consumer confidence begins to return, we're not going to see a lot of sales."

He added: "There are hundreds of these (voluntary foreclosure) agreements in process. I'm just one of them."

A similar development in Lake Elmo, Tapestry at Charlotte's Grove, recently defaulted on payments to Lake Elmo Bank for 38 of the project's 65 housing lots to the tune of $7.2 million, according to a published public notice. 

Bayport officials learned of the Inspiration foreclosures last week.  "Of course we're concerned," said Mayor Jon Nowaczek. "We struck a compromise that was historic for the city. We tried to balance all the competing interests, and we went way out of our way to ensure that the city would be in good shape no matter what. It's unfortunate that Homer and his company are the latest casualty in this latest market decline, but we don't foresee that there's going to be any impact to the city."  

The developer put in its own utilities so the city is not on the hook for any large-dollar amounts, said City Administrator Mike McGuire.

He also said that because the land has a conservation easement, the open-space component would remain. 

"I hope that whoever takes over is successful in marketing it," McGuire said. "We want to make sure that the environmental theme is carried out."

Tompkins said he was confident that would be the case. He said he was working with a group of investors who are interested in buying back the debt. "That's our dream," he said. "It would allow us to continue the vision that the project was established with."

The M&I official who handled the foreclosure agreement did not return a phone call Wednesday seeking comment. 

Tompkins, however, said bank officials were "cognizant of future property values."

"What concerns most people when they hear foreclosure is that they think the bank is going to unload it on anyone," he said. "In all likelihood, a new buyer will retain our services. We're not going to have split-entries."

Once the Stillwater prison farm, the Inspiration land became part of a wildlife management area in the 1970s. Two decades later, Andersen Corp. went to great lengths to buy the land for an expansion of its window manufacturing plant: A law was passed to allow the Department of Natural Resources to sell the land to Andersen, which bought it for $1.3 million in 1994.

Andersen sold the land in 2001 to Contractor Property Developers Co. for more than $7 million, after the manufacturer decided the land wasn't appropriate for its expansion plans.

After that sale was announced, Bayport officials and residents wrestled with whether the land - the city's last big, undeveloped parcel - should remain industrial or become residential.

When the developer first proposed 1,000 homes on the site, Bayport residents rose up in protest. The company reduced the number of planned units, but residents continued to raise concerns about groundwater, traffic and environmental issues.

After the 2002 elections, Contractor Property Developers found itself facing a new City Council swept into office on an anti-development platform. The company withdrew its development applications and went back to the drawing board.

It came back with plans for Inspiration.

Mary Divine can be reached at mdivine@pioneerpress.com or 651-228-5443.

Victor Gardens East-Update from Homer Tompkins

Things are moving quickly - I’ve received another update from from CPDC’s President, and Victor Gardens Community Association Director, Homer Tompkins regarding the Victor Gardens East lots   It’s excerpted below:

“I am moving forward with Pete Scherer in anticipation of his approval as the new owner if approved by the Bank.   We will meet with Community Development on shortfall issues and come to a recommendation for the Board’s consideration.  Thereafter, we will make this information public.  Pete and I will be meeting with the City separately.  Once the Board has made its recommendation and Pete has closed the lots, we can meet with the residents to explain what is going on and bring them up to speed. “  ...

 

“I have worked hard to bring a buyer to the community that will uphold the vision of VG and have worked for the benefit of the overall community.  Once this is complete, we can begin to move forward in a positive light to increase the image and marketing appeal of living in VG. “

- Homer Tompkins

City of Hugo eager to help

A few weeks ago the Board Advisory Group made the recommendation that the Developer - CPDC, The City of Hugo, and (the homeowner-based) Board Advisory Group meet to discuss our master association’s challenges, ways of improving our current situation, and plan for a better future.  Bryan Bear, the City of Hugo’s Development Director has agreed with the suggestion of a early January meeting of CPDC, Mayor Fran Miron, Council Member Becky Petryk, and members of the Board Advisory Group. 

The City of Hugo is has been studying the groundwater, sump pump problems in the neighborhood.  Bryan Bear informs me that the City is ready to schedule a separate meeting for those residents concerned with the issue.  An announcement will be made when the meeting is scheduled.

Victor Gardens East-Update From Homer Tompkins

Today I received another update on the Victor Gardens East lots from CPDC’s President, and Victor Gardens Community Association Director, Homer Tompkins:  It’s excerpted below:

“ Mark, here’s an update for you.  All offers have been received by M & I bank and early indications are that Pete Scherer will be awarded VG East subject to M & I’s home office approval later this week.  Pete has had a long term involvement with Victor Gardens and will be a welcomed owner of the 26 lots in VG.  He is aware of the HOA shortfall issues, lien claims, mortgage debts, accounts payables and cost to complete issues with the City.  He will be meeting with various creditors after his acceptance with the home office but as of this moment we have no official approval from M & I Bank.  I’m meeting with M & I again at 2:00. “

“ As I have said frequently, the new buyer will want to meet with the HOA board to discuss shortfalls and his financial responsibility to the upkeep of his own investment in the community.  If Pete is awarded the project this is good news as he values CPDC’s architectural control and can help stabilize the HOA issues.  He should not pay all the shortfall of the HOA as others have to make contributions as well such as Len Pratt’s neighborhood, but Pete will listen and knows this is important to keep the property up. “

Homer 

Resident Asks Questions about Gables Newsletter

There were a few questions that one resident sent me regarding the recent Gables Association Newsletter.  Those questions and responses might be of interest to other as well.  With the goal of openness, I’ve posted a few responses to some of the questions asked below.  I’ve answered the questions to the best of my knowledge with the information I’ve been provided.  Feel free to add your own comments:

1.  Who is controlling the Master Association Budget?

The Victor Gardens Board of Directors controls the Victor Gardens Community Association (The Master Association) Budget.  The Board is still controlled by the initial Developer, CPDC.

2.  What exactly do they pay for? (I know 25 dollars of my dues goes into the Master fund- where does that go if there are no holiday lights, no pool, etc)

You're welcome to look at the "Financials" page on the website for budgets, but in general, the Victor Gardens Community Association (VGCA) pays for mowing, pool maintenance, irrigation in common areas, utilities, etc... 

3.  Will the pool really not be opening this year?  Who owns it?  

The VGCA owns the pool.  The Board controls the budget.  To my knowledge, the budget has not been formed for the next fiscal year yet, so anything's possible.

4.  Is CPDC bankrupt and if so why do they still control of Victor Gardens? (It seems they do as the advisory committee asked them not to put up the holiday lights to save money)? 

CPDC is not bankrupt, but they have been defaulting on some of their VG loans. (please read some of the history of this in the site) Some of their properties have been "returned" to M&I Bank.  CPDC still has controlling interest in the Board (for the time being).  The neighborhood-based "Board Advisory Group" has made non-binding recommendations to the Board in order to save money for things that are deemed more important - like lawn mowing, utilities, paying off old debts, etc.  The lights are unfortunately a drop in the bucket, but it's a start on the path to more responsible financial management.

5.  If CPDC is bankrupt and was the group spending the money, don't they have a responsibility for that?  Will the debts be wiped out in their bankruptcy, or do we have to pay to bail them out? Or  is this the role of the buyers mentioned?   

Again, CPDC is not bankrupt.  CPDC is working with the bank that now owns their old lots, and is trying to help find a buyer "appropriate" in their minds, for the neighborhood. 

6. What types of assessments and dues increases are we facing?  Will this be done progressively based on square footage of properties? 

VGCA's Board has the power to increase the master association's dues and assessments.  This is merely speculation, but there's already a formula in place, and I would assume that if there was an increase, it would likely be proportional with what we're all paying as individuals now.  

7.  What types of disclosure rules are there for sellers regarding this? Does David Bernard for example have to tell prospective buyers they will be facing assessments and that there will be no pool?

This is a question best answered by your real estate agent and your lawyer.  This website provides general information, and doesn't speculate on matters like this. I have no information on what any builder discloses to its buyers.

8. It would be appreciated by all if you could post a much more in depth explanation on the website of how all this came to be- more so than just saying its just the housing market downturn- and what it means to residents.  

It's impossible to give you all the historical perspective a complicated situation like this requires.  My suggestion is that you read through old posts to learn more background information - then contact Gina Lampe, our Community Manager, or Shelly Tompkins of CPDC for more detailed information.  This website, is updated by me with the best information I have at any given time.  It's designed so that residents can go back and read old posts for more historical perspective.  You can also use the search features to find something more specific.  As I am one of two elected neighborhood Liaisons to the Victor Gardens Community Association's Board of Directors, I sometimes learn information before others in the neighborhood do.  I do my best to share that information as quickly as possible to residents via this website.  As I am only a Liaison, and not a Director, I do not have any official decision-making responsibilities.

Despite our problems, we've had a great spirit of neighbor-based volunteerism in Victor Gardens this past year.  As more residents become involved, more attention is drawn to the issues that we all face together.  I suggest that everyone interested in the future of Victor Gardens attend the Board meetings of the sub and master associations.  The dates are always made public in advance.  Becoming involved is the best path towards making positive changes.

Thanks for your questions,

Mark