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.
