Beard Group Expected to be New Owner of VG East

In an email today from Homer Tompkins, President of CPDC explains that Pete Scherer will not be the new owner of the remaining VG East lots in the Single Family Village.  Another developer “The Beard Group” will purchase the lots.  Mr. Tompkins email is reprinted below:

“Mark, the new owner for VG East (26 lots) will be The Baird Group and not Pete Scherer.  The Baird [Beard] Groups offer has been accepted by the Bank and closing is tentatively scheduled for the 7th of February but no exact date has been set.  I am not authorized to represent them as the new owner of these lots but I have taken the liberty to provide them the letter you sent to me with questions in hopes that I could get them to attend any meeting requested prior to closing.  At this point, they are still in their due diligence of their contract.  On Friday, they met with Pat Brinkman, our HOA attorney to gain an understanding of VG’s Master and Single Family Traditional neighborhood HOA and how its run.  I will visit with them on Monday as well as our attorney to make sure we all understand how a new owner of 26 lots is affected by the existing agreements. 

 

We are proposing to the Baird Group a 60 day turnover transition to help assist them in gaining a full understanding of all responsibilities and on going obligations to the community and the City.  They are excited about owning these lots and are appreciative of the opportunity and very respectful.  I know they have had conversations with several of our existing and previous builders so indications are that they will continue the traditional neighborhood vision that we began.  But I would like to introduce them to the community as soon as possible so everyone can hear from them directly.  In regards to HOA shortfall, I do believe they will help contribute to back due amounts and honor the responsibilities moving forward but they can not be responsible for all shortfall because they are only purchasing 26 lots and should only be held responsible for their pro rata share.  We will need a meeting with them, Len Pratt and ourselves to address the balance of HOA shortfall and commitments moving forward. 

 

I have no control over the Banks decision on who they sell the lots to that were foreclosed upon.  The bank bids in the debt at the amount owed and then sells the Sheriff Certificate to the new buyer.  Even though there is a redemption period for me and any mortgage/lien holders affected by the foreclosure, it is virtually impossible to believe that anyone will repurchase the lots for the amount bid in at the Sheriff sale, so therefore I believe The Baird Group will become the new owners of these lots.  At this point, we are early in our understanding of their firm but they represent themselves as knowledgeable developers who understand and appreciate the value of Victor Gardens and are excited about being apart of it.  Nothing at this point has raised any red flags and I believe they will continue the vision of housing styles but obviously, they are at a much lower cost point than we were in the lots and could offer the lots for less money if they wanted.  The important thing in my mind is not the price of the lots but the architectural consistency of maintaining values in the neighborhood. “

 

- Homer Tompkins

Links

A Few Links of Interest:

VICTOR GARDENS COMMUNITY INTRANET

Some detailed information can be found there. Username and password are required.

CITY OF HUGO

Recently updated.  Includes future comprehensive plans, development updates, maps, and City government-specific information.

VICTOR GARDENS GABLES ASSOCIATION

A website for Victor Gardens’ Gables Association residents.

VICTORGARDENS.COM

Our neighborhood’s

original marketing website

The Citizen

Hugo's Official Newspaper

Washington County Official Site

Recycle your Christmas Tree

Gene’s Disposal Service of Hugo will be accepting Christmas trees for recycling this year.  Current Gene’s customers, including VG’s Single Family Village, will be charged a small fee (less than $5.00) for picking it up and recycling it.   Please call Gene’s office at (651) 426-1224 for arrangements.  They’ll note your address and pick it up on their next trash-day visit.

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