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

CPDC Response & VG East Update

After receiving the Board Advisory Groups recommendations,  Homer Tompkins, President of CPDC, responded positively and included a status update for Victor Gardens East.  The Board Advisory Group looks forward to working with CPDC, Community Development Inc, and the City of Hugo to address these and other neighborhood issues.

Mr Tompkins email is reprinted below:

“Thank you for this email explaining the efforts the advisory board is making.  I think it’s a great start.  The one comment made in Paragraph 3 about a “robust Architectural Review Committee” will be in place leads me to believe that you’re thinking the Board or the residents will in someway have something to do with the Architectural Review Committee?  The ARC Committee is a declarant responsibility and runs with the declarant until all lots are sold. Unless the residents buy all the lots, this responsibility will run with whom ever buys the lots but our protection is the Architectural Guidelines that are part of our PUD agreement with the City which requires that the declarant review all plans in accordance with these guidelines and the City can assist in making sure this happens. 

 

As an update, we have now presented 4 buyers to M & I to purchase the assets in VG East who understand the ARC responsibilities and HOA shortfall issues.  We have one more buyer to present then all offers will be received by the Bank on the 26th or before and the Bank hopes to make their decision on which buyer by the end of the week.   Most if not all will want us to oversee the ARC process as some investors are passive and not active developers.  M & I is comfortable with the buyers and will not consider any more offers than these 5 candidates.  Beginning shortly, M & I will post a “sheriff sale notice” of the 29 lots in VG East per the voluntary foreclosure agreement we have with them.  Don’t be alarmed by seeing this notice, it’s a requirement by law and does not effect the business decisions of those interested in buying the 29 lots.  We’re making good progress in replacing CPDC with a financially stable company to continue the vision of Victor Gardens and I will continue to keep you updated on our progress. “ - Homer Tompkins

Neighbors Make Recommendations to the Board

Homeowners serving on the Board Advisory Group recently met to discuss a variety of neighborhood issues.  One of the most important things to come from the meeting was a short list of recommendations to Victor Gardens’ Board of Directors.  Below are excerpts of a November 15 letter sent to Board members and our Association’s management company, Community Development, Inc.

The Board Advisory Group also recommends a collaborative effort - increasing the level of homeowner, developer, and city involvement in solutions to our common problems.

Dear Members of the Board of Directors, and Community Management Inc.,

 

The Board Advisory Group met last Friday to discuss a few of our V.G. Community Association's challenges.  The group has recommended two items for the Board's consideration, and one request from the City of Hugo for their advice and expertise.

 

Item 1:  Cost saving measures for the current fiscal year

A. Many of the VG Community Association's expenses have already been spent or recorded as debts for this fiscal year (landscaping, pool maintenance, annual plantings, etc.).  It seems that there isn't much more that can be trimmed from this fiscal year's budget except snowplowing expenses.

B. Saving money on snowplowing: It's very important that the Association receive "apples to apples" bids from multiple snowplowing contractors.  

C. Saving money on snowplowing: Bid requests should be structured in a way to save as much as possible.  Consider raising snow "trigger depths", frequency of service, reduce non-essential areas to be plowed, etc.

D. Holiday Lighting:  Eliminate Holiday Lighting entirely from this year's budget.  As unpleasant as this is, eliminating lighting installation expenses and utility charges will save money.  Hopefully next year the Association will be in better financial shape and VG's retail businesses may be interested in participating.

 

Item 2:  Plan next fiscal year's budget conservatively and request participation by builders.

A. The Board Advisory Group urges the Board to not authorize more spending that what is actually coming into the Association's accounts.

B. Request that Ryland Homes, Pratt Homes, David Bernard, etc. participate directly in funding the Association's amenities.  These builders are currently marketing our neighborhood with its current amenities  (pool,snowplowing,activity center,etc.).  Those amenities may not be sustainable without "outside" help or contributions by the developer. 

C. The Association must plan for a lean year, but be flexible enough to update the budget if M&I bank, CPDC, Ryland, Pratt, etc. can contribute financially.

 

Item 3:  Request help from the City of Hugo

A.  Until the Association can pay down it's debts (including the City of Hugo), plan for future spending, and assure residents that a robust Architectural Review Committee will be in place, the Board Advisory Group seeks the help, advice, and cooperation of City officials, and the developer, and builders.

B.  Discuss the possibility of accelerating the turn-over of the Association to homeowner control.

Holiday Party - Sunday December 2

Please plan to swing by the Victor Garden's Activity Center any time between 10 a.m. and 11:30 a.m. on Sunday, December 2nd for the Victor Gardens Holiday Party!  Santa will be available for photos with kids and holiday refreshments & snacks will be served.  

Many thanks in advance to Nicky Erickson for heading up this event with the help of Rita Groneberg and Shawn Pade.

No need to RSVP or bring anything.  We hope to see everyone there! 

Gables Association Newsletter 2007

The Gables Association, one of Victor Gardens townhomes associations has released a letter for its residents and owners.  Thanks to Charles Kirk, the President of the Gables Association for sharing this with all of us.  The newsletter, along with other documents, minutes, etc. is posted on the Gables Association’s website:  http://www.victorgardens.org

Please click the following link for the 2007 Gables Association Newsletter

http://www.victorgardens.org/mf/letter2007.pdf

Dear Gables Resident, 

The Board would like to take this opportunity to give you a quick update about your homeowners' association. Please read all of the following as there are important matters for the Board to convey at this time. 

Gables Association Update: 

*  Financial Health:  We are pleased to report that our Gables townhome association is in excellent health. Earlier this year, the Board hired an outside audit and review of our financials which confirmed that the association is in solid financial shape. 

*  Cost Cutting Efforts:  While facing uncertain economic times and problems in the housing market, the Board has made extensive efforts to limit and reduce our expenditures as much as possible while keeping the association in good shape. Rising costs and unpaid dues within the association have caused us to adopt a very conservative approach toward our spending. 

*  New Landscape Company: The Board made extensive efforts this year to find a new firm to serve the association. After a lengthy bidding and review process, a new landscape company was hired recently. The Board is optimistic that the new provider will provide a higher quality service at a more competitive price. 

*  Landscaping Issues:  The Board is aware and concerned about the appearance of the association and will be taking extensive efforts in the coming year with the new landscape provider to make some improvements. For example, the major flowerbeds in the association will be redone next Spring and we are looking forward to these 

improvements. 

Master Association Update: 

As a Gables resident, part of your monthly dues goes to the Master Association whose primary responsibilities are the upkeep and maintenance of the parks within Victor Gardens as well as the Activities Center and Pool. The Master Association has a separate Board from your Gables’ townhome association. These two associations are entirely separate from each other and have completely separate budgets and responsibilities. In addition, while your Board is comprised entirely of residents and has its own budget, the Master Association's board is comprisedprimarily of members of CPDC or Community Property Development Corporation. As residents we have absolutely no control over what the Master Association does regarding their budget or expenses. As some of you are already aware, CPDC is in financial trouble due to declining housing market. After defaulting on several of their bank loans this year, CPDC is in the process of reorganizing and refinancing their debt. Because of this, CPDC HAS NOT MADE 

ANY FINANCIAL CONTRIBUTIONS to the Master Association in 2007. While those developer contributions are not required by law or by contract, developers like CPDC often provide substantial financial support for many years to associations BEFORE full their full buildout or completion. This is done not so much out of benevolence, but so that residents can enjoy the full benefits of the association prior to the full development and so the developer can sell the remaining property at a higher price due to the benefits of the association. 

Financial strain at CPDC and very poor housing market conditions have created a problematic situation forresidents at Victor Gardens because the development is far from completion. At last review, the Master Association has accumulated a large amount of debt (approximately $60,000) and has depleted the majority of the financial reserves. Please keep in mind that the decisions to spend money and to go into debt in this manner were entirely CPDC’s decisions, not residents’ or your townhome association's Board. Without a major change in either ownership or control of the remaining property and developer contributions, the Master Association will be unable to function. Fortunately, a group of concerned residents has formed an advisory committee to work with both the CPDC and the City of Hugo & Washington County to find a solution to this problem. Regrettably, as your Board, we must inform you that all residents at Victor Gardens will likely face substantially higher Master association dues and/or special assessments in the coming year. Currently, $20 of your monthly dues goes directly to the Master Association. In addition, services the Master Association has paid for in the past (like holiday lighting, for example) will not be provided because there is no money to pay for those services. Looking ahead, it is also entirely possible that the Master Association may not be able to open the pool next year and/or reduce or eliminate most if not all of their services. 

The Gable's Board is aware of the situation and is monitoring it closely. All residents are invited to keep on top of these developments as they occur by visiting the Master Association's website - Victor Gardens News at http://victorgardensnews.org. For those who may be interested, opportunities to participate in advisory committees are available and your input is welcome and highly encouraged. There will be future meetings to discuss these issues more in detail in the future, so please visit that site often to stay on top with the latest developments as they occur. 

FUTURE BOARD MEETINGS & IMPORTANT MATTERS: 

*  Board Meetings:  All residents are welcome to attend our Board meetings. They are 

held every other month at the Activities Center. Dates for upcoming board meetings this 

year are the following - so please mark your calendars! 

7PM on Wednesday, December 19, 2007*  GABLES ANNUAL MEETING 

7PM on Wednesday, February 20, 2008 

7PM on Wednesday, April 16, 2008 

7PM on Wednesday, June 18, 2008 

7PM on Wednesday, August 20, 2008

7PM on Wednesday, October 15, 2008 

7PM on Wednesday, December 17, 2008 

* Improved Communications:  To improve communication throughout the neighborhood, some have suggested email newsletters or more frequent mailed newsletters. Please let us know which you prefer by attending one of our upcoming Board meetings. Your input and opinions matter to us. Remember, also, that the Gable's association has its own website at http://www.victorgardens.org. Information concerning upcoming meetings, special announcements, minutes and financials from our meetings, etc., are put there for your review. 

* Garage Doors:  Under the current rules & regulations, you are required to keep your garage doors closed. In addition to security concerns, if your garage door is left open in the winter, there is a potential that pipes will freeze. The association is not liable for any damage caused by leaving garage doors open so please keep them closed. 

* Renting Your Townhome:  Residents who lease their unit must notify our property manager. It is important that we make renters aware of the association's rules & regulations. Please also keep in mind that property owners are 100% responsible for any and all damage renters do to the property. We have experienced problems in the past regarding this and your help is appreciated. 

* Resident Participation:  Participation at our board meetings is very low. Unfortunately, we need your input and opinions to make sure the association performs up to your expectations. Please take time to attend a future board meeting this year. 

CONCLUSION 

All in all, it has been an interesting year. I know from talking to many of you that you love living here as much as we do. While we are greatly concerned about the financial condition of the Master Association, we are heartened by the solid condition of the Gables Association. We believe in due time the concerns with the Master Association will be sorted out and that Victor Gardens will remain a wonderful place to live. As a personal note, due to increased workload and the potential for more travel in 2008, I informed the Board earlier this year that I will no longer be able to serve as the association's President when my term comes up for renewal in December. While I'm happy to serve on the Board in a diminished capacity, I believe it is time for new leadership for the association. Fortunately, your association has many Board members who are capable, dedicated, and determined to continue all of our efforts in making this a truly wonderful place to live. 

Most sincerely, 

Charles E. Kirk

Gina Lampe, our Community Manager

Congratulations to newly-wed Gina Lampe (formerly Gina Higgins).   Gina manages the Victor Gardens Community Association (our master association), and the Single Family Village Association.  She works closely with Chuck Schneider, also of Community Development, Inc.

Gina’s updated contact info is provided below:

Gina Lampe, CMCA  Community Manager  Community Development Inc.  7100 Madison Avenue West  Golden Valley, MN  55427  Direct ~ 763-225-6438  Fax ~ 763-225-6439  E-mail ~ glampe@developcommunity.com