Overcoming downhill run, Tamarack plays the waiting game

The Tamarack-Donnelly area is getting by without a new owner to run the ritzy resort, but folks have their fingers crossed that a buyer will finish the work halted in 2008

zkyle@idahostatesman.comDecember 22, 2013 Updated 15 hours ago

  • ABOUT ZACH KYLE

    Zach joined the Idaho Statesman business team in April after working for five years at the Post Register in Idaho Falls. He covers banking and real estate while keeping an eye out for small and interesting businesses in the Treasure Valley.

TAMARACK - Not too long before 2008, this resort was on its way to becoming Idaho's Aspen - an exclusive playground and hideaway for the rich and famous.

Located 21 miles south of McCall, the resort's main attractions were to be the ski slopes and golf course, but the money was in real estate. Million-dollar vacation homes buttress the ski lifts. Village Plaza was under construction with the promise of becoming a high-end retail and condo complex just a few pole thrusts away from the ski runs.

The original developer, Tamarack Resort LLC, sank more than a half-billion dollars into the 3,500-acre resort, which includes a 2,000-acre ski area leased from the state.

About 320 Tamarack Resort employees kept the place humming.

Then the real estate bubble burst. Tamarack ran out of credit and money.

Most of the construction projects stopped in late 2007 and early 2008, including Village Plaza. Nearly all employees were laid off by March 2009, when the resort went into foreclosure and a court-appointed receiver shut down operations.

The majority owner of the resort, Tamarack CEO Jean-Pierre Boespflug, disappeared in 2011 and hasn't been heard from since. A judge later issued a $4.9 million decision against Boespflug and a warrant for his arrest.

Such lavish development depended on real estate values that escalated sky-high before collapsing in 2008, said David Papiez, controller and asset manager for Tamarack Resort LLC.

"We can thank the bubble for Tamarack," Papiez said. "You'd never be able to build Tamarack if you weren't able to sell condominiums at $800 to $1,200 per square foot. These are really high prices. But when the bubble burst, the market slowed way down. Prices went way down."

Papiez is the sole remaining Tamarack Resort employee. His job is to understand the reams of paperwork and legal red tape caused by a series of foreclosures on properties once owned by the resort. He's the contact for potential buyers trying to pencil out whether buying Tamarack could work despite its legal and financial problems.

Papiez tackles the work alone in an office building that once housed the resort's business departments.

UP AND RUNNING

Despite the problems, the resort didn't die. Homeowners and renters kept vacationing there. The homeowners group, the Tamarack Municipal Association, maintained the homes and the 10 miles of resort roads. After the ski area was closed in 2009, the association signed agreements to operate the ski area four days a week starting in 2010.

The goal wasn't to make money on the ski operation, said Tim Flaherty, executive director of the association: "It's to keep it maintained and operating at a reasonable level so it will be attractive for a new owner."

The economy of Donnelly, eight miles to the northeast, struggled during the year the ski area was shut down. Shops closed, including the Pro Peak Sports ski shop owned by Wolfe Ashcraft, who is now the resort's recreation and marketing manager.

This year, the ski area opened Dec. 13. More than 1,200 skiers and snowboarders hit the slopes, Flaherty said, bringing the welcome sight of traffic on the narrow streets. Last season, the hill logged about 45,000 skier days, a 7 percent increase from the year before, Flaherty said, when most resorts suffered because of weak snowfall.

The homeowners association operates the ski area on a $1.6 million budget and breaks even each season, he said. It does the same with the golf course.

The vacation homes and condos fill up during holidays despite the fact that the Village, Midmountain Lodge and other buildings remain half-built. A new owner who could breathe life and money into Tamarack would not only attract more people to the resort, but also bring back businesses and jobs lost in Donnelly, Ashcraft said.

"People want to see a new owner step in," Ashcraft said. "(The resort) is the biggest employer in Donnelly. There's the opportunity to work for the resort, but there's also the husbands and wives and the ancillary community who would have opportunities for plumbers, contractors, electricians and snow-removal people, for stores to be open."

Ashcraft said people who once hung on every rumor of an emerging buyer have learned to be skeptical. There have been too many dashed hopes, including the Matthew Hutcheson saga.

Hutcheson, an Eagle resident and co-founder of Green Valley Holdings, bought a $3 million loan as a first step to gain ownership of the golf course. Hutcheson also wanted to buy the resort, Village Plaza and the remaining parcels that were detached from the resort during the foreclosure process. Hutcheson appeared legitimate, Flaherty said, and seemed like the savior folks in Donnelly had been waiting for.

He wasn't. To raise his Tamarack money, Hutcheson raided more than $5 million from 250 retirement accounts he managed as a trustee for small-business pension funds. He was convicted in August of fraud and sentenced to 17 years in prison.

"It's an old joke around here that this will all be over in two weeks," Ashcraft said. "It's been five years."

REASSEMBLING THE PIECES

The resort has had interest from prospective buyers, Papiez said, including financial institutions and wealthy private investors from Idaho, across the U.S. and overseas.

The greatest obstacle facing suitors is the complexity created when the resort was splintered into multiple pieces during foreclosure, he said. Each has separate owners. Each remains at different stages of construction.

Several interested buyers have passed over Tamarack for other large development projects because of the dizzying number of variables involved in piecing the properties back together, Papiez said.

Dozens of lawyers played roles in the foreclosures, and the legal work is far from over, Flaherty said.

"One problem is, why would you want to buy a resort where you have to hire a lawyer and spend millions to figure out how to do it?" he said.

Village Plaza is the largest of the small pieces. In each case, contractors who were owed money assumed ownership of the properties in lieu of repayment of their debts.

Fenced off and wrapped in protective plastic, Village Plaza is owned by the project contractor, Banner/Sabey LLC, a joint venture between two Seattle-based contractors. Banner/Sabey used the money it was owed by Tamarack as a credit to buy Village Plaza for $13.4 million at a Sept. 5 sheriff's auction.

A group including tennis stars Andre Agassi and his wife, Steffi Graf, own three small chunks of land. The group planned to build a five-star Fairmont Hotel near Village Plaza, but construction never started. The group resumed ownership by applying the $2 million it's owed at a Sept. 24 sheriff's auction.

Sixteen partially built townhomes also were purchased with credit via sheriff's auctions. Scott Hedrick Construction of Boise owns one of the townhomes after applying $233,400 in credit. Another creditor applied $196,800 in credit to acquire 15 half-completed townhomes.

But those parcels are small potatoes. The biggest property - including most of the resort and an additional 600 acres with permits for future development - still awaits auction. Credit Suisse delayed the auction twice in 2013. The bank can apply a $366 million credit toward buying the property, which includes the ski area, chair lifts, lodge and many of the nonresidential buildings on the resort. If that happens, Credit Suisse could sell the property, sit on it or resume development. It hasn't discussed its plans.

Since the Hutcheson saga, the golf course no longer falls under the umbrella of properties formerly owned by Tamarack. But it has its own complications and is further behind in the foreclosure process.

Likewise, the Lake Wing expansion of the separate Lodge at Osprey Meadows awaits auction. The judgment for the project, which is little more than a concrete-and-rebar foundation, is valued at $655,000.

'EVERYBODY IS BUSY'

The real estate and building sectors have improved despite the absence of a new resort owner.

Jason Whipple and his Alderwood Builders Inc. of McCall are working on a 10,000-square-foot home in the resort for a wealthy businessman from Arizona. The home will include a rotating dome for an observatory. Whipple said the home might become a destination for school field trips.

Like many contractors, Whipple needed the work when he accepted the job in 2012. Many contractors walked away from uncompleted projects when money for projects dried up. The resort owes between $10 million and $20 million to contractors that likely never will be paid, Papiez said.

Many of the unpaid contractors were construction firms from Seattle, Portland and Salt Lake City, but plenty of local workers also went unpaid. Whipple, who didn't build a single home in 2011, said 2013 felt like a return to business as usual after several down years.

"This year has been really good to people up here," Whipple said. "Now, we're starting to see a shortage in the trades. It's tough to find employees and tough to find subcontractors. Everybody is busy."

Resort real estate values were damaged first by the bursting housing bubble and second by a wave of distressed properties.

Between 2009 and 2012, 95 percent of home sales on the resort either followed bank foreclosures or were short sales, said Trisha Sears, a fine home specialist for Prudential Realty Idaho who works out of the Tamarack Resort lodge. In a short sale, the lender agrees to sell the property for less than is owed on the mortgage. Sears said 170 of the 389 properties on the resort have changed hands since 2009.

Some properties' values have increased 60 percent since 2010, she said. The homes featured on the Prudential website range from about $1 million to $3 million. They are all variations on the wood, rock and glass-window motif found in resorts.

Sears said new Tamarack homeowners see a chance to buy low before a new owner turns the resort around, which would raise home values.

"People know we're close," Sears said.

The Prudential website is more bullish, declaring: "Tamarack Resort: New Ownership is Imminent!"

"How we've seen properties rise right now is just getting the distressed properties off of the market," Sears said. "Certainly there will be a spike in value with a new owner in place, and the current remaining inventory will likely sell quickly."

HOMETOWN FEEL

Tamarack has taken on a more local flavor since the foreclosure. Nearly all of the homeowners association's 100 mostly seasonal workers are local, a change from the days when many of the Tamarack Resort LLC workers came from out of the area, Ashcraft said.

"These are employees who want to live here, survive here, have their kids here," Ashcraft said. "In Tam Version 1, we didn't have that. Tamarack spent a lot of money here but wasn't necessarily emotionally connected to the community."

Wealthy Idahoans took greater interest in buying resort property in 2013. More than half of the resort properties that changed hands were bought by Idahoans, Sears said, a departure from the precollapse days, which saw some out-of-state speculators own more than 10 properties each.

"Tamarack is more of a resort today than it's ever been," Whipple said. "There are quite a few homeowners here now. Before, there was a lot of speculative real estate, and also a lot of construction. People were turned off by that. They were sold on going on a vacation, and they'd show up to a construction site. "

STILL WAITING

Papiez recently sat in the small conference room armed with the resort maps and binders that help him explain the history of resort property ownership to prospective purchasers. A leftover poster on the wall behind him shows a rendering of the still-unfinished Midmountain Lodge. Golden light pours from the cabin-style building. "Coming in 2008," it reads.

Papiez remembers his last meeting with Boespflug before his boss disappeared. The men discussed business. Papiez walked Boespflug to his car. Boespflug drove away, and Papiez never saw him again.

Boespflug's name remains on his office door. His few office materials remain at his desk, untouched.

People ask Papiez whether he'll move to that office, or "the C Suite," as he calls it.

"That's JP's office," he said. "I don't expect that he'll come back. But it's also kind of been a good reminder of the process we've been through."

Zach Kyle: 377-6464,Twitter: @IDS_zachkyle

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