Wyndansea development bankrupt

Some 178 creditors - including the developer herself - are standing in line for over $100 million of unsecured credit after Wyndansea Development Corporation filed for bankruptcy on Dec. 17, 2014.

The failed luxury seaside resort development is perched on the edge of paradise on the scenic West Coast of Vancouver Island – and square in the middle of its own little Bermuda Triangle of economic missteps.

That’s $110 million in liabilities, compared to a meager $7.95 million in assets – what the partially developed 360 acres is worth, according to developer Elke Loof-Koehler, who once valued it at 10 times that much.

On the West Coast alone, between Port Alberni, Ucluelet and Tofino, over $3 million is outstanding to unsecured creditors, many owed tens or even hundreds of thousands of dollars.

Nine Port Alberni companies are owed $1,308,804.54.

On a list of 178 unsecured creditors, 21 of those hold IOU’s in amounts over $100,000.

Taxpayers are on the hook as well. According to a list provided by El Loof-Koehler, the Canada Revenue Agency is owed $180,000. Provincial government creditors include the Minister of Finance, $16,483; Ministry of Agriculture and Lands, $7,724.31 and Minister of Forests, Lands and Natural Resource Operations, $31,036.58. No government agency suffered more than the District of Ucluelet; as of filing time, the District has yet to be paid $1.32 million.

In more optimistic days, Loof-Kohler had her picture snapped with golf course designer and golf legend Jack Nicklaus; now Nicklaus Design LCC is owed $342,655.66.

American and overseas creditors include Audubon International, owed $26,868.01.

Ernst & Young Inc. has been appointed trustee.

The creditors on the list includes the inspiration behind the development; Loof-Koehler, whose braindchild was Wyndansea, put herself on the list as being owed $2.2 million.

The amount of unsecured credit dwarfs estimates on what has been sunk into Loof-Koehler’s dream baby project, once touted for plans of 180 hotel condo suites and 95 beach and golf villas.

Cooper Pacific Mortgage Investment Corporation is the only secured creditor on the list, with a claim of $7,950,000. However, the company also appears as an unsecured creditor for $79,915,051.09.

In a statement of liabilities and assets, Elke Loof-Koehler of Wyndansea Development Corporation estimated its assets to be real property valued at $7,950,000, and its liabilities to be $109,638,438.16.

Those numbers were reportedly once much closer together, and flip-flopped, with the property touted by Loof-Koehler in media reports as worth over $70 million, and a reported $52 million or less in liabilities, over half that in mortgages.

Other numbers lie in between. In a 2014 interview, Alan Johnson of Jones, Lang, Lasalle,estimated that $25 million or $30 million worth of investment and improvements had been done to the property.

If getting to the pristine West Coast of Vancouver Island is a beautiful ride, getting to Elke Loof-Koehler’s economic Bermuda Triangle has been a roller coaster.

In August 2006, it seemed like a dream-come-true for regional contractors happy for the work making roads, hauling gravel, and embarking on the unexpected task of carving a Jack Nicklaus golf course and a $650 million development out of beautiful, mucky and dense rainforest.

The Signature Circle’s 30 lots - each smaller than an acre - with their oceanfront or ocean views, with access to a private putting green and a helicopter pad, were going to sell for between $1.3 million and $2 million.  Jack Nicklaus already had his picked out.

It was all to be marketed internationally by Chris Cooper of S&P Destination Properties, the company that teamed with Donald Trump to market properties in Hawaii after successfully selling the Whistler Market.

A condo-hotel was planned for 2007.

Reviewers were flown in and wowed with a luxury dinners on the site of the single finished hole of the Jack Nicklaus Design course: The 15th hole.

The whole scheme was being favourably compared at the time to Bear Mountain in Langford.  

Developer Loof-Koehler had already shown she could capitalize on the West Coast’s beauty, with the Tauca Lea Resort and Spa and the 100-acre Oceanfront Resort.  

Then came the global economic grind-down of 2008, just as the roads were being paved and sewer lines installed.

Loof-Koehler wasn't alone; around North America, developers of luxury properties with big mortgages to match suddenly found their entrepreneurial reach had exceeded their grasp.

 Gerry Rummold’s Deer Bay Contracting is one of a host of contractors who populate Wyndansea’s lengthy unsecured creditors list. Owed just under $8,000, he’s one of the lucky ones, he said.

“There’s a lot of money owed here,” he said, leafing through the list of creditors he was sent – along with the 177 other creditors. 

“I consider myself lucky out of it because I got most of my money. It’s a good thing I was working other places, too … We carried on, eh?  The guys that had the major contracts, they went belly-up,” Rummold said.

He figured his workers worked on the property for about 6 months. Only the last month, his company didn’t get paid.

While it isn’t cited as a dealbreaker for Wyndansea, putting a golf course in a rainforest apparently isn’t as easy as it sounds, Rummold said.

“On the coast, it costs three times the money than what it takes to clear land in Port Alberni. There’s so much debris and mucky overburden. I guess they didn’t realize that or something,” he said.

He’s been in the Ucluelet area since 1960, making roads. He’s seen developers come and go, and a few fail – but none as spectacularly as Elke Loof-Koehler.

“They figured they could do it, and it didn’t pan out. They didn’t really need another development in town – how many hotels do you need in a little town like this?”  he wondered.

Chris Bird of SonBird Refuse & Recycling in Ucluelet and Tofino is owed $3,233.82 by the development, but he knows he’s pretty far down the list. He cites a litany of fellow West Coasters, contractors who went unpaid in far larger amounts in ways that hurt their businesses.

Bird is skeptical about ever being repaid for his efforts.

“We know the economy is not going to allow for anything amazing to happen there,” Bird said.

He sees the economy as the culprit.

“It’s unfortunate if things hadn’t done what they did in 2008, there might have been a future there (at Wyndansea). It was a very ambitious effort,” he said.

Loof-Koehler’s Marine Drive Properties sought creditor protection in the wake of 2008, and the Wyndansea project underwent considerable legal wrangling.

Along the way, up until now, Loof-Koehler has more or less successfully held to a single note: the development must be kept going, the development must be held together, or stakeholders would lose, because the project would be worth much less.

In a 2009 letter during insolvency proceedings, Loof-Koehler sought to hold the assets of the resort together so it could continue to operate as a “going concern.”

It seemed it would rise like a Phoenix out of the ashes of receivership, attracting new lenders, thanks to its “distinct positioning.” Once touted as being valued at $79 million, and then listed for sale at $37 million, in dream-build-out condition it would reportedly be worth upwards of a half-billion dollars.

Fighting off foreclosure by a list of lenders which included Cooper Pacific Mortgage Investment Corporation, Bancorp Financial Services In, Bancorp Balanced Mortgage Fund Ltd. and Liberty Holdins Excell Corp, Loof-Koehler was adamant and convincing. It was imperative the petitioners (a list that includes a number of the unsecured creditors later to be cited in the Dec. 2014 bankruptcy) and development must be maintained and operated “as the assets are worth substantially more if operated as a going concern than they would be if liquidated and sold on any sort of piecemeal basis,” she told the court. 

Listed three years ago for $14 million - almost twice the most recent asking price - it was taken off the market while Loof-Koehler tried to put find renewed financing after losing the property.

By 2013, Loof-Koehler said she was back. In an upbeat letter to the District of Ucluelet council dated June 11, 2013, she said Wyndansea was again teeing up to become “the first of 41 golf course resorts under the Nicklaus brand in North America to restart since the (2008 financial) crisis hit.”  

Nicklaus Design’s website cites a number of golf resort properties underway. Wyndansea is not on the list.

Windswept and picturesque, magnificent for stormwatching and spying spy-hopping whales in the distance, Wyndansea certainly a plum spot.

Once heralded in 2007 among the “hip, new” developments that were remaking Ucluelet as a model community, it has repeatedly let local hopes for economic transformation down.

A road of smooth pavement, serviced with utilities, winds through the property to the toney Signature Circle of lots, crowned with  a pristine beach - but no mansions.

Like the dreams that birthed it, the road into Wyndansea is cordoned off at the entrance for now. 

jcarmichael@westerlynews.ca