Despite a setback that developers are calling "another bump in the road," plans are still on track to build a multimillion-dollar hotel and conference center at Canyon Ridge Club and Resort in Walker County.
Randy Baker, developer of Canyon Ridge atop Lookout Mountain, said Tuesday although two sets of government bonds meant to help finance the project - Build America bonds and Recovery Zone Facility bonds - expired Friday before they could be sold, that doesn't mean his plans have stalled.
"Our plan hasn't changed at all. We're still moving forward and optimistic the deal's going to happen," he said, adding it could be finalized within the next 30 days.
The project team still has access to $21 million in Recovery Zone Facility bonds that expired at the end of 2010. The bonds can still be sold, just not at a tax-exempt rate, Baker said.
TAX DOLLARS AT WORK
Ed Wall, investment banker for Walker County government, said he hopes for a congressional exemption that would extend the deadline and once again make the bonds tax exempt.
In addition to the Recovery Zone Facility bonds, the project is being financed through PILOT bonds, hotel-motel tax bonds and a special district property tax the property owners of Canyon Ridge levied on themselves, Wall said. Altogether, the project will carry a $42 million debt load, with $12 million in equity, bringing the price tag to $54 million, he said.
Before the Build America and Recovery Zone Facility bonds expired, Wall advised the project team not to sell them, explaining that the tidal wave of projects across the country attempting to push through before the deadline had caused interest rates to soar.
"I pulled the plug," he said, adding the rates went up 1.25 percent in the weeks between Thanksgiving and Christmas. "I didn't want to set a 30-year interest rate when the interest rate had gone that high that quickly."
BET ON LOWER RATES
Wall told the team the wisest decision would be to delay the offering and wait for interest rates to stabilize.
"I think interest rates will fall back down and we'll get a lot better rate," he said. "It had nothing to do with the numbers not working or the project not being there."
In the interim, Baker and several other team members went to local congressional representatives to ask for an extension on the Recovery Zone Facility bonds. The Build America bonds are no longer in the picture, he said.
"We're asking them to give us and other municipalities who have worked for a long time, to give us an exemption, to extend the bonds for maybe 90 days," Baker said. "And we feel like we're going to get that."
Even if an extension isn't granted, Baker is confident the project can continue.
Peter J. Sonnabend, chairman for the Sonesta Collection, a Boston-based company that will operate the hotel, said contracts are still being negotiated, but he anticipates financing will be finalized within four to six weeks and "the project will move forward as planned."
Walker County Commissioner Bebe Heiskell could not be reached for comment Tuesday.
The Canyon Ridge Club and Resort has had many faces since the idea for the project first gained steam more than 15 years ago under the name of Tauqueta Falls. In 1998, Baker became an investor and took over as developer two years later, inheriting a project with plans for a public, resort-style community featuring a golf course, 95-room hotel and upscale houses.
Scaling back, the project became a private, gated community and golf course meant for people looking for a second or vacation home, he said. The golf course and neighborhood on 430 acres of land opened in 2005 with 550 residences planned and three years later negotiations once again began to put a hotel and conference center on the land.
About 150 lots have been sold and there are 67 rooftops, with about a dozen "fairly permanent residents," Baker said. With home loans drying up and the investment not going in the direction he anticipated, he's been open to new avenues to enhance the project.
"As a developer, I would have much, much preferred to develop out the vision I originally had, but that doesn't seem possible," he said. "It's sort of a unique opportunity, what we're doing, by converting it to a destination, resort-style community that does have public access. But in the end, we're helping preserve the property values of the homeowners, the tax digest that pays taxes to Walker County, and putting it in a position of sustainably going forward."
Baker anticipates groundbreaking on the hotel and conference center will begin in late spring and said he has no doubts the project will be a success for the county. He said the jobs created by construction - in addition to the future business opportunities and 200 hospitality and 50 seasonal jobs - are a good thing for the county.
"If I thought for one minute we weren't going to be successful, I would punt and do something else," he said.