News About Dyer Mountain:
This past week Dyer Mountain Associates filed for Chapter 11 protection. This will give the organization time to regroup and seek more financing. Here is the article that appeared in the 4/2 Sacramento Bee.
Lassen resort developers try to buy time by seeking bankruptcy protection
By Jane Braxton Little - Bee Correspondent
Published 12:00 am PDT Wednesday, April 2, 2008
Story appeared in METRO section, Page B2
The owners of a timbered mountainside proposed for a $35 million four-season resort have filed for bankruptcy protection.
Dyer Mountain Associates filed for protection under Chapter 11 of the federal bankruptcy code to gain more time to raise $15.8 million to stave off foreclosure of the resort property, said Grant Sedgwick, a manager of the company.
The developers have been under the threat of losing their 6,700 acres in Lassen County since November, when California Mortgage and Realty Inc. posted a notice of a foreclosure sale to recoup the money it loaned them.
The Dyer group also owes around $197,400 in back taxes to Lassen County.
"Our finances are obviously in a bit of a mess," Sedgwick said Tuesday.
The controversial ski and second-home resort on Dyer Mountain near Westwood has been planned since 2000, when voters countywide overwhelmingly approved zone changes allowing construction of around 1,000 houses.
Since then the development has grown to include more than 4,000 residential units, two golf courses and a ski resort projected to generate up to 500,000 visitors a year.
After the election, Briar Tazuk, a major investor in the resort and its primary promoter, told county officials construction would start in 2001.
But the developers encountered financial hurdles that delayed approval of the project by Lassen County officials. Among them was a 2004 dispute over their failure to pay a one-time tax payment of $157,000.
The project achieved a major milestone in September, when the Lassen County Board of Supervisors certified a state-required study of its environmental impacts. Sedgwick, who was hired in May as president, said the supervisors' approval freed the developers to seek about $100 million in financing to pay their debts to California Mortgage and Realty and carry the project into the future.
The search for investors has been complicated by foreclosure sales scheduled four times since November.
Each time the San Francisco-based lender has postponed the sale to allow the developers time to come up with the $15.8 million they owe it.
The final deadline was March 27, Sedgwick said. Instead of producing the money, Dyer Mountain Associates filed for protection in the federal bankruptcy court in San Francisco.
"We needed more time. This was a way to get it," Sedgwick said.
The developers have up to 120 days to submit a reorganization plan. They are scheduled to meet with their creditors in May, according to the filing papers.
That will include Lassen County, which will be involved to recoup the back taxes the Dyer developers owe, said Tax Collector Richard Egan. Annual taxes on the company's approximately 30 parcels are around $250,000. They increase to $276,000 with penalties if they are unpaid, he said.
Lassen County is also involved in the bankruptcy proceedings through an agreement with the developers that commits them to paying the county's legal fees in a lawsuit filed in October by three environmental groups.
The litigation is ongoing despite the bankruptcy filing, said Steve Robinson, director of the Westwood-based Mountain Meadows Conservancy, one of the plaintiffs. The filing verifies his belief that the developers "don't have the means to do this project," he said.
The Chapter 11 filing offers an opportunity to recognize the importance of Dyer Mountain and its natural resources, said Tom Mooers, executive director of Sierra Watch, also a plaintiff in the lawsuit. He said he hopes conservation groups will acquire the resort property to permanently protect the area.
Meanwhile, the developers are in "serious negotiations" with two potential investors to raise the money they need to both pay their debts and finance project construction, said Sedgwick. "Strange as it may seem," filing for bankruptcy protection could make that process easier, he said.
Guidelines established by the bankruptcy court will establish "a cleaner path to closing a transaction," said Sedgwick.
For now, however, financial difficulties have postponed construction on the project.
None of the engineering that should have been going on this winter has started, said Sedgwick, who resigned as company president last week but continues to serve as a manager.
He remained optimistic about the resort's future. "The current owners may not be involved in it, but this project will get built," Sedgwick said.
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