Friday, January 12, 2007

Tell us where the talking llama is and we'll burn your house to the ground!

The Emperors New Groove is one of Disney's best animated movies, and one of the funnier lines is by Evil Genius, Ezma:

"Tell us where the talking llama is and we'll burn your house to the ground!"

Don't you mean "or"?

This reminds me of the situation faced by Broken Top golf membership owners, as outlined in a Bulletin article, "
Broken Top sells; residents worry". Broken Top Partners, the previous owners of the Broken Top golf course, apparently laid down an ultimatum to members:

Either come up with $50,000 a piece to buy it, including their initial buy-in fees, or he would sell marked-down memberships to nonresidents and possibly open the course to limited public play."

Apparently BTP representative attended the Ezma Community College of Ruthless Negotiation, as he no sooner reeled in 140 suckers... er uh... members on this $50K blackmai... er, uh... extorsio... er, uh... business deal, then he said that would be "enough" that he wouldn't drag in the dregs of society, and open the course to public play. But there was a caveat:

"Bauhofer's group allowed the members up to 10 years to come up with 300 total buy-in members to gain full ownership."

Nice. $15,000,000 for a business that Bauhofer admits: "the course has been a money loser for years, Bauhofer said last summer." And he did it by essentially threatening to destroy the exclusivity of the club.

If this weren't enough, BTP sold the course sometime in the last 11 days (Wow. That was a fast 10 years!) to a Seattle outfit that is going to fill every square inch of vacant land with condos, a hotel, retail everywhere, and underground parking to accomodate it all, making it one of the largest developments in Cent OR. I wonder what will happen to those $50K deposits put forth by those 140 trusting souls trying to buy the course? I'll bet they're wishing they could have gotten 11 more buyers, so there would be a majority vote for BT homeowners. Here it is from a BT homeowner:

"I've spent my whole life trying to get to a position where I could enjoy a nice, quiet lifestyle with great people in a great community, with great golf," Stolz said. "And we keep getting close. But no cigar."

This Bauhofer guy would do Ezma proud!


Jen said...

For Jen Pondo:
"A 'Whistler-type' village of buildings surrounding the lake west of the current clubhouse, which would be filled in to form a common area with amenities like a skating pond/fountain, and possibly a sledding hill."

IHateToBurstYourBubble said...

Dang... maybe they read your blog!

Anonymous said...

Triple Waterfalls
Excerpts from Chapter 2 - "Triple Waterfalls" and
Chapter 3 - "How Triple Waterfalls Reshape the Landscape".

Triple Waterfall is
a familiar pattern:

What could be called the seven capital C crashes of the past 74 collectively had enormous importance in shaping our capital markets economy.

The basic ingredients of these seven events are so similar that understood the earlier manias came unscathed through the later who understand all seven will be most likely to prosper in coming as Mark Twain observed, "History doesn't repeat itself. But it does rhyme."

There are six stages
to a Triple Waterfall:


1. Optimism: 2 years
2. Faith: 2 years
3. Fanaticism: 1 to 2 years


4. Sudden Shock: First Cascade, 6 to 12 months
5. Last Chance: Second Cascade, 2 to 10 months
6. Long-Term Collapse: Third Cascade, 12 to 20 years

Read more:

* Coxe's Bear Taxonomy: Mama, Papa, Baby and Teddy Bears
* Wall Street's shame - the Nasdaq Triple Waterfall Collapse

Shared Mistake
The buildup and plunge that make Triple Waterfalls such panoramic events are driven by the spread of Shared Mistake, an overarching system that gradually coalesces among intellectual, business, Shared Mistake is one of those blessedly infrequent mass illusions about the market's current and longer-range bullish prospects Wall Street, industry, the media, and the intellectual elites.

Waterfall Trivia

The Courthouse at Robson Square in Vancouver, Canada is an architectural masterpiece, designed by internationally renowned Canadian Arthur Erikson.

His rendition of a Triple Waterfall—
no fearsome torrent—cascades
over office windows to disappear
beneath paving stones at the
Law Courts entrance.
Go to Top

Anonymous said...

check out the broken top blog, its hilarious, better than the onion!!!

Friday, January 12, 2007
Email from Don Bauhofer

Posted with permission.


Thanks for the contact. I want, first, to appologize for not being in touch with the members sooner. Our transaction was covered by a confidentiality agreement, which I adhered to prior to the meetings that started this week.

There are a few things that I believe it is important for the members to know. Arrowood sold its ownership position inside Broken Top Partners, LLC. That means all of the membership agreements, including all of the CEM agreements, remain in effect - along with all other agreements entered into by the company. These were specified in our agreements, and I was assured that the buyers would adhere to them (and I believe they will).

We were not provided with any direct information about the buyers' plans. Based on what we were able to surmise, we believed they intended to build townhomes or condominiums on excess land around the golf course. Those new units would have memberships attached to them. We were told that the onwers expected to spend quite a bit more upgrading the club that we have set aside from the CEM memberships. We believed that was doable, and we believed it was a great plan for the club members, particularly the CEMs, as the club moved toward member ownership. The transaction, to us, seemed like a winner for all sides. The club would get additional members, we could concentrate on Tetherow rather than run a golf club and the new owners could develop a profitable project.

John and I are frustrated and embarrassed by how the introduction of the new ownership has proceeded. We did not have input into the plan or the presentation. And, despite our offers, we were not given the opportunity to work with the members prior to the announcement by the new owners. I wish that had been different.

For obvious reasons, we cannot interfere with the new owner's presentation or plans. We will help, where we can, to guide them to a better resolution.

I hope this sheds some light on our position and decision.

Anonymous said...

Friday, January 12, 2007
Second Meeting Report

BTC member Bob Pearson filed the following report on the second members meeting held Jan. 11th at the club. Thanks for the report Bob.

Update on information from the “focus” group meeting on January 11th, 2007

About 30 people were at the meeting tonight. Nearly all were both club members and resident owners. Mike Parker made the presentation, but it appeared some changes had been made based on the previous evenings reactions and questions.

Some statements by Mark that may have been new or modified:

The total investment will be $140 million, with an expected total real estate sales amount of over $220 million. (a higher investment amount was reported after the 1/10 meeting)

They must have the support of the community to proceed. (He admitted that the owners do not have the “entitlements” in place to do this and that they are aware that the community can organize to stop this proposal.)

They are greatly scaling back on the commercial shops, and the grocery store is now out based on feedback at the 10th meeting.

The recreation facility will be available to community residents for a fee. The facility may not be “turned over to the BTCA” as reported on the10th.

Mike’s company has been involved in this effort for less than a month, and the decision to do the small group presentations was made 10 days ago.

The amount of golf course improvements planned is estimated at $6 million, mostly for a greens rebuilding project.

The new web page will be available with a comments capability by Wednesday, January 17th. A questionnaire will also be sent out to gather feedback.

In addition to the 112 hotel rooms, the hotel building will have two floors of individual residence condo.

The new buildings will all be five or six stories, not the 3 to 4 reported earlier.

The total number of units to be built will be 112 hotel/condo units with attached golf memberships, 300 to 400 individual condo residences without golf memberships attached, and up to 54 duplex units. The hotel and condos will all be in the large building oval. The duplexes will be where the second pool and tennis court are today.

The build out will be a five to seven year process done in multiple phases.

The recreation facility will allow outside usage up to a total of 1000 individual memberships.

The owners will be supplying a written statement concerning the current owner equity plan within the next few days, based upon the questions from yesterday.

The tone of the meeting on the 11th was reported to be much more “intense”, “by a factor of five”, than the group on the 10th.

At the 10th meeting Mark said he attempted to present what he perceived as benefits to the existing members, but due to adverse reactions he did not even attempt to deal with this at the meeting on the 11th.

Mark stated that he was completely surprised by the apparent sense of commitment and value by the current members and residents in Broken Top. He said he was unaware that this intense feeling existed before he started this process. It may be why the owners and consultants felt that they are presenting a very exciting proposal to “save” Broken Top and retain home values. They seem to have misjudged this community spirit.

The new clubhouse will be nearly as large as the present facility, but mostly at ground level with the hotel above it. The “club restaurant” will be located in the hotel above the clubhouse.

Mark clearly stated that the investors are interested in our feedback and will make modifications needed to try to get this project to move forward.

There will be an all member meeting scheduled within the next 90 days, at which time they will be able to answer most of the unanswered questions, and a vote to proceed will follow.

The sale of the club was a stock transfer in the ownership entity of the club, not a transfer of assets and liabilities. This may be the legal way to deny the rights of the convertible equity members.

He said that the actual number of full club memberships is 201 as of today. (not counting single and other less than ”full” members). We have lost over 70 members in the past six months.

Troon Golf will be paid $2 million per year to manage the club, and a ten-year contract has already been signed.

They expect to sell the hotel condo units from $150k to $1 million for a penthouse unit. The two bedroom condo units will sell from $650k up to $ 3.2 million.

The new clubhouse will have all the amenities of a top end club including more recreation and private rooms for both men and women.

He said he did not know what the price of the sale was, but expected it to become public.

A meeting with the Troon management will be held on Tuesday, January 16th with the existing staff of Broken Top.

I attempted to take pictures of the color boards, but was told this was not possible.

Bob Pearson

Anonymous said...

How much would it suck to try to sell your home in this market today?

Real Estate Smarts: Buy Low, Rent High
Real Estate Smarts: Buy Low, Rent High

By Paul Sloan
Business 2.0 at

Jonas Lee spends most days driving slowly through unfamiliar neighborhoods. He may look lost -- constantly leaning out the window, craning his head in contorted ways -- but don't be fooled.

He's doing the most critical part of his job: scoping out homes for his Washington, D.C., investment firm, Redbrick Partners, to add to its growing stable of rental properties.

Lee is doing more drive-bys than ever these days. A handful of housing markets, such as southern Florida and certain neighborhoods of Washington, D.C., are wildly overbuilt.
Go to to view the slideshow.

Prices are dropping. And developers who raced to build new houses and condos during the boom are likely to soon be begging for buyers.

"There's going to be blood in the water," Lee says. "A big pileup."
Better Returns Over Time

Where there's blood, there's opportunity. Redbrick creates and manages private investment funds made up of an unusual commodity -- cheap houses, usually in working-class neighborhoods.

The four-year-old company owns about 1,000 properties in urban enclaves in Eastern states: row houses scattered across Baltimore; townhouse-style homes in Hartford, Conn.; small brick houses packed around Philadelphia.

Lee looks for homes priced below $200,000 (some as cheap as $50,000), for a couple of reasons that any investor would do well to consider in a down market.

First, cheaper homes are less vulnerable to sharp price declines. Second, they typically offer better overall returns from rental income than upscale homes.

Redbrick fixes up its properties, rents them out, and occasionally snags a profit by selling them. Since its founding in 2002, the company has closed three multimillion-dollar funds.
South Florida's 'Ugly' Future

So where is Redbrick prospecting now? No region has Lee more bullish than southern Florida -- where the long-term prospects are attractive but, as Redbrick co-founder Tom Skinner puts it, the near-term fundamentals are "out of whack."

It's a new market for Redbrick, and Lee, who has been scouting parts of Miami, Fort Lauderdale, and Fort Myers, predicts that buying opportunities will begin in early 2007.

"The next couple of years will be ugly," he says, optimistically.

Lee says developers are offering condos in the region at 20 percent below appraisal value. Redbrick expects the discount to grow to 40 percent because developers lose money every day they own a property. Making the equation even more appealing is that rental prices are holding steady.

Lee and Skinner use a simple formula to calculate the overall return, or yield, of a rental property: rent divided by two divided by price.

Lee says small landlords often overestimate rental income because they underestimate costs like maintenance, management and vacancies.

The advice Lee gives most often to aspiring real estate owners is to focus on a local market and get to know it really well.

"Just wait and watch," he says. "If you know the market, you'll know when an anomaly comes up." And, he adds, that's more likely to occur in the next two years than in the past two.