Lajitas Resort

[BigBendHiker]

In today's San Antonio Express-News:

Resort's outlook far from restful

Web Posted: 05/18/2007 11:06 PM CDT

John MacCormack
Express-News

Billed as the "Ultimate Hideout," for the rich and powerful, the $100 million Lajitas Resort in far West Texas may be headed for the ultimate indignity.

A New England finance company, which a year ago lent the resort $12.5 million for improvements, has filed for foreclosure in Brewster County.
 
According to the public notice posted this week, the property — which is open for business — is set for sale to the highest bidder on the courthouse steps in early June.

Stephen R. Smith of Austin, the telecom magnate who bought the remote and then-primitive resort on an impulse in 2000, couldn't be reached for comment.

"Mr. Smith is in the process of closing on new financing that is expected to close in June. The current lender is simply trying to add pressure to the process," resort manager Dan Hostettler said in an e-mail inquiring about the threatened foreclosure.

"We view this simply as yet another unsavory tactic by the lender who holds an extremely small asset," he added.

Taken out a year ago, the loan from Prime Asset Funding of Greenwich, Conn., was collateralized by the resort property, on the western edge of Big Bend National Park, and was to be repaid with resort profits and land sales.

At the time, Hostettler said the loan would be used for additional resort improvements, including "lakeside cottages, creation of a theater, utilities for the subdivisions, the clubhouse spa and the highway relocation."

However, according to sources familiar with current features of the resort, few if any of these projects have been begun.

Smith, who made his wealth with Excel Communications, bought the resort and 20,000 acres of surrounding desert for $4.25 million on an impulse seven years ago.

It was sold at a public auction by Houston oilman Walter Mischer, who had created the Old West-style resort on the Rio Grande in the 1970s.

Built on the site of an old cavalry post, and complete with a functioning border trading post that drew most of its business from Mexico, Mischer's unpretentious resort drew a middle-class crowd, including RV patrons.

Its best known resident was Clay Henry, a smelly, beer-drinking goat kept in an open pen by the century-old, thick-walled trading post.

The weathered resort was a favorite of moviemakers and marketers seeking the Old West flavor, and cinematic cowboys from the Marlboro Man to Willie Nelson were filmed there.

Initially, Smith said he intended only to spruce things up a bit so he could play a little golf with his buddies. But now, seven years and more than $100 million later, only the beer-chugging goat has escaped an upscale makeover.

In the course of pumping a sizable chunk of his personal wealth into Lajitas, Smith has created an emerald-green desert golf course, a gourmet restaurant and a jet runway.

Resort membership commands $75,000; its finest two-bedroom suite goes for over $900 a night, and private jet service is available from Dallas.

"Here you will find comfort beyond measure, beauty beyond belief, and rest and renewal beyond imagination," promises the resort's Web site.

But the mantra, "If you build it, they will come," apparently works better in fictional baseball movies than for real-life West Texas resorts.

Lajitas never has broken even. Land sales in the planned subdivisions have been slow, and the resort sometimes resembles a well-primped Western ghost town in the hot summer months.

Signs of financial stress continue to hover over the resort, which for the second consecutive year was late in paying its Brewster County taxes.

Hotel receipts reported to the comptroller's office reflect a slow but steady decline in business.

For the past four quarters, Lajitas generated $1.65 million in receipts, down from $1.8 million for the year before that, and from $2 million for the year earlier.

Smith's personal finances also have been under stress lately. In April, a suit filed by him in U.S. Tax Court against the IRS over $140 million in contested tax shelters was dismissed before going to trial.

Still, in comments made a year ago, Hostettler said the owner's commitment to the resort was unshakable.

"Of all his investments, Lajitas is his most prized. He sees a brilliant future in the project," he said.

--------------------------------------------------------------------------------
jmaccormack@express-news.net

[SHANEA]

Thanks for posting.  

Of course, $1.65 million in a quarter isn't a bad revenue stream for a lot of businesses.

[Goldilocks]

I wonder what the future of Lajitas is going to be?  It doesn't seem likely that it will succeed as the Smith's vision of it.  But it can't ever be restored to what it was before he got ahold of it.  I wonder what the economic impact for the area will be if it closes down?

[Roger, Roger]

Thanks for posting.  

Of course, $1.65 million in a quarter isn't a bad revenue stream for a lot of businesses.

That was for a year though.

[jeffblaylock]

According to the public notice posted this week, the property — which is open for business — is set for sale to the highest bidder on the courthouse steps in early June.

Let's start the bidding. I have $10,000 for those several thousand acres of land. First action -- stop watering the golf course.

[SHANEA]

According to the public notice posted this week, the property — which is open for business — is set for sale to the highest bidder on the courthouse steps in early June.

Let's start the bidding. I have $10,000 for those several thousand acres of land. First action -- stop watering the golf course.

I'll leverage some $ I have tucked away.  We can turn it into an ecoresort.  Home of the Big Bend Foundation.

[SHANEA]

I wonder what the future of Lajitas is going to be?  It doesn't seem likely that it will succeed as the Smith's vision of it.  But it can't ever be restored to what it was before he got ahold of it.  I wonder what the economic impact for the area will be if it closes down?

Ah, mother earth will take it back.  I'm just happy that I'm not a home/property/resort member out there.  Once they turn off the pumps, ashes to ashes....

[SHANEA]

Jet-set Texas resort crashes and burns  SAN ANTONIO, May 19 (UPI) — A resort envisioned as a hideaway for the rich and famous is meeting a more humble end on the steps of a Texas courthouse.

The Lajitas Resort, located near Big Bend National Park, is the subject of foreclosure proceedings initiated by a Connecticut finance company that loaned the developer more than $12 million.

The loan was supposed to be used to pay for various improvements that would get the project off the ground. However, the San Antonio Express-News said Saturday that the work didn't get very far.

As a result Lajitas Resort will be auctioned next month at the Brewster County courthouse.

The resort and 20,000 surrounding acres were purchased in 2000 by Austin telecom industrialist Stephen Smith, who sought to turn it into a plush getaway with a spa, lakeside cottages and suites costing up to $235 a night for high rollers, the resort's public relations firm said.

The newspaper said the location was anything but exclusive at the time; it now boasts a golf course but is still largely the domain of RV enthusiasts and a beer-drinking goat that has been kind a fixture of the area for several years.
Copyright © 2007 by United Press International

Kinda sounds like the ROI that Daimler got on Chrylser...
Of course, you gotta dream big in order to have your dreams come true...

http://www.imedinews.ge/en/news_read/40868

[SHANEA]

and I was ready to be on the court house steps...

http://www.mysanantonio.com/news/metro/stories/MYSA060607.2B.resort.foreclosure.33813e8.html

Resort foreclosure sale is off — for now

Web Posted: 06/06/2007 01:18 AM CDT

John MacCormack
Express-News

The owner of the financially distressed Lajitas Resort in far West Texas got a little breathing room Tuesday when a foreclosure sale in Brewster County was canceled.

"My client has agreed to delay the sale for month. It will give the Lajitas folks some more time to get their new loan or additional money together," said Robert Ladd, a Houston lawyer who represents Prime Asset Funding of Greenwich, Conn.

A year ago, the finance company lent Lajitas $12.5 million for improvements, but according to Ladd, the resort next to Big Bend National Park did not hold up its end of the bargain, triggering the foreclosure proceedings.

"They agreed to maintain certain levels of financial performance," Ladd said, declining to be more specific.

Stephen R. Smith of Austin, a telecom magnate who bought the remote resort for $4.25 million at a public auction in 2000, could not be reached for comment.

Since acquiring Lajitas, then a modest middle-class hotel, Smith has pumped at least $100 million of his personal wealth into creating the self-described "Ultimate Hideout," which has yet to turn a profit.

Resort manager Daniel Hostettler, who several weeks ago said new financing was imminent, likewise did not respond to phone calls or e-mails seeking comment.

Ladd said the parties got together Monday and signed an agreement to suspend the sale, which had been set for the next day. With interest and costs, the resort owes a little more than $12.5 million, but no deadline has been given to pay up, he said.

"There is no timetable, but don't be surprised if you see another posting of foreclosure. You have to do it 21 days in advance. That just means we'll be ready to foreclose on July 3 if they don't pay the obligations," he said.

[dave2]

Lajitas wasn't too bad about 15 years ago when the river outfitters rented space on the boardwalk and you could stay at the hotel for about $100 a day.  It was also a good place to go across the river and get a meal, but it was never a great place.  The best thing that could happen would be to let the golf course melt down--what a waste of water.  Anyone who bought into the "Palm Springs of Texas" is going to get burned.

[SHANEA]

http://www.alpineavalanche.com/articles/2007/06/28/news/news02.txt

You could probably make a go of this if you toned it way down and turned it into a true frontier town, returned the golf course to it's natural state, etc.  I'd sure hate to be a property owner and good gosh almighty a home owner there right now.  I wonder what happens if it's foreclosed - do the water pumps get turned off so you don't have running water, etc.?

Friday June 29, 2007

Lajitas on the auction blockTime is up for the Lajitas resort in South Brewster County, which was given one month to make good on a $12.5 million loan from Prime Assets Funding, a Connecticut lender.

Notices of a foreclosure sale scheduled for June 5 were posted in the Brewster and Presidio county courthouses in mid-May.

Just before that date, the resort and the lender agreed on a one-month extension, according to Prime Assets' attorney, Robert S. Ladd.

The sale has now been re-scheduled for Tuesday, July 3, on the Brewster County Courthouse steps. Lajitas has until Tuesday to pay back the loan.

The one-year note was issued in June 2006.

Lajitas, "the Ultimate Hideout," is a 25,000-acre private estate and includes a 92-room resort, private club and real estate division. Among the amenities listed at its website, www.lajitas.com, are an 18-hole golf course, spa, hunt club, lodge, equestrian center and a gourmet restaurant, among others.

Brewster County Tax Assessor/Collector Betty Jo Rooney told the Avalanche earlier this month that Lajitas currently owes nearly $21,000 in interest in penalties on its 2006 tax statement.

Tax payments are due Jan. 31, but the resort didn't send theirs until Feb. 15, at which time Rooney's office received only $278,192.80, excluding the interest and penalties.

She said $203,000 of Lajitas' total is paid to the Terlingua school district.

According to Terlingua Superintendent Kathy Killingsworth, a few years ago, about half of the students who attended the school had parents employed by Lajitas.

"It's probably still that now, but folks have moved," she said.

Killingsworth said she hasn't heard much talk about the possibility of foreclosure in South County as many people leave the region during the off-season - the hot summer months.

"A lot of folks plan on being gone. The rest of us just hope we have good air conditioners," she said. "I just hope it all gets worked out. I'm thinking positive."

According to the Brewster County Appraisal District, Lajitas is valued at $16,969,433, including the resort, airport, golf course and adjacent real estate.

If the resort is foreclosed upon, it could be placed on next year's tax roll at a lesser value.

"It means nothing this year to the county's budget," said Judge Val Beard. "It's all hypothetical at this point. I suspect they're going to pull this off."

Beard said the most negative thing about the issue is the possibility of lost jobs.

"We never want to see any taxpayer in distress," she said. "There are significant assets there. There may be some real bumps."

However, she said, the county is prepared if a lesser valuation means less tax dollars for the budget.

"We do have remedies if there's a bump of that nature," she said. "If it happens, it happens. It's not of such a magnitude that it's going to cause a disaster."

Phone calls from the Avalanche to Lajitas General Manager Daniel Hostettler were not returned.

[bdann]

I'm thinking Steve Smith will pony up and make good on the loan before Tuesday.  Maybe he'll also get some sense and change his business plan.

[Drifter]

Steve Smith no longer has management control of the resort.  When the corp. floated the last loan (12 mil) one of the stipulations was that Steve could not have any management control. Looks like that didn't put any brakes on the inevitable downward spiral  of a monumental bad idea.  Who in the world would have thought that there were enought rich couples that enjoyed the end of the road.  I mean when Mr. was enjoying being a cowboy or playing golf what was she going to do for the entire day.  It aint Palm Springs.

[presidio]

Looks like that didn't put any brakes on the inevitable downward spiral  of a monumental bad idea.  Who in the world would have thought that there were enought rich couples that enjoyed the end of the road.

Consider for a moment the scenario that this development was perhaps never intended to be a success. A person with the financial resources to buy and overdevelop the area when there was no proven market for what was being offered, may in fact have been looking for a tax write-off that would offset gains made elsewhere. Folks whose assets are in the multi-millions have a different perspective on what is a 'success'. Since the present iteration of Lajitas is a business, the concept of capital gains and losses comes into play.

If you sell your house at a loss you can't claim any deductions. If a business fails, there are tax 'advantages' that may accrue to other areas of that individual's financial portfolio.

So, it may have been designed from the get-go to not be more than even a marginal money-maker. Had the idea taken off there would have been considerable taxes on gains, far more than the property taxes, but he may not care plus he gets to play land baron for a while.

A fully successful enterprise would have been quite a windfall in terms of income versus investment but, again, that may not have been his scheme. He does not seem to be unable to pay, just whether or not he will. You will notice that his personal fortune is not at risk if the thing folds. That's what 'INC' and 'LLC' mean in the business titles.

You have to remember that what most of us in the middle class consider 'normal' financial activities in no way reflect the realities of the super-rich. And, what may seem bizarre to us is normal life in their world.

[chisos muse]

Consider for a moment the scenario that this development was perhaps never intended to be a success.

I have always suspected this. Over the years my various experiences with Lajitas always had me thinking that the puzzle pieces just don't fit. Or as Mr. Spock would say...."highly illogical".