OSOYOOS, BC, March 2, 2016 /CNW/ - Central facilities at Spirit Ridge Resort, including the convention centre, the check-in lodge, and the restaurant have been shut down and locked up by the developer of the Resort. The owners association, on behalf of the hundreds of investors in the Resort, is struggling to deal with this situation.
Bellstar Hotels & Resort Ltd. ("Bellstar) through a holding company (the "Bellstar Affiliate"), owned 75% by Bellstar and 25% by the Osoyoos Indian Band ("OIB"), developed and sold units in the Spirit Ridge Resort located on OIB land also known as NK'MIP. Between 2005 and 2015, about $80 million of leased units were sold to purchasers, with the assistance and permission of the Federal government (INAC) who is the landlord. Bellstar was initially the property and rental manager for the Resort.
In communications between owners and Bellstar, and pursuant to sales and disclosure documents which each owner received on purchasing a long-term sublease, it was inferred that the Head Lease would eventually be transferred to the owner association once all of the leasehold units were sold.
Phase 1 was 100% sold some years ago, but the Head Lease over this portion of the Spirit Ridge property was not transferred to the owners. Phase 2 has only 13 units left "unsold", and these are held by principals or affiliates of Bellstar. Nevertheless, the Bellstar Affiliate still holds the Head Lease.
On the 10th anniversary of the rental management contract with Bellstar, the owners, with well in excess of a 75% majority, exercised their right to terminate Bellstar's rental management of the Resort.
After being terminated as rental manager, the Bellstar Affiliate elected to shut down the convention centre, restaurant and check-in lodge at the Resort. The closure of these facilities occurred despite the Bellstar Affiliate having taken bookings and deposits for the future use of those facilities. The closed facilities remain controlled by the Bellstar Affiliate pursuant to the Head Lease. Despite provisions in the Head Lease which make it a default to vacate or abandon any part of the premises, neither the Federal Government, who is the landlord under the Head Leases, nor the OIB, whose land it is, have rectified the situation.
The owners have worked hard to remedy this situation. Originally the owners thought that the Head Lease and thus the central facilities would be transferred to them. When this did not occur, and faced with the possible closure of these facilities, the owners entered into extensive negotiations to purchase those facilities from the Bellstar Affiliate. Eventually, a handshake agreement was entered into, but the Bellstar Affiliate reneged on that deal. The owners have since arranged for separate space for check-in and a different, but smaller, restaurant and meeting space for guests.
The owners apologize to those who booked with the Bellstar Affiliate and will not be able to utilize the conference space or restaurant for which they contracted. The owners believe that this may affect over 40 weddings in addition to many business meetings. The Bellstar Affiliate has also taken close to $200,000 deposits for bookings and the owners believe that those deposits have yet to be returned.
The owners' association has also learned that over the past year or so, the Bellstar Affiliate has charged customers a Destination Marketing Fee of 2%. The amount collected over this period is approximately $100,000 and has not been paid to Destination Osoyoos, the intended recipient.
The owners are also facing an issue with the extension of the Head Leases, which require a fee of $74,000 to be paid. According to the original disclosure documents issued by the Bellstar Affiliate to the owners, these monies were to have been placed in trust with the owner association. They were not.
These actions by Bellstar and the Bellstar Affiliate as developer are likely to significantly negatively affect the value of the purchasers' investment in the Resort. The owners expectations certainly did not include the developer closing and locking the Resort's central facilities, including the conference centre, restaurant, and check-in facility. The owners have expended considerable time and money to ensure that room bookings and the Resort as a whole continue to operate despite these closures by the Bellstar Affiliate. The owners are considering taking legal action against Bellstar, the Bellstar Affiliate, as well as the OIB and the Federal Government who have control over the head lease to the Bellstar Affiliate (and are not enforcing it, to the detriment of the owners).
SOURCE Spirit Ridge Owner Association
Image with caption: "Spirit Ridge Owner Association (CNW Group/Spirit Ridge Owner Association)". Image available at: http://photos.newswire.ca/images/download/20160302_C8998_PHOTO_EN_633231.jpg
For further information: Press and Media Contact: For Spirit Ridge Owner Association, Board Spokesman: Delwen Stander, 1 (604) 847-9777, dstander@StanderandCompany.ca