Granby Ranch’s contracts with metro district should ensure resort amenities stay open
Granby Ranch is facing foreclosure, but the ski resort and other amenities remain in full swing. Some interesting contracts are the reason why.
Granby Realty Holdings, the land-owning arm of Granby Ranch, owns all property, including the undeveloped land and amenities associated with the resort. But the amenities, managed by Granby Ranch Amenities, have not been placed in the hands of a receiver because of a lease with Headwaters Metro District.
The Sky-Hi News obtained documents relating to a lease purchase agreement, the Headwaters Metro District and a management agreement, which together show a framework that should ensure the amenities remain in place.
“The golf course and ski area owned by Granby Realty Holdings remain governed by the existing lease purchase agreement with the Headwaters Metro District and their operations will continue in the ordinary course,” court appointed receiver Randel Lewis said in an email to Granby Mayor Paul Chavoustie.
Keeping track of all the different entities can get confusing. Granby Realty Holdings owns both the undeveloped land in the Granby Ranch area and the part of the resort often referred to as the amenities, which include the ski resort and golf course.
Headwaters Metropolitan District is a quasi-municipal corporation and political subdivision in Granby Ranch. It is referred to as the “service district” and remains responsible for the infrastructure and ongoing operations of the entire Granby Ranch community, including the amenities it rents through a lease purchase agreement.
Granby Ranch Amenities is a separate entity from Granby Realty Holdings that manages operations of the amenities through a contract with Headwaters. However, the two had the same owner until recently. Marise Cipriani owned Granby Realty Holdings before the foreclosure filing, and she continues to own Granby Ranch Amenities.
The lease purchase agreement in which Granby Realty Holdings rents the ski and golf amenities to Headwaters Metro District will eventually allow Headwaters to purchase these amenities from Granby Realty Holdings when the purchase price is reached through a fee structure.
According to the lease purchase agreement, Granby Realty’s lender, Granby Prentice, is subject to the agreement, which means this lease will likely remain in place.
The question of who exactly Granby Prentice is remains a question. Granby Prentice’s authorized agent in the filing, Phil Russick, has not responded to emails requesting comment. Granby Prentice is a Delaware based company, but in the foreclosure filing lists its address in Los Angeles.
Granby Prentice will be partnering with Pacific Coast Capital Partners, a real estate finance and investment firm, to manage the properties. On its website, Pacific Coast Capital Partners lists the same Los Angeles address as Granby Prentice.
The debt assumed by Granby Realty Holdings in 2005 was taken over by Granby Prentice from Redwood Capital Finance Company in April 2016, just a month after Granby Prentice was incorporated. Redwood, also a Delaware based company, lists a now-cancelled California branch of the company with the same Los Angeles address as the two other companies.
To understand the foreclosure proceedings at Granby Ranch, it is important to understand the various metropolitan districts at work in the area.
A metro district is a special tax district, like a fire or water district, that serves to fill a gap in the services provided by a county or municipal government. A metro district is a type of special district approved by the local government, and the districts are often controlled by developers.
The Granby Ranch community is made of 10 separate metro districts: Headwaters, SolVista, Granby Ranch and Granby Ranch Districts 2-8. While Headwaters is the service district, managing infrastructure for the Granby Ranch area, the other districts are known as “financing districts” and fund these costs.
The Headwaters board is a tightly controlled group managed by both sides of the Granby Ranch corporate structure. Its chair is Lance Badger, vice president of Real Estate Development for Granby Realty Holdings. The only other person on the Headwaters board is Dustin Lombard, the chief financial officer of Granby Ranch.
The metro district’s boundary as of 2018 was roughly 9.16 acres or about 400,000 square feet, including a 7.34 acre parcel north of Fraser River, a 1.84 acre posting parcel near the intersection of County Road 894 and Ten Mile Road, a portion of Village Road and one condo: Base Camp One Condominium Unit 400-R.
The Nov. 5 election for Headwaters Metro, which maintains operations for the entire Granby Ranch community, had three voters.
Headwaters leases property from Granby Realty Holdings, including the ski area and golf course that are often referred to as the amenities. Signed in 2006 and revised in 2012, the lease purchase agreement automatically renews for 49 additional one-year terms. Rent is paid through amenity fees.
Property owners in the Granby Ranch metro districts pay a one-time fee of $10,000 when they purchase their homes. This pool of amenity fees is to be used by Headwaters to finance the eventual purchase of the amenities.
There are a few ways for Headwaters to purchase the amenities. Headwaters can pay the full purchase price through amenity fees, pay the full purchase price from sources other than amenity fees with Granby Realty’s consent or it can pay with all amenity fees collectable under the agreement if the purchase price is greater than the total fees to be collected.
The appraised value of the ski area, golf area and Base Camp Lodge — not including the third floor, which is not involved in the lease — was $18.9 million in the amended lease purchase agreement.
Management meets landlord
The lease purchase agreement with Granby Realty was entered at the same time Headwaters entered an agreement to manage the property. In 2012, that management agreement changed and Headwaters began contracting with Granby Ranch Amenities.
The agreement outlines Granby Ranch Amenities as the operator of the amenities, receiving all revenues and paying for all expenses related to the ski and golf operations.
Granby Ranch Amenities agreed to pay Headwaters an annual rent of less than $15,000 for the amenities, adjusted annually based on ski visits and golf rounds. Compared to the appraisal value listed in the lease purchase agreement, the rent is less than 0.08% of the property value.
This ratio would be similar in terms of renting a house worth $250,000 for $200 a year, or less than $16 per month, making this a sweetheart deal for a ski and golf resort. The reason might might have been who was involved in the negotiations.
The 2012 contract was signed by the then-president of Headwaters, Kyle Harris, who was also the chief executive officer and vice president of development of Granby Ranch. Marise Cipriani, representing both Granby Ranch Amenities and Granby Realty Holdings, signed the contract twice.
(The story continues beneath the graphic. Graphic by Amy Golden.)
In regards to foreclosure, it seems the lease will continue as it has been.
Part of Headwaters’ lease with Granby Realty states that Granby Realty cannot grant a security interest of the amenities leased to Headwaters without first obligating the lender to be bound by that lease. This means an agreement would be put in place that if Granby Realty defaulted and the lender filed for foreclosure, the lease would still stand.
The lease goes on to point out the prior and superior deed of trust with Redwood Capital Finance. However, the contract said that Granby Realty delivered an agreement executed by Redwood that binds the lender and any successor to this lease, including an agreement that does not require the lender’s consent to allow Headwaters to acquire the amenities.
Granby Realty originally borrowed $29.5 million from Redwood Capital Finance in 2005. The loan was amended multiple times, reaching a principal of $55.8 million dollars, combined with accrued interests and fees to total $62.8 million in debt. Redwood transferred this loan to Granby Prentice in 2016, just a month after Granby Prentice was incorporated. Granby Prentice filed a judicial foreclosure against Granby Realty Holdings in January.
A notable part of Granby Prentice’s foreclosure filing points out that Headwaters, the metro district chaired by Granby Realty Holding’s vice president, was seeking $400,000 in costs for certain road repairs at the Granby Ranch property. Headwaters filed liens against 27 properties on the Granby Ranch development property.
These liens are part of the reason Granby Prentice filed for foreclosure and requested a receiver. Failing to sell a lot by either Jan. 20 or Jan. 30 — Granby Prentice and Granby Realty disagreed on the date — would risk Granby Ranch losing its spot on the residential owner’s association. The liens made it impossible for Granby Ranch to sell any lots.
Granby Realty disputed these claims, saying in a filed response that Granby Prentice failed to fund the property repairs after agreeing to do so in writing, and Granby Realty placed the fault on the lender.
Granby Prentice’s filing said that while the two worked to find a solution for this debt, Granby Realty “refused to cooperate unless Granby Prentice makes a number of other concessions” related to other obligations.
It seems, after the foreclosure filing, Granby Prentice paid back the debts and Headwaters released certain liens. This allowed the receiver to keep Granby Ranch’s spot on the owner’s association by selling a lot to GP Florida Holdings, a branch of Granby Prentice, for $10 on Jan. 29.
Foreclosure proceedings typically last at least a year. However, given the complicated nature of Granby Ranch, it’s unclear how long it might take to untangle the ownership issues. While the exact future of Granby Ranch remains to be determined, these intricate contracts at least put the amenity side of operations in a favorable position.
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Grand County’s real estate transactions June 6-12 were worth more than $33.6 million combined.