by Gary Nelson - Jan. 4, 2009 12:00 AM
The Arizona Republic
Thirteen months ago, Mesa voters gave overwhelming approval to the idea of selling Riverview Golf Course and four nearby ball fields to a company that wants to build a water-sports paradise on the land.
In the aftermath of that election, the founders of Waveyard Development LLC said they would move quickly to build what they said would be Arizona's most popular man-made destination. They hoped to be turning dirt by this past summer and opening the mixed-use resort by early 2010.
Now, early 2010 is a little less than a year away. Instead of promising an opening day, it looms as the deadline for Waveyard to either close the deal or walk away from Mesa.
From the start, the project hinged on whether Waveyard founders Richard Mladick and Jerry Hug could prove to the city that they had hundreds of millions of dollars in solid financing. Until that happens, Mesa retains ownership of the land.
To no one's surprise, those loans haven't materialized amid the worst worldwide financial crisis since the Great Depression.
"We're talking about the worst credit cycle in the last 100 years," Hug told The Arizona Republic. "It's not like (other) things are getting done and Waveyard is not."
Although the Mesa project is stalled, Hug and Mladick said several things are working in their favor:
• Creditors who have kept them afloat for more than five years during the company's infancy are still supplying money, and the firm has not had to lay off staff.
• Negotiations and design work are under way to build Waveyards in Dubai and South Korea.
• Waveyard has been able to sell licensing agreements for amusement-park technology it has developed as it works on the Mesa project.
• Entertainment-oriented projects are more attractive to investors right now than traditional developments such as recession-stricken housing subdivisions and shopping malls.
• A down economic cycle might actually help the project in the long run.
"We're very fortunate that we're not opening our doors today," Mladick said. With commodity and labor costs falling, he said, "the cost to execute on our vision is coming down almost daily."
Earlier this year Mladick said the Mesa project could cost $750 million. That was up from the initial estimate of $250 million, partly because of soaring costs at that time and partly because some parts of the project had grown larger than originally planned.
Mladick said Waveyard could have been in big trouble had it started construction with financing from companies that imploded because of the subprime mortgage crisis. Instead, he said, "We'll let the markets settle and play out," and the company is working with several possible lenders to fund the Mesa project.
Mayor Scott Smith said he and City Manager Chris Brady are in regular contact with Waveyard and planned to meet with Hug and Mladick this week.
"We recognize that with the financial markets the way they are, things aren't going to change overnight," Smith said.
Meanwhile, he said, Waveyard still has time to pull things together before the agreement to buy Riverview expires on Jan. 11, 2010.
Mladick said Waveyard could ask for an extension of that deadline, but such a request would be accompanied by an enormous site plan and other paperwork showing the project was moving ahead.
He promised that despite the delay, Waveyard will get built.
"It's just a matter of timing, when the credit markets free up to provide us that opportunity," Mladick said.
No comments:
Post a Comment