Saturday, May 8, 2010

Home, Sweet Homex?

All of you who are Loreto Bay Homeowners are well aware of the uncertainty we have all been living with for the past year or two while the future of the project has been in limbo as the search for a new Developer has been going on. For those of you who are less familiar with the situation a brief (as possible) explanation may be required.

About 2 ½ years ago the original Developer of the Villages of Loreto Bay was unable to continue operations due, in large part, to the reversal of the Real Estate Markets in the US, and, to a lesser extent in Canada. The resulting loss of equity for many North American Homeowners in their primary residences had a dramatic effect on the market for retirement homes here, and many other places around the world. The impact was immediate and terminal for the operations of the original Developer and triggered the takeover of this project by a division of Citi Bank, who were an equity partner and wound up owning the assets and managing the project through consultants.

Citi Bank continued with construction on some of the presold homes for a period of time, while they began marketing the project to potential new Developers. This continued until about a year ago, when Citi announced that they too had to cease operations and the project was put on hold, pending the sale to a new Developer. At that time, many of the maintenance requirements of the common areas of the first phase (or Founders Neighbourhood) had already been assumed by the Homeowners Association, under the Condominium Regime. Fonatur (the Mexican Government agency dealing with Tourism Development) took over management and maintenance of the Inn at Loreto Bay and the Golf Course, preserving those principal assets for the potential new Owner.

Construction eventually resumed on over 120 homes in the second phase (Agua Viva), under the management of a General Contractor, and work on a number of Custom Homes continued with individual Contractors. Demand for services like Property Management, Landscape Maintenance, and repair and renovation work for the over 400 existing homes in the Founders Neighbourhood created opportunities for other entrepreneurial types to start businesses and meet the demand. By the end of last summer there was a new range of choice and options for Homeowners requiring these services that had previously been controlled by the Developer.

Last Fall, when many of us were beginning to arrive for this winter’s season, we heard the first substantial word about a prospective new Developer, after almost a year of successive rumours and speculation about possible owners. The purported company was one of the largest Mexican residential construction companies – Homex – and they had a long and impressive record of building thousands of small to medium sized homes for working class nationals, mainly on the mainland of Mexico. According to corporate communications, they were beginning to move into the construction of luxury homes in resort areas in Mexico, catering mainly, but not exclusively, to the ex-pat market.

For over six months this winter, we Homeowners (along with many businesses and individuals in the town) have been waiting anxiously for a clear and definitive statement by Homex or Citi Bank as to the future ownership and continued development of the original project. And, technically, we are still waiting for such an announcement. I say technically, because, over the past several months, there have been an increasing number of signs and indications that Homex was indeed going to be the new Developer. But, as is the case in Real Estate development anywhere, and particularly here in Mexico, there is no deal unless and until the parties involved SAY there is a deal - officially!

Amid a growing number of unofficial confirmations, we began to see evidence of the Homex presence, like surveyors (wearing Homex logos) working on undeveloped land north of Agua Viva, and statements by local politicians that were positive (but not definitive) about the future of the project. A couple of weeks ago construction work (reputedly by Homex) actually began on two homes at the north end of the development, just beyond where Agua Viva now ends – but still no official word. In the past weeks there have been word of mouth reports from several Homeowners, who have met self-described Homex employees and quote them saying: “the deal had been done”, and there would be an announcement: “in the near future”. Last week one of these impromptu meetings led to an actual site plan being circulated on a Homeowners website – the most tangible evidence yet as to the future plans and direction – and still we wait for the OFFICIAL ANNOUNCEMENT!

Based on everything we have heard so far, most people here are under the impression that when the facts are known, Homex will have purchased the Inn at Loreto Bay, the golf course that borders much of the Loreto Bay development and some amount of undeveloped land for new housing. Many questions remain about what, if any, relationship or involvement Homex will have with the existing Loreto Bay development and any assets or liabilities that may, or may not, be included in the deal. But the fact is, that with the administration of the completed part of Loreto Bay under the Condominium Regime, there is very little direct connection between the current Homeowners and whoever the new Developer is that will continue with a new project in the future.

One of the most obvious issues that a new Developer’s action could (and we hope will) make a big difference for those of us who already own homes here, is the redevelopment of the main road running through the development, which we refer to as the “Paseo”. This road is not part of the common property administered by the Condominium Regime as it is considered a municipal road (belonging to the town of Loreto) and is maintained by Fonatur.

My understanding is that over a year ago there was a contract between these two parties and the owner of the development (Citi Bank) to redesign the current road allowance with increased parking capacity in angled bays and more green space. Work on this had just begun when Citi shut down all operations last year, and the job has been on hold ever since, waiting for a new owner to assume their share of the road project, leaving the only access road through the development partially torn up and in poor condition. Therefore, the resumption of work on this vital roadway (if and when it happens) will be an important symbol of the future relationship as well as being a real and symbolic link that we hope will exist between the current Loreto Bay development and what will be the new development that Homex will build.

Another important concern of the Homeowners is our future access to the golf course, and to a lesser extent, the Tennis Center, two amenities that were integral parts of the original Loreto Bay development plan, and now (we believe) have been sold to the new owner. While it remains to be seen what the final situation will be, I am finding some encouragement in some recent changes in how the golf course is being managed.

Prior to the aforementioned shutdown of operations a year ago, the course was being managed by Troon Golf, an internationally recognized leader in that field. When they departed after their contract was terminated due to the shutdown, Fonatur stepped in and has been maintaining the course since. Although the Fonatur staff was more experienced in general landscape maintenance than greens keeping, they have done a more than adequate job keeping the golf course alive and viable during the past year.

To reduce staff requirements and operating costs this winter, the front desk at the Inn has done double duty as the golf course “Pro Shop” where green fees were paid and carts and clubs were rented. The golfers were then required to travel to the other end of the development, where the temporarily abandoned clubhouse is located, to start their round of play. In addition to this inconvenience there was another issue that has been a bone of contention among some golf playing Homeowners this past winter. Last year, while Troon was running the course, we could purchase packages of coupons for our green fees – 20 coupons for $500 US, or $25 per round. At the end of the season last year many of us were holding some number of these unused coupons, however, under the new management by Fonatur, these old coupons were not accepted for play this past season and the new rate was increased to $40 US per round.

However, in the past couple of weeks, I had heard from other golfers that the staff at the Front Desk of the Inn had begun accepting the coupons again – presumably a change that was somehow connected to the assumed new ownership of the course. This week I had a date to play a round of 9 holes with another Homeowner, and so I took my coupons with me. When we checked in to pay our green fees I found out that the new policy is that while the charge was still $40 for 9 holes, they would accept one of the coupons along with a payment of $40 to play 18 holes – effectively a 50% discount from the previous rate for 18 holes. They also indicated that the coupons would be accepted under these terms until the end of June this year, effectively the end of the season, due to the small numbers of people staying over the hot summer months and their willingness to play in the heat.

While some may not consider this to be a big deal (no discount if you are playing only 9 holes as we were) I choose to see this as a recognition of the presence of the Loreto Bay owners – and as such - the first such indication of the potential willingness of Homex to “work” with us as their plans for the future of the development emerge. There were other signs of progress as well. The Clubhouse, which has remained unused and abandoned all winter, has now been cleaned up and reorganized; the carts stand ready for golfers, clubs are available for rent and there are new staff working there, assisting the players.

To an outside observer these changes may seem insignificant, but to someone who has spent the past six months living with uncertainty about what the future of the development may be, even this small sign of recognition and progress is welcome and, hopefully, a sign of better things to come. While there are many details and questions still to be resolved, as I come to the end of my stay here this month, I am taking a positive perspective from these small indications and I am looking forward to my return again in the Fall, when I hope to find new (and no doubt changed) circumstances, and a greater sense of certainty about the future course of events.

Living with uncertainty, and learning the patience to wait for things to happen that are beyond my control - while still continuing to appreciate the good things that make this place so special – that may be one of the most important parts of “Living Loreto”!