2002: Superintendent News - Under new ownership
By SCOTT KAUFFMAN
The saga of Ocean Trails Golf Club took another turn when the most expensive restoration of a single hole became the burden of the course’s new owners. Work on resurrecting the 18th hole, whose collapse nearly three years ago led to the bankruptcy of the original investors, was scheduled to resume in late May, said an official representing the group that took control of the Southern California property earlier this month.
Ocean Trails received $50 million in insurance proceeds to repair the hole ruined by a landslide within a month of its opening. But the funds were exhausted with work still far from complete. By the time the new owners are finished with the project, an extra $10 million to $20 million likely will be spent.
Douglas Wilson Cos., a San Diego-based real estate consulting firm, was recently assigned the day-to-day management of the development set atop bluffs overlooking the Pacific Ocean. The company is overseeing Ocean Trails at the behest of the new ownership group, V.H. Property Corp., an affiliate of New York-based investment bank Credit Suisse First Boston.
On May 6, U.S. Bankruptcy Court Judge Arthur Greenwald approved Credit Suisse’s reorganization plan for the public course and luxury residential community located in Rancho Palos Verdes in Los Angeles County. Credit Suisse First Boston Mortgage Capital LLC, which made the initial $100.4 million loan on the development, is Ocean Trails’ main creditor.
The original owners, brothers Bob and Ken Zuckerman, invested $8 million of equity into Ocean Trails, pumping up the development’s price tag to at least $158 million. The golf course alone will cost about $80 million when the 18th hole is completed.
Terry Plowden, senior vice president of Douglas Wilson, said May 10 that construction schedules and budgets were being prepared so work could resume.
“The actual grading operation should start in late May,” Plowden said. “The tentative schedule for completion would be by next summer. ”
The Pete Dye layout will continue to operate as a 15-hole layout until the 18th hole is completed. The course, originally pegged at $200-plus for green fees, now charges $115.
For the Zuckerman brothers, the judge’s decision ends their 30-year effort to develop the 262-acre tract that they expected to rival Pebble Beach Golf Links in Monterey.
“I feel a deep loss,” said Ken Zuckerman. “It’s something I’m having a lot of difficulty dealing with.” The day after the bankruptcy proceeding, Zuckerman was asked to pack up his belongings and leave his Ocean Trails office.
The Zuckermans’ troubles began June 2, 1999, when the landslide carried the 18th hole some 50 feet toward the ocean and left a deep, horseshoe-shaped chasm. Five months later, Ocean Trails LP, controlled by the Zuckerman brothers and family, filed for Chapter 11 bankruptcy protection.
In subsequent months, and while under bankruptcy reorganization protection, the Zuckermans began the most expensive restoration of a single hole ever, but ran out of money. The restoration was halted in January.
In February, with losses mounting, Greenwald took control of Ocean Trails and assigned bankruptcy trustee Norm Hanover to oversee it. In addition to the course, 75 multimillion-dollar residential lots are being developed.
The restoration work, which began Feb. 8, 2001, entailed excavating about 1.5 million cubic yards of dirt from six slot cuts, said Jeff Kaplinski, project manager for Ocean Trails.
The dirt was then returned to the slot cuts with a geosynthetic fabric that helps strengthen the soil to resist future landslides, Kaplinski said. Holes Nos. 9 and 12 are being used as staging areas for the construction project, which was halted after five of the six cuts were finished.Kaplinski estimated restoration costs alone will be in the $30 million range when the job is finally completed. That’s on top of the original $50 million it took to build the course.
Niebur Golf of Colorado Springs, Colo., built the course and was the largest unsecured creditor with a claim of $377,160.
As for the future of the golf course, there have been negotiations between Credit Suisse and Destination Development Corp., an affiliate of Brentwood, Calif.-based Lowe Enterprises, according to officials close to the project. If a deal s struck, that could mean one more ownership transfer before the year ends.
“(Lowe has) been sniffing this project for a long time,” Hanover said.
Credit Suisse officials declined comment on Ocean Trails. Lowe Enterprises officials did not return phone calls.
This much is known, based on public reports and officials familiar with Ocean Trails: Lowe Enterprises wants control of a course to complement a $200 million resort development it plans to build nearby. Last fall, Rancho Palos Verdes city officials nixed a Lowe proposal to build a course on municipal parkland – a course that Lowe officials said was necessary to assure the resort’s economic viability.