Bankrupt developers, property liens, misrepresented sales, a $250,000,000 loan default, and multiple lawsuits are all elements in a proposed bailout of Tamarack Resort in Valley County.
A bankrupt Mexican and Frenchman are seeking a bailout with assistance from the U.S. Department of Commerce and the Idaho Housing and Finance Association (IHFA) in the form of a $670,000,000 bond sale to “institutional investors” like pension funds–such as those operated on behalf of unions and the Public Employee Retirement System of Idaho (PERSI).
The IHFA stands to make about $3.5 million in fees if the deal is consummated with their help. A spokesman for the IHFA told the GUARDIAN the fees would go toward “affordable housing” in the area of the luxury resort and subdivision. Other sources tell us Tamarack is the big owner of those properties as well.
The Tamarack publicity machine runs overtime, attracting financial giants like President G.W. Bush and the former Idaho Guv–who once stiffed his barber with a bad check– Dirk Kempthorne. Dirk went on to be Interior Secretary. G.W. currently ranks as the most “ disapproved president in history and Tamarack is after the hard earned retirement money of worker bees and pension funds so the rich will have a playground and multi million dollar vacation homes.
The potential for financial disaster with this scheme ranks right up there with Enron, and all the recent sub prime lending and resulting scandals that has brought the national economy to its knees.
The Idaho Housing and Finance Association claims to be a “quasi government private corporation.”
That means they were created by the legislature, the board is appointed by the governor, but there is no state control of their lending. They have a monopoly on selling the bonds sought by Tamarack, but adamantly state NO STATE FUNDS are used or obligated.
The GUARDIAN submitted a series of questions to IHFA. Their written responses follow:
1) Tamarack approached the Association in partnership with the US Department of Commerce to pursue a privately placed conduit financing. There are certain large institutional investors, primarily pension funds, that will not make direct real estate loans but will invest through a conduit financing structure. These financing structures offer an investor a Trustee Bank, such as Bank of N.Y., to oversee financial matters relating to the investment. The Association is the only authorized entity in the state that can issue bonds under this type of economic development financing structure. Traditional banking entities could offer direct loans for Tamarack, but cannot facilitate access to certain of these large institutional investors.
2) The Association will not invest any funds toward this transaction, nor will it provide any credit enhancement or place any assets at risk. If Tamarack is successful in finding an investor(s), all funding will be provided by the applicable investor. Any bonds issued will be done on a private basis and not offered in the open market to any unsuspecting investors. Only highly sophisticated institutional investors are qualified and will conduct their own due diligence in determining the propriety of such an investment. Tamarack is responsible for identifying and negotiating a successful outcome with any prospective investor. There would be no guarantees on the bonds – the investor’s recourse in the event of a default is to foreclose on the underlying loan or pursue other security or personal guarantees offered by Tamarack in their negotiated terms and conditions with the investor.
3) The Association’s Board of Commissioners considered Tamarack’s application for this financing at their July 25, 2008 Board meeting. It was determined that the application met all Statutory and Association policy provisions. A significant report on Tamarack’s economic impact to Valley County and the State overall was presented to the Board. It was also confirmed to the Board that the proposed financing would pay off all outstanding debts owed to contractors and others connected with Tamarack. The Board passed an initial or inducement resolution for the financing. This allows the Association to move forward with public hearings for the purpose of determining whether a “public purpose”
will be served by this financing. Additionally, Tamarack must find an investor, and then acceptable terms and conditions must be negotiated with both Tamarack and an investor. The bond financing is not yet approved. There will need to be additional action by the Board, assuming the transaction comes together acceptably. We are aware that Tamarack is pursuing other debt restructuring alternatives.
4) After making inquiry to staff members involved with this transaction, we are unaware of any inquiries, phone calls, e-mails, or other communications by political figures to either support or object to the Tamarack financing application. Our expectation is that we will hear from various community and elected officials during the comment/public hearing phase of the financing approval process.
We cannot understand why an outfit that claims it is not a public agency would hold public hearings, but not much makes sense with this story.
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