700 doubt arises
Officials question the commitment of developers
By Brandon Gee (Contact)
Sunday, October 19, 2008
Steamboat Springs — As formal review of the proposed Steamboat 700 project west of city limits is set to begin in earnest, concerns have been raised — and refuted by Steamboat 700’s project manager — about developers’ commitment to seeing the project through.
Per the terms of a pre-annexation agreement with the city of Steamboat Springs, Steamboat 700 is to submit an application for annexation by the end of the month. The city and developers are conducting studies of raw water availability, metro districts, U.S. Highway 40 and fiscal impacts of the project.
Excerpts of a leaked Steamboat 700 investment prospectus twice have been revealed publicly in recent months — at a meeting of the Steamboat Springs City Council and in a letter to the editor published in the Steamboat Pilot & Today. According to a copy of the prospectus provided anonymously to the Pilot & Today, Steamboat 700’s investment strategy is “to complete the annexation, entitlement process and engineering allowing for the property to be developed by a third party. It’s anticipated that the land will be sold in an unimproved state within a three year period.”
Councilman Steve Ivancie said that wording concerns him.
“I want to be sitting across from the people who are going to be a part of this community for the next 30 years,” he said. “I want to know that the deal I’m negotiating is with them. I want a partner. I’m not here to ensure that an investor in a piece of property has a huge return on his investment. My job is to negotiate the best deal for this community for now and into the future.”
Councilwoman Cari Hermacinski agreed.
“I definitely think it would be more reassuring for the city if we knew we had a partner for development that was going to see the project through,” she said. “It’s a little concerning to know their ultimate strategy is to annex and sell it rather than annexing it and moving forward with vertical construction.”
Meanwhile, Steamboat 700 principal and project manager Danny Mulcahy continues to assure doubters that he is in it for the long haul.
“The intent of Steamboat 700 is to be the master developer of the Steamboat 700 community for the foreseeable future,” Mulcahy said. “The prospectus is written in a manner that is appropriate for this stage of development.”
When asked to elaborate, Mulcahy said he could not.
“That’s probably the best thing I can say to that,” Mulcahy said. “It all comes back to how investments are structured.”
The principal owners of the development company Steamboat 700, LLC, are Mark L. Fine, of Mark L. Fine Associates; Jim Zeiter, of Insight Holdings; and Mulcahy, of DM Hollo Management. All three companies are based in the Las Vegas area. While Mulcahy is the project manager, all three companies are managing the investment.
On the Web site of Zieter’s company Insight Holdings, a real estate operating company specializing in the commercial real estate market, Steamboat 700 is listed not only as an investment opportunity, but also under a tab labeled “available properties” where it describes the property as vacant commercial and residential land. Mulcahy also said this is not cause for concern.
“We’ve never made any secret that there’s going to be a number of third-party developers,” Mulcahy said. “That’s how development works. … The master developer controls what products are built and where they’re built. They make sure the master plan is followed. In that manner, (third-party developers) have to build what I want because it directly affects the value of the adjacent property.
“I’m not going to make any promises to anybody,” Mulcahy continued. “But Steamboat 700’s intent is to be the master plan developer of this master-planned community. We don’t see anybody else being the master developer of this site.”
Asked if the leaked investment strategy would affect the way they review Steamboat 700’s annexation application, council members said they would proceed cautiously and structure the annexation agreement and master plan in such a way that it must be honored regardless of ownership.
“It puts me on a very heightened awareness to make sure we’re addressing all the concerns with a good agreement,” Hermacinski said.
“I think if we do the annexation process right, we can do that,” said Councilman Jon Quinn, who suggested the city require all infrastructure improvements be constructed up front. “That’s probably not what the developer is looking for. But I think the more we front-end load (the annexation agreement) the more it’s going to compel them to stick around and sell some homes.”
Mulcahy, Fine and Zeiter have collaborated before, on projects primarily in the Las Vegas area. Their experience includes mixed-use projects, office buildings, business parks, industrial warehouses and retail centers.
Mulcahy, who graduated in 1997 from UNLV with a degree in psychology, was promoted to real estate broker with Insight Realty Associates in 2004. Mulcahy was charged with analyzing investment and development opportunities, as well as monitoring and driving the company’s sales programs and training its sales team.
Asked for credentials relative to a project like Steamboat 700, Mulcahy most often has cited two Las Vegas-area master-planned communities guided by Fine. Fine guided the 8,000-acre Green Valley development for 17 years as president of American Nevada. For four years, he was president of Summerlin, a division of the Howard Hughes Corp.
In their early years, both developments became some of the fastest-growing communities in America.
In 1999, Fine considered the communities successful and popular enough to stake much of his campaign to be mayor of Las Vegas on them. He claimed his experience building those communities would serve him well in leading all of Las Vegas, according to the Las Vegas Sun. Fine was not elected.
During Fine’s campaign for mayor, the Las Vegas Sun reported that, in 1988, Fine served on a bond oversight committee for the Clark County School District that was heavily criticized for spending bond money ineffectively and for building just 57 of 77 promised schools. The same article also reported that when Fine served on the bond committee in 1994, as its vice chairman, the committee “went out of its way to rectify the problems of the previous bond.”
Fine since has shifted his focus to high-end retail and office projects in the Las Vegas area. He continues to develop property in Summerlin, which has a population of 85,000. According to the Las Vegas Business Press, one of Fine’s current projects is a 370,000-square-foot headquarters complex for the Las Vegas Metro Police Department and Mulcahy’s DM Hollo is developing a $58 million, 552,833-square-foot big-box industrial complex jointly with RJR Capital Management.
A document provided by the city of Steamboat Springs lists 77 Steamboat 700 investors. The overwhelming majority have Nevada addresses, but investors also come from Florida, Oklahoma, California, Alabama, Ohio and Illinois. Of the five investors with Colorado addresses, two are in Steamboat. They are David Baldinger Jr., managing broker and owner of Steamboat Village Brokers, and West Steamboat Partners, a limited liability company. West Steamboat Partners’ registered agent is Chad Fleischer. Fleischer and Pam Vanatta, of Prudential Steamboat Realty, facilitated the 540-acre Brown property’s 2007 sale to Mulcahy and his partners for about $25 million.
In addition to its purchase of the Brown property, Steamboat 700 also has an adjacent parcel of about 150 acres under contract for $4 million. Another limited liability company, Steamboat Victory, owns that property. Steamboat Victory’s registered agent is the Corporation Service Company, one of the world’s largest registered service agent companies specializing in corporate identity protection. Marilyn Guire sold the 150-acre parcel to Steamboat Victory in 2004 for $2 million.
That year, Guire told the Steamboat Pilot & Today that her property was under contract by The Pacific Companies, a group of firms specializing in the development and construction of affordable housing. Earlier this year, Caleb Roope, managing principal and founder of The Pacific Companies, signed the city’s pre-annexation agreement on behalf of Steamboat Victory and designated Steamboat 700 as its authorized representative. A phone message and e-mail to Roope on Friday afternoon were not returned.
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