The Great Recession happened right in the middle of my career. I worked for a real estate development company on a large-scale project that was about 7 or 8 years into a 25-year master plan. And it was high-end, second home resort development in California. It really could not have been worse.
We started on several golf and ski resort communities in 2000. We were taking a model that had worked in the high-end mountain resorts of Colorado especially well during the convergence of the late 90s tech bubble and empty nest baby boomers arriving at the peak of their vacation home purchasing potential.
We adopted the model to California resorts with high hopes that the market was ripe for some new development. The plan included two brand new golf course communities, a high-end luxury hotel with a residential component, and an 1,800-unit master planned community at the base of and on the ski resort, and a club to bring it all together. Entitlements and planning took a couple of years but when the first real estate was offered it was obvious the plan was right. In 2002 we began delivering finished lots and townhomes, and by 2005 we were delivering a multi-story mixed-use base ski village that was the nicest in the state.
At both the golf course communities and the ski village we had oversold lotteries to allow potential buyers the opportunity to select lots or units based on architectural renderings and site plans. We had people threatening to sue because they showed up at a fancy hosted party and were unable to get their chance to plunk down a hefty deposit for a lot that hadn’t even been built. That was the peak and we all now know that money was just too easy to come by and that was the real source of the hyper-competitive market for any and all real estate.
We were writing the term sheets for construction loans and delivering to the banks, knowing if they didn’t take our proposed terms another bank would. We created three different Community Facilities Districts with local utility and community services providers based on appraisals showing sales in the billions of dollars over the next 20 years. Based on the way real estate was selling at the time, the assumptions were correct. We had taken out every loan available, including the biggest loan the company had ever closed on to build the 5-star luxury hotel. The loan was so big it took a consortium of four major international banks to deliver the funding.
None of this was easy. There was so much effort put in by smart and hard-working people. We had folks that had relocated from around the country, experts in construction, sales and marketing, land planning, architecture and design, and finance. The machine was humming, and the future was bright.
It was all too good to be true.
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