A Park City-based billionaire says he’s interested in purchasing and revitalizing Wohali if the development near Coalville goes to auction as part of the company’s bankruptcy proceedings.
Doug Bergeron, known locally for building and selling the $65 million Deer Valley home featured in HBO’s “Mountainhead” film, has a lengthy history of flipping underperforming companies. In 2001, for example, Bergeron led the acquisition of Verifone from Hewlett-Packard, buying the electronic payment company for $50 million and increasing its value to $5 billion over the course of 10 years.
Now, though, Bergeron has his sights set on a local investment: the embattled luxury real estate development approximately five minutes west of Echo Reservoir.
“They have a chicken and the egg problem here because they need to make a much more believable plan for how to build out this lifestyle in order to get lifestyle clients,” Bergeron explained during an interview at The Park Record office. “If they don’t get lifestyle clients, nobody’s going to live there. Without the lifestyle and without the neighbors, it’s just another ranch.”
Wohali billed itself as a luxury development with community amenities, a golf course and acres of privatized open spaces, but the company spearheading construction ran into legal issues earlier this year. The business has since declared Chapter 11 bankruptcy in federal court, and a handful of contractors separately filed their own lawsuits naming Wohali as a defendant, alleging the developer owes them money for work executed on the property.
Wohali Land Estates in its bankruptcy filings estimated between 100 and 199 creditors were owed between $100 million and $500 million. Court documents further indicated the company owes approximately $12,908,637 to its top 20 creditors alone.
“We know the place is a train wreck right now,” Bergeron said. “The cardinal sin here was then using their suppliers and vendors as their creditors. … Unfortunately, at least through the eyes of federal bankruptcy laws, they are unsecured. They have nothing to go back on. They can whine and scream and yell and call town hall meetings and sue because everybody sues, but they’re junior to (investors) that loaned them $75 million.”
The Park Record has been unable to reach Wohali representatives for comment on the company’s finances.
Bergeron characterized what he saw as other key missteps in Wohali’s development process, including flaws in how the company approached selling lots and raising funds for construction.
He claimed the development’s management should have focused on equity capital, saying investors should have been asked to contribute money in return for a share of the profits after the project’s completion, similar to buying stock.
“Instead, from my readings, there was a small amount of capital raised, relatively speaking, by a group of investors … anywhere between 25 and 50 other people,” he said. “And then a much bigger amount was borrowed. That’s kind of dangerous. You can borrow to build your second dry cleaner because you’ve already got customers for the first one who can pay the interest, but they didn’t have any income. They hadn’t sold the lots yet, so therefore, they landed on an expectation several years ago around how fast they could sell these lots, and the sale of the lots would become replacement capital.”
In that scenario, Bergeron said, it’s easy for things to derail.
“All that has to go wrong is you don’t get the prices you want,” he explained. “New competition shows up. It’s not the only place you can play golf and live and have access to ski resorts, but probably the biggest error in financial planning here was the cadence at which they would sell the lots. … If you’ve borrowed money versus equitized money, that makes a big difference because you’ve got interest. It’s still accruing, like a credit card gone bad. You’re paying every month without even buying anything because you’re paying interest on past purchases.”
It’s a difficult situation to escape, even with the backing of wealthy investors, because money is needed to pay back debts in addition to continuing construction. Bergeron said he’s the right person for the job, though, which is why he and his legal team are already working on a plan to acquire the property if it goes to auction as part of Wohali’s bankruptcy proceedings.
However, Bergeron said Wohali would likely look a little different under his leadership.
“I could fund maintenance of the golf course for as long as it takes to fill up that community,” he said. “My thinking is the community, given where they are, you’d likely want to reimagine the idea of this clubhouse and think about it as a luxury hotel and spa. That could attract golfers and non-golfers.”
Bergeron’s idea is to create a mixed community of real estate owners and tourists. Lot owners would still have the chance to live on the Wohali property and tourists would get to visit and experience the luxurious offerings while also providing a steady stream of income to the development.
Specifically, Bergeron mentioned giving a 100-year lease to a hotel developer to “let them build the greatest hotel they can imagine” while also establishing a nationally renowned wellness spa.
“The spa is not just for golfers because I don’t think there are enough to make a great spa,” he said. “The restaurant isn’t just for residents. It’s for everyone from Park City who wants to take a day trip or drive 15 minutes down I-80. I think there’s an opportunity here.”
Reception to Bergeron’s proposal among the local business community has been mostly positive so far, he said, especially because one of his top priorities is to ensure local creditors are paid if he takes charge of the project. In general, Bergeron said the development contributes to the local community in other ways, too, even if the amenities are largely geared toward wealthy tourists, because of how it would expand the area’s tax base.
The increased tax base would then contribute funds to local law enforcement, schools and infrastructure, benefitting full-time residents and Wohali visitors alike.
“In my case, I’m sure we’ll be back, if we’re successful, with the county and with the town revising what the expectations are, but it’s in everyone’s interest that projects like this are successful,” Bergeron said.
Bankruptcy proceedings typically move through the court system fairly quickly compared to other cases. Bergeron said he hopes to have a better idea of whether the property will go to auction in the coming months.
In the meantime, he plans to continue ironing out his proposal for the resort and gauging community interest, acknowledging he’ll have an uphill battle in terms of the development’s reputation among locals right now.
“We need town halls, meetings, to get everybody on board with what the new face is going to look like, to get them excited about it. We’re going to need their patience, too,” he said. “Rome wasn’t built in a day, and Rome got torn down a few times, but this doesn’t need a teardown.”