BajaNomad - Trump pulls name out of Baja development

Trump pulls name out of Baja development

bajabound2005 - 2-11-2009 at 07:56 AM

Trump pulls name out of Baja development
By Sandra Dibble
Union-Tribune Staff Writer
2:00 a.m. February 11, 2009

A billboard featuring Donald Trump towers over a development site in October 2007. The billboard was still up last week. (Union-Tribune file photo) -
TIJUANA — Fueled by rapidly rising U.S. real estate prices, the Baja California coastline was booming in October 2006 when Donald Trump lent his name to a planned luxury condo-hotel development overlooking the Pacific Ocean.

But as a global credit crisis envelops the real estate market on both sides of the border, the famed New York real estate mogul has severed his ties with the much-touted project known as Trump Ocean Baja Resort.

Planned on a 17-acre site about 10 miles from the U.S.-Mexico border, the project envisioned 526 units that ranged in cost from $300,000 to $2.5 million. The project has yet to break ground.

The developer late last year informed purchasers that it still was looking for loans and that the purchasers' deposits, totaling more than $32 million, had been spent, according to a document obtained by The San Diego Union-Tribune.

Experts say the project's financing difficulties reflect the changing real estate climate, a situation that is not unique to Baja California nor to the Trump development. But many purchasers, most of them from the United States, have said that Trump's association with the project had made them feel it would be a secure investment.

“I bought this development for one reason, and one reason only – the Trump name,” said Gregory Starn, 47, a U.S. citizen living in Cancun, Mexico, who in 2006 signed a contract for a studio apartment costing $437,000 – but now wants the developers to return his deposit of more than $80,000.

“I'm afraid that without Trump's name, it's less likely the developer will be able to arrange financing,” said Robert Culbertson, 59, a stockbroker from Orlando, Fla., who put down a 30 percent deposit on a one-bedroom unit.

Trump told the Union-Tribune in a 2006 interview that the Trump organization would be a “significant” equity investor; yet he never put his own money into the project, according to the developer. Rather, Trump, who stars in his own television show, “The Celebrity Apprentice,” allowed the developers to use his name on the project through a license agreement.

That arrangement was terminated last month.

“The developer did not comply with certain terms of the license agreement, including the deadlines to obtain construction financing and begin construction,” Trump's executive assistant, Rhona Graff, said in an e-mail.

A billboard with Trump's photograph still loomed over the site one afternoon last week, abandoned save for a security guard at the entrance. Trump's erstwhile partner in the project, Los Angeles-based Irongate, did not return telephone calls.

The numbers for sales agents, attorneys, public relations firms and the escrow company listed on legal documents either did not work or went into voice mail. The project's Web site was recently removed.

A Mexican company, PB Impulsores, is listed as the developer on legal documents. Jorge Torres, named on one document as the company's representative, said last week in a telephone interview from Mexico City that he was not at liberty to talk about the project.

An e-mail sent out by PB Impulsores to purchasers Jan. 28 said that given Trump's termination of the license and pending litigation, “the developer will provide no further comment concerning the project.”

The purchasers' predicament highlights the common practice of using deposits from pre-construction sales to finance development of many Baja California coastal projects.

“We always recommend that buyers read the documentation,” said Ross Buck, president of a the Rosarito Beach branch of AMPI, a national real estate agents group. “It will clearly state how the funds are to be used, if they are able to be used.”

Under California law, builders must keep deposits in escrow or post bonds to protect the funds, said Chris Neri, assistant commissioner of the California Department of Real Estate. Neri added that “a good percentage of builders hold the money in escrow.”

Baja California law allows deposits to be used to finance projects, but only if a series of conditions are met, said Rafael Gama Pérez, a Tijuana attorney who frequently represents U.S. citizens buying coastal property in Baja California. In cases where a builder is determined to have broken the contract, investors are entitled to the return of their deposit plus interest, he said.

“The issue is whether the defendant has the resources to guarantee repayment,” Gama said.

With the heady Baja boom days over, some experts see an end to such financing arrangements for unbuilt projects.

“The market can now settle down to the real world of brick and mortar, finished properties for people who really want to live there, as opposed to speculators,” said Brian Flock, a longtime real estate agent in the region. “The people that I'm talking to these days have some connection to Baja.”

Gama, the Tijuana attorney, believes there will be room for a range of projects, including luxury developments and retirement communities.

“The opportunities will be there, as will the people to take advantage of them,” he said. And with the days of easy credit now over, “the buyers are going to be more solid.”

Taco de Baja - 2-11-2009 at 08:04 AM

Quote:

“I bought this development for one reason, and one reason only – the Trump name,” said Gregory Starn, 47, a U.S. citizen living in Cancun, Mexico....

Sadly, the Trump name should have been a reason for this guy to run the other way. It's Just like the Nigerian scams.

Wall Steet Journal -June Flectcher

Bronco - 2-11-2009 at 08:50 AM

This was a quote in an article by the Wall Street Journal touting the "Baja Boom". Imagine this poor guy-

Earlier this year, Geoff Folsom, a Thousand Oaks, Calif., businessman, bought a 4,500-square-foot oceanfront penthouse, with its own private swimming pool, in Trump's Ocean Resort in Playas de Tijuana, Mexico, a 30-minute drive from San Diego, Calif. He paid $3 million for the property, about half the cost of similar resort units he looked at in the States. Property taxes and maintenance costs are lower than in the U.S., too.

Really interesting is on the first day of sales both of Trump's kids were shown buying their own units. Bet they got their deposits returned.

surfer jim - 2-11-2009 at 09:01 AM

Trump......you're FIRED! :bounce:

CaboRon - 2-11-2009 at 09:24 AM

Are we suprised ?

NO :lol:

Why are prople so eager to throw their money away on these preconstruction deposits :?:

CaboRon

sd - 2-11-2009 at 09:27 AM

It amazes me how so many can put up very large deposits that are released to a "developer" before ground is broken.

Trump is not alone in this real estate price decline. Developers can not get money to start projects, and many projects are stalled/stopped as banks are not loaning money needed to complete the projects.

Buying a property based on the Trump name is foolish. Buy what you can afford, do not agree to release ANY money prior to closing, and consult with professionals. That may be a Realtor, Attorney, Accountant, Notory, or combination of all. Obtain council from professionals not involved in your transaction, and choose these professionals based on referrals of your choosing.

I feel badly for those who have lost money. My guess is you will never receive your "deposit" returned.

Buyer beware. Educate yourself. Get impartial advice!

Terry28 - 2-11-2009 at 09:43 AM

$32million in deposits "spent" on what????..follow the money....

[Edited on 2-11-2009 by Terry28]

DianaT - 2-11-2009 at 09:56 AM

I really feel for the people who made good faith deposits because of the name Trump. I really hope they can get their money back.

However, when they were doing the pre-sale in San Diego and kept advertising that Rosarito was only 30 minutes from downtown San Diego, etc., I wondered how many of the people who made deposits had ever been to Rosarito.

Diane

Woooosh - 2-11-2009 at 11:05 AM

Quote:

Originally posted by CaboRon
Are we suprised ?

NO :lol:

Why are prople so eager to throw their money away on these preconstruction deposits :?:

CaboRon

I don't think people still understand the consequences of putting down huge deposits with no construction "completion bonds" in place. And how did these people spend $32 million without ever breaking ground?

Woooosh - 2-11-2009 at 11:26 AM

I still can't feel bad for the victims. The site is toxic and just yards away from the TJ sewage treatment ponds. What were they thinking? Like another poster siad- they probably never looked at it- just trusted the Trump brand.

Bajahowodd - 2-11-2009 at 11:47 AM

That whole idea of people feeling confident because Trump's name is associated with something just blows my mind. It was Trump's father who amassed a fortune. The Donald inherited the fortune by accident of birth. He has gone through so many bankruptcies over the years. I sincerely doubt this guy could ever have become a self-made millionaire. And shame on the media for creating such an unearned image for this narcissitic hoar.

mtgoat666 - 2-11-2009 at 11:58 AM

People bought in early expecting to make a buck. This is just another lesson that you shouldn't get too greedy and abandon common sense and invest in a nebulous project. Better to wait until project construction starts and project has posted performance and payment bonds.

Has anyone ever seen a condo project in Mex post bonds? I've seen a lot of half-built abandoned high rises that obviously did not have bonding :?:

fernando - 2-11-2009 at 07:44 PM

I did some work on the property related to an artificial beach study and they still owe me money...very unfortunate. The internal meetings seamed very profesional though.

Fernando

CaboRon - 2-12-2009 at 07:54 AM

Quote:

Originally posted by mtgoat666
People bought in early expecting to make a buck. This is just another lesson that you shouldn't get too greedy and abandon common sense and invest in a nebulous project. Better to wait until project construction starts and project has posted performance and payment bonds.

Has anyone ever seen a condo project in Mex post bonds? I've seen a lot of half-built abandoned high rises that obviously did not have bonding :?:

Correct me if I am wrong, but I don't believe performance bonds are common practice here.

CaboRon

k-rico - 2-12-2009 at 08:13 AM

Quote:

Originally posted by Woooosh
I still can't feel bad for the victims. The site is toxic and just yards away from the TJ sewage treatment ponds. What were they thinking? Like another poster siad- they probably never looked at it- just trusted the Trump brand.

That's true. Several months ago I drove through the ocean front Punta Bandera community just to the south I believe. Nice houses of all kinds lumped together. BUT there was a very noticable stink in the air. That's where the barely treated TJ sewer water, because the Punta Bandera facility is overburdened, flows into the ocean.

30 million gallons per day, onto the beach, into the ocean.

Improvements are being made though.

San Diego Union

From an infrastructure point of view, which is an important one, it's good that development has stopped. A silver lining perhaps.

[Edited on 2-12-2009 by k-rico]

Woooosh - 2-12-2009 at 12:18 PM

Quote:

Originally posted by Bajahowodd
That whole idea of people feeling confident because Trump's name is associated with something just blows my mind. It was Trump's father who amassed a fortune. The Donald inherited the fortune by accident of birth. He has gone through so many bankruptcies over the years. I sincerely doubt this guy could ever have become a self-made millionaire. And shame on the media for creating such an unearned image for this narcissitic hoar.

Reminds me of my favorite quote about George W bush: "Here's a man who was born on third base and thinks he hit a triple."

Bajahowodd - 2-12-2009 at 12:21 PM

I like it! :biggrin:

DianaT - 2-12-2009 at 12:50 PM

Quote:

Originally posted by Woooosh

Reminds me of my favorite quote about George W bush: "Here's a man who was born on third base and thinks he hit a triple."

I just remembered that I think that quote was originally for George HW Bush, but it fits both.

[Edited on 2-12-2009 by jdtrotter]

woody with a view - 2-12-2009 at 05:43 PM

so what did the "sr. combover" glean from this fiasco. i'll bet the contract stated something like his take was 15% yearly on new deposits in perpetuity.

i gotta believe he wanted more than to see his own scowling, ugly face looming over a sewage outfall in a third world country.

elgatoloco - 2-12-2009 at 07:08 PM

I remember when they had the big pre-construction sale for Trump Baja here in SD. They had a short segment on the evening news showing interviews with a few purchasers. Mostly real estate agents who had bought two and three units and were gushing about Trump and ocean front and I kept wondering if any of them had ever been to the site and stood on the bluff and had the oppurtunity to take a deep breath and a close look at what is running into the water around there. It seemed that people were star struck with the donald and ivanka's midas (not) touch. Just now I did a web search and there are a few blogs filled with folks looking for legal recourse. It was obvious that a few of them had never been to Baja at all much less Punta Bañda. Wish them all luck.

Woooosh - 2-12-2009 at 07:12 PM

Quote:

Originally posted by elgatoloco
I remember when they had the big pre-construction sale for Trump Baja here in SD. They had a short segment on the evening news showing interviews with a few purchasers. Mostly real estate agents who had bought two and three units and were gushing about Trump and ocean front and I kept wondering if any of them had ever been to the site and stood on the bluff and had the oppurtunity to take a deep breath and a close look at what is running into the water around there. It seemed that people were star struck with the donald and ivanka's midas (not) touch. Just now I did a web search and there are a few blogs filled with folks looking for legal recourse. It was obvious that a few of them had never been to Baja at all much less Punta Bañda. Wish them all luck.

Not only that, it sold out in one day and set a one day real estate sales record for all of Mexico. More money than brains, I guess.

ElFaro - 2-12-2009 at 10:57 PM

Can someone explain to me how the development out on Pta. Banda with Tiger Wood's name on it end up any different than the Trump development given the current Real Estate downturn ???

elgatoloco - 2-12-2009 at 11:32 PM

Quote:

Originally posted by ElFaro
Can someone explain to me how the development out on Pta. Banda with Tiger Wood's name on it end up any different than the Trump development given the current Real Estate downturn ???

The PB deal is already fully financed and being spearheaded by reputable folks and being marketed to people who are not concerned with the current downturn and want the prestige of having a TW venue in their leisure portfolio. The Trump deal not so much. It was a pipe dream - sewer pipe that is. :rolleyes:

Stickers - 2-13-2009 at 12:17 AM

Quote:

And how did these people spend $32 million without ever breaking ground?

I'll bet Trump got ten million for 'lending' his name and all the others involved took their bonus too. It's profitable isn't it?
So let the chase begin and the lawyers will get richer. :fire:

Bajahowodd - 2-13-2009 at 12:56 AM

No crocodile tears for the Donald......

wilderone - 2-13-2009 at 10:54 AM

"Can someone explain to me how the development out on Pta. Banda with Tiger Wood's name on it end up any different than the Trump development given the current Real Estate downturn ???"

1. If you read the Entrepreneur article, it is clear that some of the buyers - if not all of them - including the developers - are utterly star-struck with Tiger Woods. They are "on board" because they are ASSUMING that because Tiger is involved, then the project will be a success.

2. The article clearly states that Tiger gets paid TO DESIGN a golf course, no matter what. So there is absolutely no assurance that $3 million homes will be built, the golf course will be built, that the entire project as planned - with club houses, guest cottages, etc. will be built and maintained.

3. Yes, there's some money to be thrown into it, including large deposits, but as the article states, Tiger is getting paid a very large portion of the working capital up front - before anything is built.

4. The buyers don't know anything about Baja CA. One of the developers made his money in the communications industry. He was brought into this project because he golfs and has money; The other developer was involved with Horseshoe Bay in Texas - nice homes, private golf course resorts - but no Mexico experience. But it will take Mexican contractors who will be willing to live in the area, as well as hundreds of skilled Mexican construction workers - at least a year and a half - to build the homes and other buildings, all the while spending, spending, spending.

5. The logistics of acquiring all the materials for those huge homes, in the quantities that they need, will definitely present a problem - delays at the very least.

6. The area is environmentally sensitive and the ongoing opposition and the developer's hype will dictate that the project include environmentally friendly elements - which will increase building costs. How much capital are these willing to throw at it, before they see any return on their money? Punta Brava is no different than Loreto Bay in this respect.

7. It just doesn't make sense. There will be 44 residences, plus guest houses. Why do they need a guest house when they've already purchased a huge mansion? How many freakin guests does each buyer have? Are these buyers spending corporate money? I just can't see that these residences are going to be used very much, if - as reported - a buyer is from Dubai or Florida. There will only be a few residences occupied at once? They're going to maintain the property and all the amenities for maybe 100 people? The buyers are going to pay for their homes, their guest cottage, the clubhouse fees, the green fees, etc. year after year after year? If they're buying on speculation, I hope they know they'll NEVER SELL that home to anyone - they're stuck with it. I will bet that Tiger says he will have a home there simply because it's part of the sales plan and his duty to hype the project. You can't possibly believe that Tiger will be spending much time there, given he has two small children and quite a full calendar I'm sure. If buyers think that they're going to helicopter in and say howdy to their neighbor, Tiger, and play a round with him, they've got their heads up their __.

8. From what I've learned about the developers, they don't seem to have a handle on what it will take to make this a reality. One guy says the Punta Brava site is a once in a lifetime site. WTF? Only shows you how much he knows about Baja CA. And he picks this site with no beach, and crashing waves, and Pacific Ocean fog, etc. - and thinks this is just IT. And then says that there's recreation for everyone in the family - surfing, kayaking and fishing. Like these buyers are going to actually do that or encourage their teenagers (?) yeah, right - to do this. Just doesn't add up.

I hope Tiger thinks twice about what he's doing and comes to the right conclusion - that the project is wrong for this site - and backs away. The golf course design business is relatively new to him - and it takes more than a superstar's enthusiasm to get $3 million homes built.

Woooosh - 2-13-2009 at 11:33 AM

Tiger's done thinking, he got his consulting fees and that deal is done. They'll get halfway through contruction and then the economic reality will set in. It will sit idle for adecade like every other project in the world right now. Not even the arabs in Dubai are finsihing their "plam tree island homes". No one is immune from the economic collapse happening worldwide- these guys just don't know it yet. They will very soon as more banks failand hedge funds rollover and die. No one legit keeps that much money in cash and there is no place safe to keep anything over the $100K FDIC insured limit. JMHO.

Bajahowodd - 2-13-2009 at 01:14 PM

Woosh- a small glimmer is the fact that FDIC now insures accounts to $250,000. So you can consolidate your accounts now.

Woooosh - 2-13-2009 at 01:35 PM

Quote:

Originally posted by Bajahowodd
Woosh- a small glimmer is the fact that FDIC now insures accounts to $250,000. So you can consolidate your accounts now.

Thanks, you are of course correct. That's a problem I don't have to worry about.

Bajahowodd - 2-13-2009 at 05:09 PM

Sadly, me neither.

fishbuck - 2-13-2009 at 05:34 PM

Sooo boring!

Bajahowodd - 2-14-2009 at 12:39 AM

Fishbuck is becoming a troll. :!:

fishbuck - 2-14-2009 at 01:53 AM

No, it was boring.

Quote:

Originally posted by Bajahowodd
Fishbuck is becoming a troll. :!:

CaboRon - 2-14-2009 at 05:50 AM

Quote:

Originally posted by Bajahowodd
Fishbuck is becoming a troll. :!:

You just figured that out :lol:

What took you so long :lol:

CaboRon

Bajafun777 - 2-14-2009 at 06:36 AM

I met several people at the bar inside Rosarito Hotel Bar and they had been drinking, golfing up the road, and buying like some say two and three of these units. I asked them why they would put up that kind of money without see a completed condo and they said that is not the way you make money on investments got to get in on the ground floor. I told them I realized that but where was the ground floor at the Trump Towers and they just laughed and kept drinking. They were having a great time and some it was probably not their first visit to Baja but all of their other trips were staying at really nice places and golfing along with deep sea fishing. This is the "dream sell" that was used to draw them in but Trump's name was the deal sealer so Trump should have to answer for some of these peoples monies. These people just wanted the fun life or as we know it "La Vida Loca" ahhhhhhhhhhh, the feel of good times and happy times with friends just ran them into something in Mexico I would never do. If I can not feel it, see it, use it right then, enjoy its fun right now, then I am not spending a dime of my money on it. I told them that they would have been better off spending money buying a condo time share at Rosarito Beach Hotel and Condos. I bought two here with the first one almost 23 years ago and have never had an issue. Mr. Torres I see ever morning I am having coffee downstairs in the Lobby at around 7am. He comes in every day checking on his hotel and freely talks with guests if approached. Tough businessman you bet but I have never met any businessmen with money that were not tough and looking for the next dime. Yes, I do and have stayed at lesser cost places but this one 23 years ago for a two bedroom cost me about $8,000 dollars and with the beach view and services right there it was money well spent. I was paying over a $1,000 dollars a week in Mission Bay back then because I had all of the In-laws coming up to stay during our vacation also. No, problem in Mexico for some still came over but some won't cross the border but all had fun day and night, yes I actually like my In-Laws. Moral to the story for me is know the builder and project supervisors to carry out a deal but if you cannot see it and walk into it do not buy it!! Attorneys on either side are there for one reason to get into everybody's pocket, so do not get involved in something that will allow them to even get close to putting their slimmy hands into your pockets, right??? I personally have a 5th wheel trailer with 3 slide outs to place somewhere in Baja or maybe even Mainland that I will call my place in the sun. Once I take it down I probably will never bring it out and still will have more than gotten my monies worth out of it. I am not greedy just want to feed the needy starting with me and mine with fun times to take up whatever time I will have left on this earth. Like others I feel bad for those that were caught up in the moment of fun times and fast talk that screwed them out of monies they will never see again. Even those that had a lot of money to buy more than one unit they did not deserve to have this money stolen from them. "No Hurry No Worry Just Fun" is what we all are looking for even though our current times make it really tough. We can all pop a cold one to that thought. Later---- bajafun777

Woooosh - 2-14-2009 at 01:19 PM

Quote:

Originally posted by Bajahowodd
No crocodile tears for the Donald......

He just fired himself from his casino business along with daughter Ivanka. She was the sales pitchperson for Trump Baja and claimed she bought a penthouse. Where will these two get their money from without casinos and real estate scams. Oh yeah- a new golf course in Ireland or something...

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8VJ...

[Edited on 2-14-2009 by Woooosh]

Bajahowodd - 2-14-2009 at 04:00 PM

It'll only be the third time Trump's Casino business has file for bankruptcy. He manages to fleece his investors, and lands on his feet. I always thought anyone investing in Atlantic City casinos had a screw loose anyway. They attract the low rollers. Heavy on busloads of old folks from NYC. As for Trump Baja, if he is to be believed, he only received a licensing fee for his name. Ivanka probably paid to read a script. NBC pays the guy too much to put out a stupid show. We are a society that is celebrity obsessed, and as long as we are, there will be the Donald.

Class Action Suit for Trump

Bronco - 2-15-2009 at 08:00 AM

Dear Trump Baja Buyers:

For those interested, below is the contact information for an attorney representing 60+ buyers in a Class Action Suit.

Daniel J. King
Law Offices of Daniel J. King
The Trillium Building
6320 Canoga Avenue, Suite 675
Woodland Hills, California 91367
818-587-9299
Worldwide Fax Toll Free 866-260-2160
Alternate Fax 818- 587-9292

The Gull - 2-15-2009 at 08:41 AM

Did some hear an ambulance siren?

more news

desertcpl - 2-17-2009 at 04:53 PM

http://www.vancouversun.com/business/Ocean+luxury+condo+inve...

Bajahowodd - 2-17-2009 at 05:01 PM

Two observations:
The Trump bankruptcy filing today. The Donald has the cajones to not only say that he wasn't involved with the management (despite a 28% ownership and being the chairman of the board), but he claims that the net worth of his holding in the casino business were miniscule as compared to his total net worth.

Second, the ambulance chaser, as the gull mentions- what court is he going to file in? Far as I know, the developer of Trump Baja is a Mexican Corp. So, if they file North of the border, it's probably only going to be expenses charged to the same victims, with no recovery. What a deal!

[Edited on 2-18-2009 by Bajahowodd]