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Author: Subject: Trump pulls name out of Baja development
bajabound2005
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[*] posted on 2-11-2009 at 07:56 AM
Trump pulls name out of Baja development


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.”




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[*] posted on 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.




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[*] posted on 2-11-2009 at 08:50 AM
Wall Steet Journal -June Flectcher


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.
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[*] posted on 2-11-2009 at 09:01 AM


Trump......you're FIRED!:bounce:
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[*] posted on 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




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[*] posted on 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!
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[*] posted on 2-11-2009 at 09:43 AM


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

[Edited on 2-11-2009 by Terry28]




Mexico!! Where two can live as cheaply as one.....but it costs twice as much.....
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[*] posted on 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




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[*] posted on 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?




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[*] posted on 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.



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[*] posted on 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.
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[*] posted on 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 :?:
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[*] posted on 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.

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[*] posted on 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.

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[*] posted on 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]
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[*] posted on 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."




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[*] posted on 2-12-2009 at 12:21 PM


I like it!:biggrin:
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[*] posted on 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."


:lol::lol::lol::lol::lol::lol::lol:

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]




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[*] posted on 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.




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[*] posted on 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.



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