Victoria’s Bear Mountain Resort Revival

After years of controversy, Victoria’s Bear Mountain Resort is creaking back to life, though residents may be looking at mothballed construction sites for decades to come
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The Highlander isn’t the only major project at Bear Mountain Resort that ground to a halt when the cash-strapped golf resort began spiralling toward bankruptcy three years ago. But as a lingering symbol of the massive development’s troubled past, its current state and its future challenges, the half-built condominium tower dug into the scenic, rugged hills of Langford, about 30 minutes from downtown Victoria, is a picture worth 1,000 words. 


Announced by former Bear Mountain owner Len Barrie during the height of B.C.’s real estate boom five years ago, The Highlander was envisioned as a posh, 210-unit, 14-storey residential highrise overlooking the 18th fairway of the Mountain course, one of two sets of championship links the southern Vancouver Island resort has to offer. 


Today, the mothballed development consists of six storeys of weathered concrete forms and rusting rebar wrapped around the base of a 150-foot construction crane that rather inconveniently dominates the million-dollar view from the Bear Mountain Westin Hotel’s south-facing windows.

 

Over lunch in Panache, the Westin’s four-star restaurant, the resort’s CEO, Gary Cowan, vows that The Highlander will one day rise again. He also admits the time frame will be measured not in weeks or months, but years, perhaps many of them. “Ultimately, we will develop that project,” says Cowan, who was installed as Bear Mountain’s interim CEO in July 2010. “If that’s not this year or next year, it will happen in the future. It’s clearly an issue that we would like to take advantage of because there’s a lot of costs sunk into it.”


A wisp of a man with snow-white hair and businesslike demeanour, Cowan observes that the challenges facing The Highlander mirror those facing the resort as a whole: how to capture the most value out of the money that Len Barrie’s consortium spent on water and sewer services, electrical systems, roads and other infrastructure to service projects that had to be shelved when the economic downturn hit.


By the time retired NHL forward-turned-developer Barrie was ousted as president and CEO in March of last year, Bear Mountain owed more than $300 million to secured creditors, including $250 million to HSBC, the primary lender. Since the assets on the ground couldn’t be sold off to help repay investors, HSBC opted to assume control of day-to-day operations and gave Cowan the unenviable task of reviving the resort’s struggling real estate division. In November, following an eight-month court-ordered restructuring process, ownership of the resort was officially transferred to Bear Mountain Land Holdings Ltd., a wholly owned subsidiary of HSBC.


“This is the first normalized operating year for the resort and we’re pretty excited about the future of it,” says Cowan, 61. “We’ve got a tremendous amount of infrastructure already in place on the mountain and a number of sites that are fully serviced.”


A seasoned developer and real estate professional who has worked on such high-profile projects as Waterfront Centre in Coal Harbour and the Whistler Athletes Village, Cowan made it his first priority to maintain the quality of the golf courses, hotel, spa and landscaping around the central village, all prime selling points for potential home buyers. Last fall, he hired hotel industry veteran Francis Parkinson as general manager of resort operations and, despite months of cold, wet weather, the hotel and golf courses have remained profitable through the ownership transition. Nevertheless, the key to Bear Mountain’s long-term future lies not in green fees and package-tour revenues but in realizing Bear Mountain’s lucrative real estate potential – estimated at somewhere north of $2 billion over the next 15 to 20 years.


Cowan is philosophical about the resort’s recent misfortunes and insists that improved market conditions will eventually breathe new life into the massive development. “The project was always conceived as a 10- to 20-year build-out. In the height of the market you’ll see it accelerate and in the bottom of the market you’ll see it slow down,” he says. “But the vision was always that time frame and that hasn’t changed.”

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Bear Mountain Resort real estate

Even in its half-finished state, Bear Mountain gives Gary Cowan plenty of reasons to remain positive about the future. The winding road that snakes up the mountainside leads past subdivisions full of high-quality luxury homes. About 500 of them, built according to stringent design, form and character covenants line streets with posh names like Nicklaus Drive, Muirfield Place and Navigator’s Rise. (Barrie, who could not be reached for comment, lives in a 15,000-square-foot home in the mountain’s priciest enclave, Compass Point Place, a private neighbourhood separated from the rest of the world by an electronic gate set between stout columns of polished black marble.)


The resort village is anchored by the five-star Westin Bear Mountain Golf Resort and Spa with its rustic but elegant interior boasting cherry-wood paneling, granite columns and floors made of slate quarried in India. The resort includes a spa, a fitness facility available free of charge to mountain residents, a sushi restaurant and Jack’s Place, a popular bar frequented by residents of the surrounding condo complexes. 


In addition to the approximately 500 single-family homes in the resort’s subdivisions, Barrie’s company built and sold about 500 upscale condos before the crash, spread over three major projects on the mountaintop. Ponds Landing and St. Andrews Walk both sold out in record time during the economic boom. The third, Finlayson Reach, was completed just as the economic downturn hit, and at last count had nine units left for sale.


The resort’s two golf courses were completed as planned, and remain unscathed by the delays plaguing the real-estate build-out. The Jack Nicklaus-designed Mountain course and the more recent Valley course, now entering its third full season, continue to attract golfers in droves. Up to 300 rounds are played daily during peak season, although business suffered due to unseasonably poor weather this spring, operations manager Parkinson says.


Last June, as bankruptcy proceedings were in full swing, Bear Mountain received a huge publicity boost when the resort hosted the 2010 Telus World Skins Game, which drew 10,000 visitors and was broadcast live on TSN. “The event gave us tremendous exposure, nationally and internationally, and it certainly highlighted the quality of the golf experience,” Cowan says. “We can be quite proud of that, considering all the circumstances that were in place at the time.”


If there’s a brighter future ahead for the Bear Mountain resort, it can’t come too soon for residents of the subdivision just below the resort village and flanking the Mountain course’s 18th fairway. After building million-dollar homes, they now find themselves living in the shadow of The Highlander’s dormant construction crane.


When Janet Peachey and her husband Michael bought their lot on Troon Court in 2004, Len Barrie’s plans to build a highrise in the neighbourhood had yet to be revealed. Eighteen months later, the couple returned to Canada from Qatar, where Michael had been working as a civil engineer, to find work had begun on two large condo projects at the foot of Troon Court: The Highlander, and a four-storey condominium project next door called Stonehaven.


Residents of the subdivision wrote letters of protest to the City of Langford, but both projects went ahead. Fortunately, Stonehaven was completed before the crash, but the Peacheys and their neighbours have been left wondering how long the Highlander will remain a fenced-off construction zone at the end of their street.


“That crane is pretty annoying when you’re sitting up at the Westin enjoying the view,” Janet Peachey says. “I hope they finish it someday so when we’re driving down the street we don’t have to look straight at it.”


Looking at the resort as a whole, it’s hard to ignore all the lingering evidence of how quickly boom turned to bust for Barrie’s company. Not far from the Westin’s front doors, a four-storey office building that was supposed to house Bear Mountain’s real estate offices awaits completion in a gravel parking lot that was once envisioned as a landscaped town square with a bricked-in promenade called Village Way. In and around the village, there’s a long list of serviced lots earmarked for projects that have been put on hold indefinitely while Cowan and the HSBC team regroup. These include the $100-million Soaring Peaks condominium site between the Mountain course’s ninth and 17th holes. There’s also a series of empty lots along Bear Mountain Parkway, the only road in and out of the development; it winds through the village, then passes what would have been the site of a trio of condo complexes before its curbs and gutters come to an abrupt halt.


Farther down the mountain, at the end of Player’s Drive, cobwebs gather on another giant construction crane. This one rises above the preliminary foundation work laid three years ago for a $1.4-billion luxury condo project by Vancouver-based developer Robert Quigg, who purchased the lot from Barrie’s company in 2007.

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Bear Mountain’s financial misadventures

The resort’s financial woes also stalled a $25-million overpass on the Trans-Canada Highway outside Victoria, a project that was supposed to be financed by Bear Mountain Resort and a handful of other landowners in the area, based on future development revenues. Barrie was due to make a $4.8-million contribution to the overpass in the spring of 2009, but creditors came calling and the money never materialized. Locals have nicknamed it “the bridge to nowhere.” 


Planned in part to provide a second access to Bear Mountain and to reduce traffic congestion on the main route, the overpass project and its failure proved embarrassing for Langford mayor Stew Young, who had championed the deal despite strong opposition from a small but vocal group of environmental activists who disrupted council meetings and accused the municipality of ignoring due process. In February 2008, at Young’s request, RCMP officers stormed a patch of Crown forest next to the proposed site of the overpass and arrested half a dozen activists who had been tree-sitting in the area for several months, hoping to halt work on the project.


While some of the interchange’s on-ramps and an access road will be completed this summer, the road linking it to Bear Mountain won’t be built until the development regains its financial footing and construction resumes on the mountainside above the highway. “We’re hoping that somebody will come along and buy [the resort] and resurrect it, but that’s not going to happen until the economy gets stronger,” Young says. 


A vocal supporter of the resort since its drawing-board days, Young is often credited with pushing Bear Mountain through the municipal approvals process in record time and has nothing but praise for the vision Len Barrie initially brought to the project. “I don’t think anyone else could have pulled off what he did. He put everything he had into it,” Young claims. “It’s an absolute top-notch resort and it’s got world-class reviews.”


Barrie’s departure, however, remains clouded in controversy, including questions about how he financed the purchase of a 35 per cent stake in the National Hockey League’s Tampa Bay Lightning in 2008, the same year in which court documents indicate he was in default on payments to his Bear Mountain creditors. Barrie and Los Angeles television producer Oren Koules bought the Lightning for $200 million in 2008 and sold the team for less than $170 million last year. Among the unsecured creditors who lost money when the resort went under are 18 current and former professional hockey players, many of them friends of Barrie’s, who invested between $600,000 and $1 million each.


Gary Cowan, eager to distance the resort from the past, insists that Barrie’s legacy no longer has any bearing on the resort’s future. “Any discussion around other companies or any of the original investors has nothing to do with Bear Mountain today,” he says. “All of the assets are now owned by a new company.” Regardless, since HSBC faces the same problems that drove Barrie into bankruptcy, it will take more than an ownership change to move the development forward. With a quarter-billion dollars sunk into the ground, the bank’s enthusiasm for pouring money into new housing projects on the mountain is tempered by extreme caution.


Cowan, who has hired a team of real estate professionals to reassess the entire development plan, said some projects such as The Highlander and Soaring Peaks will be scaled down, while any new single-family homes will likely be smaller and more affordable. First in line for development once construction resumes at some point in 2012 are a dozen single-family lots adjacent to The Highlander. What happens after that has yet to be determined, he says.


Bear Mountain homeowners face an uncertain future. The market crash left many of them in limbo, unable to recoup their investment without taking a heavy financial hit. Prices have dropped on average between 20 and 30 per cent and there’s an oversupply of product on the market. As of mid-June, there were 43 homes in the area for sale at less than $850,000, but only 11 sales had been made this year in that price range, and there have been no sales at all above $854,000 since the first of January.


Rental units abound in the subdivisions and condo complexes, a side effect of property speculators trying to ride out the downturn. Finlayson Arm resident Jean Gibson, who rents a half-million-dollar condo for $1,600 a month, estimated about 40 per cent of the buildings’ residents are non-owners. “There are young families and retirees, but there are a lot of people from out of town, from Vancouver, Calgary, Edmonton, who only come on weekends,” Gibson says. “Some people are doing vacation rentals.”


In November 2005 Linda Granlin and her partner, Preston Randall, paid more than $500,000 for their condo in St. Andrews Walk, a 127-unit building that sold out within hours of hitting the market, part of a record-setting real estate feeding frenzy that saw Bear Mountain move $130 million worth of real estate in a single day. But their original plan to live at Bear Mountain for a few years, then sell the place and retire on the proceeds, has been put on hold by the slumping real estate prices. Their life savings are now tied up in an investment that has lost at least one-fifth of its value since 2008.


“The drop in prices really set us back and affected our ability to retire. We’re forced to live here because of that,” Granlin says. “On the other hand, it’s a really nice place to be stuck.”


For Bear Mountain investors, just like the road that winds uphill to the luxury resort’s expertly manicured championship links, there’s only one way in and one way out.