People who are planning to move into The Ranch, a retirement community under construction on 55 acres in northern Stillwater, received a shock last week when they received a letter from The Ranch’s Executive Director informing them construction on the $82 million project had been suspended until further notice.
The letter said creditors holding bonds being used to finance construction of the complex are withholding funds and have declared The Ranch to be in default on the bonds. As a result, construction was being suspended until the issue is resolved.
“The Ranch’s legal counsel is preparing documents to protest this action in the strongest terms possible to the Trustees and the bondholders,” Executive Director Mark Gray wrote to depositors who have made down payments on entry fees.
Board Chairman for The Ranch Ron Beer said the board and The Ranch’s legal counsel believe using the term “default” is a false representation by the bondholders’ when The Ranch hasn’t missed any payments to its creditors.
The bondholders’ concerns are based on a proposed price restructuring for The Ranch that means it would take longer to pay them back, he said.
Beer says the bondholders are basing their action on speculation that The Ranch’s revenues up to five years in the future won’t be enough to make bond payments if entry fees for moving in are lowered.
Because the investors are withholding payment on the construction bond, general contractor the Weitz company hasn’t been paid for at least one month and can’t pay its sub-contractors.
Some of them have completed their work on the project and are waiting for final payment.
Beer praised Weitz for its work to date and said the company is willing to come back when the situation has been resolved. At that point, any subcontractors that want to and are able to return will be invited back or new sub-contractors will be brought in.
Both Gray and Beer said they don’t know exactly when that will happen, but they hope to have a decision as soon as the end of January.
The bond trustees ordered appraisals on the property and are completing their own study before making a decision about approving the new plan.
In the meantime, Beer says he wants to assure depositors that their money safely held in an escrow account at BancFirst and can be returned any time they request it.
He also wants people to know the board of directors and their legal counsel are working hard to solve the differences and get the project back on track.
He estimates the cottages and main buildings are 80-85 percent complete and would have been done by early spring if the project hadn’t been delayed.
It now looks like it could be 6-9 months before people are able to move in, he said.
Depositor Cynthia Shawley said she and her husband Richard, who are selling their home in preparation for moving to The Ranch, are still looking forward to it.
“Stillwater really needs The Ranch,” she said. “When it opens we will move.”