Arrow Point Plans Go Astray

FOR THE RECORD: 2-2-2000 Name misspelled: Gail Chamberlin’s name was misspelled in an article in Sunday’s newspaper about the Arrow Point Resort. FOR THE RECORD: 2-4-2000 Story wrong: Lake Country Investments, a company owned by Arrow Point Development Co. and its Canadian partner, Agincourt, has filed for Chapter 11 bankruptcy protection from creditors. The bankruptcy effects only undeveloped land, not Arrow Point’s other interests. A story in Sunday’s paper implied otherwise.

Bud McDonald bought one of the first pricey condominiums at Arrow Point Resort on the promises of future walking trails, tennis courts and a marina.

But those amenities never came.

Now, five years later, the Hayden Lake retiree says he is trying to get out.

“We are just sitting on the fence, waiting to see what happens like everybody else,” he said. “All the owners are concerned about it. We want to know what is going on. It’s hard to find out.”

The Stewart family’s Arrow Point Resort plan is collapsing under a war of accusations, a lawsuit between partners, unpaid taxes and bankruptcy.

“It’s extremely frustrating,” said developer Roger Stewart, adding that his attorney advised him not to talk. “We formed a partnership with somebody we thought we could trust. It’s turned into more of a battle.

“It’s certainly nothing my family wanted to be a part of.”

That family followed Paul Stewart to North Idaho from Southern California in 1979. Wife, Carrie Stewart, sons Roger and David, and daughter Gail Chamberlain are all part of the Stewart Construction Co. that thrived building custom homes.

Then the family turned its attention to developing 114 acres at Arrow Point, a beautiful peninsula jutting into Lake Coeur d’Alene.

The family dreamed of condominiums, a golf course and a marina that would become a smaller version of The Coeur d’Alene Resort.

Roger Stewart, president of the Arrow Point Development Co., raced forward with the construction of 100 condominiums in 1994.

Also that year, Stewart purchased the Arrow Point Bar and Grill, which had earned a reputation as a party spot among boaters.

A year later, the Stewarts were approached with the idea of combining some adjacent properties to build a golf course as part of the resort.

A business acquaintance put the Stewarts in touch with Vancouver, British Columbia, businessman Edward Fu about becoming a partner in the project.

In 1996, a Canadian company, Agincourt, was formed. It included Fu and a couple of other investors who agreed to be one-half owners with the Stewarts on the golf course development.

Then in January 1997, problems with the restaurant went public. The family’s effort then slowly began to unravel, bogged down by petty disputes and legal wrangling.

Restaurant owner Tom Robb sued Arrow Point Development, claiming the company had not paid him for the bar and grill.

Stewart then countersued and shut off the restaurant’s water and sewer.

A seasonal business, the bar and grill normally opens each year in April or May. But in 1997, with no water, it didn’t open until June 13.

Stewart also installed a chain-link fence to deny boaters access to the restaurant.

Robb would not comment about the dispute, but it was settled when Stewart reconfigured the resort’s 82-slip marina to allow better access to the restaurant.

However, that move raised concerns from neighbor Pat Stroud, who said the current marina layout is not safe.

“It’s impossible to work with the Stewarts,” said Stroud, who owns waterfront land next to the resort. “They refused to work with me to come up with a compromise.”

Stroud’s complaints were upheld in December and the marina license was revoked. A final ruling is pending by the director of the state Department of Lands.

Last March, Agincourt and Arrowpoint entered Chapter 11 bankruptcy.

A bankruptcy judge appointed Spokane attorney Joe Esposito to make the decisions on how to proceed with vacant land that was planned for a 56-unit lodge and the golf course.

“There is definitely a conflict between these two entities,” Esposito said of the Stewart family and the Canadian investors. “They are definitely deadlocked.”

Esposito said the golf course and lodge won’t be built anytime soon.

“There’s no way I can figure out to make it go forward because I don’t have the funds to do it,” he said. “I couldn’t borrow enough money to take the project forward.”

“Therefore, we need to liquidate it,” he said.

The undeveloped land is now for sale. If it isn’t sold by early May, Esposito will put it up for auction.

“I believe the highest and best use is for a golf course with residential lots,” he said. “But whoever buys that for a golf course has a lot of work to do.”

While the bankruptcy plan works out, the Canadian investors filed a lawsuit Jan. 12 against the Stewarts.

Agincourt is seeking damages from the Stewarts for alleged fraud and negligent representation, among other things.

In a 19-page lawsuit, the attorneys for Agincourt claim the Stewarts misled Agincourt about how many condominiums had been sold and falsely based property values on future profits.

“… The Stewarts also represented, orally and in writing, that they had $18 million to $20 million in assets and the financial resources to carry on their business without having to rely upon income from the project,” the lawsuit states. “In fact, the Stewarts’ assets were nowhere near the represented value or liquidity.”

When measured against pending bills and “realistic” values, “the Stewarts had little or no equity of their own or in the resort properties,” the lawsuit claimed.

Canadian partners Fu, Bob Malcolm and their attorneys did not return phone calls.

“All these people would have to do is sit down and negotiate with us in good faith and we feel this could be resolved,” Stewart said. However, he would not comment about claims made in the lawsuit.

He also concedes that the golf course and lodge projects won’t happen.

“It’s no longer part of my plans,” Stewart said. “I just want to maintain my condominium development and have a more peaceful existence.”

That peace won’t come soon unless Stewart answers calls by the Kootenai County treasurer’s office to pay his taxes.

Tom Malzahn, chief deputy treasurer, said Arrow Point Development Co. has not paid taxes on 43 parcels - mostly unsold condominiums - since 1996.

Unless Stewart comes up with about $175,000 - which does not include unpaid taxes for 1997, 1998 and 1999 - by April 4, the county could take over the deeds and auction the properties to pay off the debt.

Stewart said it’s common for developers to run behind on paying taxes, “for cash flow purposes.”

“Our lenders are aware of it and they are making arrangements to take care it,” Stewart said. “There was a big tax payment made last year, as well.”

Stewart said the golf course idea came from the Canadian investors. But he also said the proposed golf course was used for a time as a marketing tool to sell condominiums.

“But when it went sour, those marketing materials were pulled,” Stewart said.

Back in October 1996, Stewart said 70 condominiums were sold. They were priced at $195,000 to $325,000 depending on size and location.

This week, Stewart said 55 are sold. The prices now range from $175,000 to $230,000.

Problems with partners, Stewart said, have taken its toll on condominium sales.

“We were doing pretty good until these people filed suit and things just kind of slowed down,” Stewart said.

In the year the McDonalds’ condominium has been on the market, virtually no buyers have shown strong interest.

“We’d like to see these problems resolved,” McDonald said. “It’s really too bad. That’s the best location on the whole lake for a project like that.”

Condominium owner Dick Fahrenwald, a former car dealer in Moscow, said in a phone interview from his Hawaii home that he also has his place for sale.

“I’ve been happy with the project,” Fahrenwald said. “But I am getting older and we don’t need to spend summers there anymore.”

Fahrenwald doesn’t know why the resort didn’t sell better.

“I feel badly for the Stewarts. I don’t know what mistakes they made in making deals with these other people,” he said. “I am in no position to judge them.

“When people start filing lawsuits, everybody starts losing.”

Tom Clouse can be reached at (208) 765-7130 or by e-mail at tomc@spokesman.com.