A new partnership is formed
Editor’s note: In keeping with a tradition that began with Dick Hauserman’s “Inventors of Vail” and continued with Pete Seibert’s “Vail: Triumph of a Dream,” the editors of the Vail Daily are serializing Bill Clinkenbeard’s “Cordillera, From the Ground Up,” in weekly installments each Sunday. Bill can be reached at 748-0971 or via e-mail, billclink@comcast..net.
On that Sunday evening when Les Shapiro, Felix Posen and I agreed to form a new partnership to develop the Squaw Creek Recreational property, we also agreed that the original plans would be substantially changed.
We visualized a much larger mountain resort with a lot more than just cross-country skiing. We talked about having a mountain spa and several outdoor amenities, perhaps even an equestrian center and polo.
At this early stage, we had only a few general ideas in mind, nothing really specific. We knew that a major effort would have to be made with the goal of getting a master plan developed and approved. This would require considerable new human and monetary resources.
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There were already several outstanding debts, including payments currently due on the land parcels. None of us could have foreseen just how much and how fast debt was to be incurred. This turned out to be the source of much friction within the partnership, which will come as no surprise to most developers.
It was agreed that Les’s company, Shap Corp, would be the managing partner. Felix’s company, JLP Realty, was to loan the necessary funds to the new partnership.
I had no specific duties outlined at that time. My shareholding was a result of my putting the deal together. However, I volunteered to help with PR and marketing. My plan was to continue to run my consulting business from Miami and spend some time, in both Miami and Colorado, working on PR and marketing for the new venture.
Little did I realize how soon that would change. The short-term plan was to close on the land parcels and get work started on a master plan and county approvals.
The next day Felix and I departed, me to my home in Miami and Felix back to England. During the month of March, via telephone and fax, a three-phase investment plan was set and cost estimates made. Felix had his attorneys draw up a general partnership agreement, which was executed in April 1986.
The partnership was named Kensington Land Investment Partners. Kensington was the name of the area in London where Posens had a townhouse. The acronym of the partnership had an unfortunate connotation, KLIP, and it was later changed to just Kensington Partners, or KP, which reminded me of my army days.
The stated purpose of the partnership was simply “to purchase, own, hold for investment, sell, finance or deal with in any manner, real estate located in the Squaw Creek Recreational planned unit development.” We hadn’t yet selected a new name for the project, so the original one was still in use when the new partnership was drawn up.
Since Shap Corp, a sole proprietorship, was the managing partner in practice it was Les Shapiro who was the manager. Les had contributed his Chaveno property and some water rights to the partnership.
The majority of clauses in the agreement were boilerplate material dealing with daily management, major decisions, allocation of income and losses, distributions, meeting notices and so on.
The more important part of the Agreement was the “Kensington Investment Plan.” The investment plan spelled out how the monies that Felix was to loan to the partnership were to be spent. It also described how the outstanding commitments from the Squaw Creek Recreational project were to be met and what monies were to be spent on planning for and obtaining final zoning approvals.
The investment plan was to be carried out in three phases in chronological order.
The first phase called for closing on the Bohlin and Williamson land parcels and for purchasing Jerry Rea’s interests. All this was to be done during the week of April 28, 1986.
The second phase covered preliminary infrastructure construction and was to take place during the fourteen months after closing on the property.
Also, the second investment phase included a water augmentation plan, which is a condition precedent to zoning approval. This was to be filed no later than the end of 1986. Two Denver groups were hired for this work – Harvey Curtis, a water attorney, and Bishop Brogden Associates, water consultants.
Phase two of the investment plan also called for completion of the road design – which was already underway – and finalizing plans for both on-site and off-site improvements specified in the design.
Phase three assumed that the sketch plan application for the Squaw Creek Recreational Planned Unit Development, filed in late 1983, would be approved by June 30, 1987.
The investments in this phase were for the planning, engineering and architectural fees required to obtain the approvals. Actual approval was two months later than planned, in August 1987.
That was not bad considering that public hearings were required and there was mounting opposition to development in Eagle County.
The final clause in the general partnership agreement directed that Shap Corp, the managing partner, keep the other partners fully informed on all matters that pertained to the three-phase investment plan. It also recognized that Shap Corp had other business interests and was free to pursue them.