by Terri Likens Staff Writer
Sedona Red Rock News
11-May-01
A year after Sunterra Inc. filed for reorganization under Chapter 11 bankruptcy law, representatives for the timeshare
giant came to the city council looking for a break.
Sunterra got that break — worth nearly a quarter of a million dollars — in a deal that two councilmen contested,
one of them vehemently.
The city could have collected the $240,000 under a 1998 development agreement that required Sunterra to have completed
30 mid-income, multi-family rental units by May 28.
The deal was part of the arrangement Sunterra made with the city to build its Summit Resort on the west end of
town. The rental units were not to be timeshares; they were to add needed mid-price units to the city’s housing
mix. The city did not specify what mid-price is.
By failing to fulfill the obligation, Sunterra would have owed $240,000 to the city. However, with Sunterra in
the middle of bankruptcy proceedings, city officials weren’t sure they could collect.
By a 5-2 vote, the city council instead decided to extend the construction period for Sunterra to fulfill its obligation.
The new agreement sets the completion date at Nov. 28, 2004.
Mayor Alan Everett justified the extension at Tuesday’s meeting.
“Sunterra is probably the largest employer in the city of Sedona,” Everett said. “They are one of our corporate
partners.”
“We’re not letting them out of anything, we’re just giving them a little more time,” he said.
Councilmen Paul Tutnick and Steve Nahmanson both voted against the move.
Nahmanson was indignant at Sunterra’s request, noting the company had not made any effort to get find a builder
for 18 units of the project until early this year.
“Why has it taken them until January 2001 to try to fulfill their obligations?” he said.
“I still don’t see what the quid pro quo is for the city,” Nahmanson said and proceeded to rail on some common
complaints about Sunterra’s timeshare sales tactics.
“Maybe we could ask Sunterra to change all the names on their ‘visitor information booths’ to ‘timeshare sales
centers,’” Nahmanson said, as two Sunterra representatives gulped nervously at the podium facing the city council.
“That they don’t get accosted by your salespeople — maybe that’s a quid pro quo,” he said.
“Maybe get your sales people to sell them ethically — maybe that’s your quid pro quo,” Nahmanson railed.
“We want to do the right thing,” said Todd Pokrywa, a Sunterra representative from the corporate office in Orlando,
Fla. “It’s our firm intent to leave Chapter 11 as soon as possible.”
“We’re not asking that the city eat $240,000, just extend the agreement,” he said.
Tutnick disputed the fairness of the extension. “I wonder if we would wave this quarter of a million dollars if
just anybody were to walk in,” he said.
“I just want to make sure that every single person that comes before this council is given the same consideration,”
Tutnick said.
“I think we treat everyone fairly, and I think each case has to be looked at to see what the problems are,” Everett
contended. “I think each case is individual.”
Sunterra filed for bankruptcy on May 31 of last year. Since then, both the president and chief economic officer
have left the company.
(c) Copyright Sedona Red Rock News. All rights reserved. To see more of The Sedona Red Rock News, or to subscribe
to the newspaper, go to http://www.redrocknews.com/