The El Dorado Ranch Story - American Greed or a miracle in the Baja desert?

The El Dorado Ranch Story - what is the resolution?

The story of an expat development in San Felipe, Baja Mexico is like watching a suspense movie where the plot doesn't progress. Viewers hope the movie ends well. But the plot is stuck on the conflict of the story. The viewer wonders what will happen next and will the conflict be resolved or not? So far the El Dorado Ranch story which is a true tale of big dreams, greed, scandal, lost hopes, and deception has no resolution.

El Dorado Ranch [EDR], a residential resort community development in San Felipe Baja is in limbo and has been since the economic downturn of 2008. The stalled development is frozen in time. The developer Pat Butler out of Colorado and his sales people and his associates out of California have blamed the economic downturn 8 years ago for the lack of any progress completing electric infrastructure to over 1500 land lots purchased for very high prices by buyers mostly from the USA to build houses. There are around 65 unfinished condominiums at this large development as well. I have written a series of LinkedIn articles about all of these EDR issues.

NOTE: There are also good discussions about these issues at the facebook group: https://www.facebook.com/groups/1668224326763585/ [San Felipe Talk]

Update for 2/20/2017 as there appears to be work started at El Dorado Ranch to complete unfinished areas that didn't get wired for electric utility service. The work is preliminary I believe, and I have no knowledge of any specific completion schedules or detail of the work contract(s) to complete promised electric infrastructure to approx. 1500 building lots sold. So specific timelines/schedules have not been officially released. Workers out there said it would take 6 to 8 months to complete the work. [4/5/2017 - As of this date, the work to complete electric infrastructure has stopped but have no details. As of May 1, 2017, the work to complete electric has not resumed and there are issues re: money/funding to pay for the work that have not been resolved.]

My current recommendation [May 11, 2017] to potential buyers of land lots at El Dorado Ranch in San Felipe, Mexico:

Buying land in Baja Mexico is tempting when visiting as a tourist. Or when invited down by a real estate sales company to view land lots to build on. There needs to be extreme due diligence and extensive homework before making a purchase. Would the purchase be an investment, speculation, or buying with the intent to build on a land lot for a retirement or vacation home? Whatever is the motivation to buy, proceed carefully. In some cases, the sales promises made by sellers operating out of the U.S. [in such states as California and/or Arizona] and arranging sales tour buses to Baja do not pan out as described in sales pitches. 

There could be title issues, developer promises that don't get fulfilled, or any number of scenarios where you lose the money you spent if the lot is not usable meaning improved as described in the sales pitch. Getting a refund if you are not happy with your land lot purchase can be extremely problematic. You do not have consumer rights per se as a buyer from the U.S. purchasing subdivided land in Mexico. The land may not have been legally subdivided in some cases.

I have done a series of articles on this subject that can be found on LinkedIn. I have some personal experience buying land lots in San Felipe, Baja at El Dorado Ranch. Please review these articles for more information.

On LinkedIn:

Legal action options re: breach of contract and/or land fraud in cross border sales

Refunds on land lot purchases in MX - a rocky road

Buying land in foreign countries

Source: https://activerain.com/blogsview/5054311/buyer-beware-buying-land-lots-in-baja-mexico [ActiveRain real estate discussion site]

Photos just below of electric installation work to building lots without electric that were never wired even though some 1500 lots were sold by El Dorado Ranch as 'electric lots'... unfortunately as mentioned above this work has stopped. [Scroll down to bottom for CONCLUSION as of May 11, 2017.

My current thoughts on the latest available information re: completion of the El Dorado Ranch development electric infrastructure - commentary [2/21/2017]:

As this story develops, it really comes down to the main character Pat Butler, the developer of El Dorado Ranch. The sales team R-MAC out of California is long gone, down the road to another project with dirt lots. Meanwhile long time supporters and followers believe in the Ranch developer and think he'll come through and that he operates in good faith. They think his detractors and critics are too hard on him, too suspicious, and are giving him a bad rap. So here we have what looks like something happening with electric installation. But is it any guarantee the electric will be completed for sure. Therein lies the rub. Is there the millions of dollars secured to really start and complete the work project? So who observing this is based in reality and closer to the truth? Is this a big con and actors or folks being used? Just a lot of nothing really going on? More false hope? Who has the best view on this? I have tried to stay on the fence a little as you know since there's never enough proof to say this is what the deal really is. If this is a massive con job, it will end someday but as anyone knows about ponzi schemes, they can go for what seems like forever. Those suspicious of the schemes may be called paranoid or 'dissidents'. I'm not ready to call this one way or the other with complete certainty. But if there's no money, then that brings to mind every ponzi scheme I have ever read about and how they are maintained and promoted. Hope of return is the key to extending ponzis. If this "work" is still in a bid stage or bid renegotiation stage, then we are not as far along as has been promoted. Duh. Body language and verbal style of Ranch representatives does not give me any confidence this is a slam dunk that electric is going in for sure. But again these are just my feelings and impressions. Nobody wants to keep getting played for a sucker over and over. I still think this project to meet obligations is a must to complete for the future of EDR. If it doesn't happen, then we were not given all the info we needed to know that for sure. We were given misinfo and/or disinfo. Just sayin'. Anybody with EDR wanting to clear up any of this, please PM me on facebook or email me.

What is the real story of El Dorado Ranch?

The causes of what locked the EDR development in financial dire straits are disputed. The EDR developer and his supporters have said there have been efforts to refinance the Ranch all these years. These efforts are basically unverified and come from the announcements that the EDR makes periodically at EDR public meetings or by emails to owners. Were the original sales proceeds of 9000 lots sold and all the project finance loans squandered and/or converted [transferred] thus making completion impossible when the economy went into a downturn? These issues have never really been resolved either.

There has been some litigation against EDR and the EDR developer and his sales team called R-MAC [that operate out of the U.S. in such states as CO, CA, AZ, and NV] with mixed results. There have been some court ordered judgments a few EDR owners have secured in U.S. courts [in California] against the EDR developer and his companies. There has been some litigation in Mexicali, Mexico by some owners who didn't get their electric but that is murky and it's not evident where those complaints and actions have gone. Down the rabbit hole possibly? The litigation story is another entire story or subplot that will have to be explored in another article. Will there be future additional litigation? This remains to be seen. The media [either broadcast or print] in California has not done any stories about El Dorado Ranch problems and controversies although the sales company R-MAC licensed in CA has sold thousands of lots [with many questionable sales] from marketing and sales activities in CA selling dirt lots at EDR in San Felipe, MX.

The plot of this EDR story appeared to have a resolution a month ago announced by the developer and a "new partner" at the EDR annual meeting for 2016 which includes the annual developer meeting and HOA [Home Owner Association] meetings. The new deal announced was characterized as a 'joint venture' and there are YouTube videos published/posted of the developer meeting and the annual HOA meetings where this new deal providing funding to complete EDR was announced in detail one month ago.

Here is the developer meeting on YouTube: https://www.youtube.com/watch?v=lsTEIzZCVH4&feature=youtu.be

Here are the HOA general assembly meetings for owners:

https://www.youtube.com/watch?v=JP4jsqJ8k-E

https://www.youtube.com/watch?v=PBP7xzU0qjA

https://www.youtube.com/watch?v=lsTEIzZCVH4&t=3280s

NOTE: The El Dorado Ranch developer and his sales agents & associates (& supporters) have made the claim over the years that the owners' HOA's at EDR are completely separate and have nothing to do with the business side of EDR or the Ranch [development & sales companies]. YET the developer brought the new 'investor' to the EDR HOA meetings for some reason.

Below is a summary of the new investor's description of the joint venture deal guaranteed to provide funding to finish development infrastructure and complete unfinished condos... the new EDR partner/investor Stephanie Summers says a mouth full in the eight minutes or so she is speaking in this video. Here is a transcription of what she says after introducing herself and her company to EDR owners:

Summers Company has entered into a joint venture partnership with Pat. The charter states that they will offer help to joint venture partners when they have problems they can't solve themselves. Summers Company is offering to help with some specific problems that include: adjustments of debt, maximizing the use of existing funds on hand, implementing and improving management policies and procedures, preventing insolvency, completing construction on electrical and water infrastructure, and implementing a design finance bill program for condominiums and for home construction.

Recently, Summers and the Ranch entered into a joint venture agreement for the recapitalization, refinancing and operating of the Ranch. Summers Companies now is here this week to start construction on infrastructure and the condominium re-start; to meet with you, and to meet with Pat, to receive approval for Summers Companies to take specific actions to give the Ranch full protection against it's creditors, and to actually implement the recapitalization and refinancing plan, and to make sure that the current financial situation never happens again.

Over the last two months, Summers Companies has had a chance to conduct an in-depth look at the Ranch's obligations, and Summers wishes to direct Pat to achieve settlements with every creditor group that it has. And as a result, we would like for the successive settlements to accompany successful plans.

The plan that Summers Companies is requesting that the plan confirm contemplates a complete restructuring of the Ranch's debt and internal departments. The Ranch will have to settle with every major creditor group, complete infrastructure construction, as well as look at additional properties to purchase. The result of this will result in the Ranch being able to add hundreds of millions of dollars to eliminate it's outstanding liabilities. Upon execution of this plan, the Ranch, through a department that we will organize, called EDR Finance, will provide an internal finance company that will fund all of the investments made within the ranch companies, and to act as a central bank as the Ranch, and we will begin to fund and to start the recapitalization and refinancing plan. The plan also contemplates pulse re-position financial oversight of the Ranch to ensure that the fiscal contingencies that resulted in the Ranch's past never happens again.

Summers' plan calls for the implementation of what we call a grand bargain -- to complete a financial review commission to review the Ranch's finances and budgets and ensure that the Ranch adheres to the plan and continues to implement needed financial and operational reforms. EDR Finance and the stabilization fund will also be required to create investment committees whose roles will be to make recommendations to and approve certain actions by respective systems boards of trustees.

It is noted that the Ranch's recapitalization and refinance plan is protected by Summer's Companies' articles of incorporation, by our resolutions, our guarantees -- including our personal guarantees. Summers Companies may be obligated to pay for all or a portion of the Ranch's liabilities, and Summers obligation is not reversible. Thus, the accrued assets of Summers and it's subsidiaries, and it's organization as a whole, has a contractual obligation to the Ranch, and shall not be diminished or impaired.

We've also developed a marketing plan that will exploit the fact that EDR is a 25 year old branded name in California, Arizona and Mexico. The plan includes increasing the sales of homes to homeowners such as yourself, and to others who are seeking safe, beautiful homes in a safe, beautiful community that they can live, relax and vacation, without the worries of urban life and fast paced activities.

This plan also includes development of an existing relationship with the Mexican government's tourism department so that we can expand the Ranch properties to San Felipe and increase your overall living experience here at the Ranch.

Our master plan also includes additional health care facilities and retail.

NOTE: Nothing has been started in finishing EDR as I personally drove around the development and checked this week. Here is an UPDATE from Pat Butler the developer that there may now be a snag holding up the joint venture deal and the funding coming for EDR infrastructure completion:

Copied from another Facebook site: (from Pat Butler regarding El Dorado Ranch's new 'investor'):

"The first funding by the investor did not happen on the 10th as expected. Due to some banking regulations here in Mexico the investor was unable to start a cash management program/set up bank accounts whereby the funds would be transferred. We are therefore talking about other ways to complete the funding. We are having some hiccups. I don’t believe she is backing out but she is making changes and requests that were not part of the original deal. We hope to have any issues resolved by end of week.

Since we signed the JV agreement with the Summers Companies the first things that happened was the rebidding of the electrical infrastructure and sewer treatment plant costs. This was completed the first 2 weeks in November. There was a delay in awarding the contracts due to bids being resubmitted with changes. Contractors were selected last week and I spoke to the investor yesterday who states that even though we have had some banking issues, the hope is to have the contracts signed next week. This work will be paid for by the investor and it would take 2 weeks to get started once contracts signed and about 6 months to complete and can be done while we are working out our other issues."

Pat

Here's the second and most recet update from the developer:

From: Pat Butler

This week the final contrast was sent to the electrical contractor for

signature with the anticipated construction commitment date to be before the

end of January. This is a $2.8 million contract with a 180 day completion

date. Next week the Summers Companies (SCI) expect to get the sewer

treatment plant contract completed and on a similar construction schedule.

SCI will be giving us there revised financing plan within the next few days.

They tried to complete this before yearend but investment banker schedules

and SCI funding entities schedules prevented this from happening. With

everyone back to work we expect SCI to get their equity investment/financing

back on track with more specifics we hope to share with you soon. - Pat

Butler.

NOTE - I have been following what will happen now if anything and have made a series of comments on social media groups about EDR and San Felipe:

So quiet on this great news. Weird. No interest in details. No follow up questions it appears. Been a few pointed questions brought up & ignored. Details are interesting. And this is a big deal. The elation of the news seems to have worn off. No need to get lost in the details I guess. Whatever. No Bad Days. Bottom line... Who sees any work started and continuing on finishing the electric in EDR mountainside areas waiting to be wired?

This letter was just sent out to EDR owners: Subject - Golf assessment

Message from Mr. Pat Butler:

When the investor spoke about there being no more golf assessment, the 2017 contract was already voted in last year by the GA. The intention was for there not to be another extension into 2018. And the information we gave to the investor included the assessment for 2017. It may not have been clearly stated but the intent was for no assessment in 2018.

Regards

Pat Butler

Well does it make any sense to make a public announcement at the El Dorado Ranch developer meeting that for example the electric infrastructure will be completed. To not come through on that is doom. Why make up some big story just to buy 30 more days? Doesn't make any sense?

How does anyone know for sure that no money has 'changed hands' (as has been said in online discussions) in these milestones in the new joint venture deal that's supposed to be happening at El Dorado Ranch? [Developer Pat Butler has just verified that no money has changed hands yet.]

If this deal was shaky or not as described, I have been trying to get some ideas from EDR owners as to what's the upside because buying 30 or 60 days does not seem worth burning your reputation to the ground completely. One person who owns at the Ranch did say this: "maybe the 'New Investor' was to get everybody all pumped up so they would pay their HOA dues". Notice there's not much chatter or speculation going on among the Ranch faithful. HOA is involved in this story as Pat Butler the developer brought the new 'investor' to the HOA general assembly meetings as well as his annual developer meeting a month ago.

My other thoughts on this stalled EDR story line:

I've been asking what's the upside to Butler making this whole new "deal" up where he went all in on it.

Not getting anyone to talk about it even in our group so I'm doing the story with no owner feedback.

An owner though gave me this theory which I am mulling over in my mind... "maybe the 'New Investor' was to get everybody all pumped up so they would pay their HOA dues".

Going over to another non-electric owner's house today to see what he thinks.

The "angel" investors are already found to be not what they project in this story about their involvement. [Some research has been done by EDR owners already on the new investor looking at public court records, etc. but I won't get into any of these details here.]

Could be there's some hitch in the deal if the deal was as described... the key to this story is the new investor partner [joint venture] is supplying the money for finishing things at EDR.

A Ranch owner with an empty lot with NO electric infrastructure yet contacted me with this:

Talked with you a few years. We purchased a lot in 2007 in Los Viajeros (6100-041-10) Well we just got our HOA dues notice and wondering if we should hold off on paying it.  I have not seen anything about the status or progress of getting electricity to the lots for some time now.

 Can you please let me know where I can get a status update on the electric infrastructure.

This was my response:

We have contacted Jesus Velarde, Ranch engineer about the status and timeline of getting electric done.

He hasn't responded yet to 2 emails sent. [UPDATE : The bids to complete electric in areas waiting for it have been done according to a representative of the El Dorado Ranch engineering dept. Reason I went and talked to them is I haven't seen any work started yet. The response was the money hasn't come in yet to start. Stalling at this point after saying electric infrastructure will be done for sure doesn't add up. Why paint yourself into a corner with no way out and no wiggle room. Doesn't make sense. See comments below.]

Some further observations of mine at this point in time:

Another owner I talked to said she asked the developer in an email and the response was no funding is in yet to do the electric. That's about all I know.

Some crew was out doing some kind of survey in some of the non-electric areas. They were spray painting green numbers on some of the empty concrete vaults where electric cable goes.

Don't know for sure what that means.

I haven't been over to Los Viajeros North to look around and looked in Vista del Mar & Monte Vista.

Also there is zero activity of any kind in my non-electric area Buena Vista [in the back of Buena Vista past block 39 all the way to block 66].

Conclusion & questions - Again this is my question and will do a follow up article to this article when the answers are found:

Why would the EDR developer Pat Butler go ALL IN to peddle a BS story just to buy 30 or at the most 60 days? I know I already asked this but I still can't figure out an answer.

After talking to a few EDR owners, I see that there is a lot of skepticism about this latest announcement by the developer about there being a joint venture deal where a new investor guarantees the funds to complete everything at this development. Did the developer Pat Butler just do this to get owners to pay up their HOA dues aka "civil association maintenance fees"? Does the developer plan to cash out and run away or sneak way? These are questions and assumptions some owners at this development are making. The lack of trust has grown over the years about any announcement by the developer and/or his associates/agents/supporters that money will come in to finish things. I will post an update or Part ll as I mentioned to this report as soon as things become more clear.

Meanwhile the needed project infrastructure such as underground electric utility service to over 1500 dirt lots and a seaside sewage treatment plant remain unfinished which has been the status for years. The seaside golf course for the EDR development looks terrible as it is browning for various reasons. Owners have now been promised the moon again and everyone is just waiting and watching to see if this was another false hope and unfulfilled promise given with nothing to back it up with. In the meantime, many owners waiting for electric are still on generators and/or have purchased their own solar/battery systems for alternative electric power. Or have made other arrangements such as a rental provided by the developer if their house has no electric as an alternate to being supplied an EDR generator which are now in short supply.

My thoughts & opinions on this situation:

The El Dorado Ranch development right now most importantly is at a crossroads with the announcement of secured funding from a new joint venture partner. This new money infusion would complete all the unfinished obligations that stigmatize this development project called El Dorado Ranch. Nothing has happened yet in completing anything as to any work being done... so far just the talk & new promises. But it's critical the basic electric infrastructure gets done if this residential & resort project moves forward or is stuck in time back when the development stalled.

Now if nothing in actual development infrastructure work completion comes from these official announcements of an El Dorado Ranch bailout from a new partner & new secured funding after all the hoopla and youtube videos about it, it's not just extremely disappointing, it's creepy.

CONCLUSION as of May 11, 2017:

My thought is to avoid buying in Baja, Mexico as a U.S. citizen. My experience of buying land lots for building has been in San Felipe, Baja. I have heard of many problems buying real estate in Rocky Point aka Puerto Penasco also which is on the other side of the Sea of Cortez from San Felipe, Baja. Bottom line the U.S. sellers I had experience with operate with apparent impunity on both sides of the border and hundreds [at least 1500] lot buyers got stuck with worthless dirt building lots when the underground electric infrastructure improvements never came as promised in the sales. Thus all these building lots are without electric utility service although they were sold as 'electric lots' for high dollars. Hiring a Mexican attorney to get refunds has not worked out either as far as I know. The CA Bureau of Real Estate has not been able to stop these sellers after several buyers filed complaints from selling more lots at another development in Baja after there were many bad sales I refer to. Sellers have all the advantages to do what they want. They can change their primary business locations in the U.S. to NV for example and still operate out of CA seeking more buyers to ride on sales tour buses down to Baja as prospective 'clients'. It's a mess that has no solutions.

Land lot sales operations out of the U.S. operating in several states but primarily California can sell worthless dirt lots in Baja, Mexico using youtube, facebook, and other popular social media. Any claim can be made and CA Bureau of Real Estate won't help buyers as far as I know once a cross border land lot purchase is made that is a ripoff. New buyers are the name of the game and a continual stream of U.S. buyers can be brought down on sales tour buses out of CA. If sales promises are not kept, again there is zero recourse from what I have seen. It's really a very weird situation. It's impossible to check all the sales claims such as if the building lots are legally registered and/or if valid development permits in Mexico have been obtained for sales as you would have to know how to use the public registry [where there are recorded documents] in Mexico to check claims. Very few buyers from the U.S. [and that is the target market] and buying in Baja, MX would know how to do that.

Current photos of El Dorado Ranch, San Felipe, Baja Mexico: