VIA selling properties amid strain
Three years ago, the Valley Improvement Association hit a magic number — 2010. That was the year the land indentures started to expire and assessment revenues began dropping off.
As assessment revenues dropped year after year, the association struggled to provide services to the communities such as streetlights and upkeep of common areas.
The indentures were created by Horizon Corporation, the original developer of Valencia County's east side, and given a 40-year life span.
Those indentures created the association and allowed an assessment on each piece of property. VIA used the assessments to pay for improvements to the developments, such as parks, walking paths as well as utilities for street lights and road repairs.
Now VIA is in the position of having to make some tough business decisions, says CEO Paul Baca.
"We started looking at our operational costs. We are at the point where we need to liquidate assets," Baca said. "We can no longer afford the (Valley) Plaza."
The association has listed the 35,000-square-foot Valley Plaza for $495,000, or $14 per square foot.
The two most visible occupants in the Valley Plaza — MyBank and the Del Rio Senior Center — won't be affected by the sale. The bank owns its building, Baca said, and Valencia County owns the senior center building
The Moose Lodge and Pup Cuts, the stand-alone building at the north end of the property, are also privately owned and won't be affected by the sale.
VIA is also selling the community's two parks. Twelve-acre Timan Park and eight-acre Del Fuego Park are going for $10,000 per acre.
"We haven't been able to maintain the parks and we can't continue to supplement them for the community," he said. "We are in a tough position and have to do things we don't really want to, such as reducing staff. We are running as efficiently as we can."
Since Baca took over operation of VIA in 2010, staff has been reduced from 35 people, between VIA and all its subsidiaries, to three — Baca, VIA Executive Vice President and Chief Operating Officer Theresa Scott and a bookkeeper.
Baca said the hope is to sell the plaza and eliminate the company's debt. What happens after that is still in the planning stages.
"What are we going to be?" he said. "We're looking at that."
Baca said if the plaza sells, VIA would lease office space from the new owners.
The association held its annual meeting on Sept. 13, and it was there that Baca presented the bottom line to board members and residents. Since VIA knew the indentures were limited to 40 years, it formed several subsidiaries to funnel money into the association to pay for services.
However the recession hit those companies, which were mostly construction-industry related, and they have not been the money-makers they once were.
"The way Horizon set up these communities was for them to eventually govern themselves or for the county to govern them," Baca said. "But at one point VIA was bringing in so much money, it took over for government. But it's not."
As more and more subdivisions fall off the assessment rolls, VIA's revenues continue to plummet. This year, Baca said there are about 1,200 members; next there will be 600, maybe.
In 2014, the area of Rio Communities around Del Fuego Park is due to stop producing assessments. Baca said VIA will be lucky to get $2,000 in assessments.
Assessments for Playa Verde Unit I west of the golf course, are due to stop in 2015 and Unit II in 2019. Baca said VIA can expect a maximum of $1,600 in assessments from each of those units annually.
"This is not the demise of VIA," Baca said. "Where Horizon thought this was going, that the communities would self-govern, it didn't happen."
Baca described VIA's 2013 budget as "very balanced." The assessment revenues for 2013 are $52,028.81 and resident area expenses are $52,010.96. The remaining balance of not quite $18 has to pay for things like insurance, utilities and salaries, Baca said.
He called what is happening right now a transition for the company.
"Over the years, we have cleared up legal issues, debt. But like everyone else, we've been the victim of the recession and we still haven't felt that bounce back," Baca said.
Being in the business of land, VIA is land rich and cash poor, he said.
"We have to look at what we can responsibly retain. Like a lot of other businesses, after the recession we've had to make some hard business choices and change to stay in existence," he said.
There have been rumors that VIA is declaring bankruptcy. Baca said that's not an option.
Compared to its assets, VIA doesn't have enough debt to declare bankruptcy.
"Again it comes back to being land rich and cash poor," he said. "That's why we're selling some of our assets — to get cash."
-- Email the author at firstname.lastname@example.org.