GILROY
– Breaking months of silence, Bonfante Gardens founder and
former Gilroyan Michael Bonfante spoke openly Wednesday about his
plans to pay back the $32 million of private debt he accumulated
trying to save the struggling Hecker Pass theme park.
And, he praised the recently divulged land deal between the
theme park and developers of the ritzy Eagle Ridge housing
development.
GILROY – Breaking months of silence, Bonfante Gardens founder and former Gilroyan Michael Bonfante spoke openly Wednesday about his plans to pay back the $32 million of private debt he accumulated trying to save the struggling Hecker Pass theme park.
And, he praised the recently divulged land deal between the theme park and developers of the ritzy Eagle Ridge housing development.
Speaking from his home in Branson, Mo., the semiretired Bonfante said he was optimistic about the future of his namesake park. And he answered pressing questions about what he would do with a 34-acre nursery bordering Hecker Pass to the immediate east of Bonfante Gardens.
“I have a responsibility to the people who gave me those personal loans, and I intend to pay them back,” Bonfante said.
Bonfante said he is in the process of moving items off the nursery to a 43-acre parcel west of the park, which he also owns.
The nursery is commercially zoned and could be used, for instance, to build a hotel and convention center – projects conceived by Bonfante in 2001, back when he envisioned the park to be a stopping off point for Bay Area folks and even world travelers.
Today, the park is run by Paramount Parks, which cut costs, increased ads and promotions, and produced Bonfante Gardens’ first-ever profitable season in 2003. Yet the horticulture-based Hecker Pass theme park remains $70 million in debt ($32 million in private loans, $38 million in municipal bonds) and has not paid its annual $1 million property tax bill the past two years.
Bonfante’s nursery property is within the Hecker Pass Specific Plan area. Landowners there have divvied up nearly 430 housing permits between them, and those who have been interviewed claim they’re not ready to share them with Michael Bonfante.
Bonfante did not say he would pursue those permits but did not rule it out either.
“What we plan to do with the nursery is still undetermined, but it will be used for the best and highest use in order to satisfy the (private) creditors,” Bonfante said. “Time will tell.”
What’s the fuss?
Questions about the nursery property arose after Bonfante Gardens and Shapell Industries – the developer of Eagle Ridge – inked a letter of intent to sell off 33 acres of the park to Shapell.
The developer wants to build up to 99 luxury homes on the 33 acres that border Eagle Ridge to the west, bringing long-sought after amenities to existing Eagle Ridge homeowners. Profits from the land sale would go to the cash-strapped park. Profits from the sale of residential lots would go to Shapell.
Originally, Bonfante was supposed to donate the nursery to the park. Bonfante Gardens would then have the option of selling the parcel if or when it needed cash.
The park needed cash – in December 2003 Bonfante Gardens defaulted on its bond payment – but the donation never happened.
“It was best to keep that property separate from the park, so I could eventually pay off the private creditors,” Bonfante said Wednesday. “It’s all about what makes financial sense.”
The best financial sense, Michael Bonfante and park officials say, is to sell the 33-acre property and use proceeds to begin paying back municipal bondholders.
“To us, the nursery is a non-issue,” said Bob Kraemer, president of the Bonfante Gardens board of directors. “We believe we have a better solution, that is to sell the park’s own land contiguous to Eagle Ridge. Having homes there is far better for (Eagle Ridge homeowners) than us developing the lot under current zoning, which is commercial.”
But the history of the nursery lot may be an issue for City Council, which still must exempt the park from the city’s growth control ordinance to grant the housing permits.
In December 2001, park officials and Michael Bonfante asked the city to change its growth control ordinance to allow homes to be built on the nursery lot. The Council did so, allowing for “fewer than 100” housing permits to be granted to the park. This raised the value of the land and made it easier for Bonfante to land a $7.5 million loan from friend and electronics mogul John Fry.
Nothing in the ordinance says the homes must go on the nursery lot, but that’s where folks thought the homes would go. At one point during lobbying sessions, Michael Bonfante produced conceptual drawings showing how 85 homes would look sprawled across the nursery lot.
“We think this is a clean process,” Kraemer said. “The intention of the City Council (in 2001) was to provide a means for Bonfante Gardens to generate money through the sale of land. I’m hopeful the Council and the community understand the intention. And this provides closure to that intention.”
Five present day Councilmen were on the 2001 Council. However, at least one – Bonfante Gardens employee Russ Valiquette – will be stepping down from the vote due to conflict of interest laws.
The other debt
Michael Bonfante Wednesday reiterated Kraemer’s recent claims about how close the bondholders are to reaching a debt restructuring agreement. However, Bonfante, who controls several million dollars in junior bonds, stayed tightlipped on the details.
“There’s been a tremendous amount of progress related to our debt,” Bonfante said. “As it stands now, everyone has come together to find a solution.”
But not everyone is happy. There are senior bondholders (creditors who have liens on park and Michael Bonfante properties) who worry junior bondholders (creditors without liens, some of whom are acquainted with Bonfante and park officials) are getting preferential treatment.
In the legal order of things, the senior bondholders are supposed to get paid back first after a foreclosure. The park is dangerously close to foreclosure – it missed its December debt payment – but City Council recently changed a bondholders agreement to keep the park afloat.
The amendment happened at the request of Putnam Securities, which controls a majority of the bonds. However, other senior bondholders like Southern California investor Bud Byrnes were not enthused about the change.
Byrnes, who controls $2 million in bonds, said the park should be finding ways to pay off its senior bondholders instead of working out a pennies-on-the-dollar deal with junior bondholders.
Since the potential land deal between the park and Eagle Ridge was announced, Byrnes says he is more optimistic about senior bondholders receiving what they are owed.
“I think everyone will be getting a fair and equitable deal,” Bonfante said. “I think bondholders are all equal in that they are owed. But there is a legal order to who gets paid first. That will absolutely be followed. That has to be honored and followed.”
Michael Bonfante lives in Branson, Mo. with his wife Claudia. He says he is enjoying life there and spends some of his time consulting on horticulture for other theme parks. He is still a voting member of the Bonfante Gardens board of directors.
