Gilroy
– A debt-restructuring plan designed to save Bonfante Gardens
from bankruptcy remains on schedule, but timing remains critical as
the nonprofit park expects to exhaust its reserve fund in its next
round of debt payments.
Gilroy – A debt-restructuring plan designed to save Bonfante Gardens from bankruptcy remains on schedule, but timing remains critical as the nonprofit park expects to exhaust its reserve fund in its next round of debt payments.
The last payment on the bonds, which earn 8.15 percent interest, totaled more than $1 million and went out to bondholders in November. The next of its half-year installments is due in May, according to Bob Kraemer, president of Bonfante Gardens’ board of directors.
“We will likely use up most of the reserves to make that payment,” he said. “But it all depends on the timing.”
He declined to specify exactly how much remains in the reserve fund.
The horticulturally-themed park currently owes about $70 million to investors, but posted nearly $23 million in losses during its first two seasons of operation, according to financial statements released in September. It did however, post a profit in 2003, and figures for the first three quarters of 2004 indicate another boost in revenue.
To help restructure Bonfante Gardens’ debt, the Gilroy City Council in August unanimously approved the park’s request for 99 housing permits on 33 acres, an exception to the city’s growth-control law.
Shapell Industries will develop those homes as a northern adjunct to its Eagle Ridge golf course and housing community, off Santa Teresa Boulevard. Revenues from the home sales are expected to reduce the park’s current debt to a more-manageable $14 million.
“From day one we’ve known that if the deal with Shapell were to fall through, the park would shut done,” said Mayor Al Pinheiro, who serves on the park’s board of directors. “You’ve got to have enough money to buy back some bonds.”
City Planning Manager Bill Faus spent Monday afternoon reviewing five applications related to the proposal.
Some residents have expressed concern about developing the environmentally sensitive Uvas Creek area, especially in terms of creating access roads to the new development. But at first glance, Faus does not foresee too many problems.
“I think there are always a number of solutions available to any project proposal,” he said. “This project is certainly no different than any project that comes before us. I fully expect there will be discussion concerning access issues, although I believe the solution that is being put on the table is best.”
The current plan would create dual access points, Faus explained. Primary access to the new homes will be through the Eagle Ridge development, off Santa Teresa Boulevard. Secondary access through an existing gate at Bonfante Gardens is planned for weekday hours, but will be limited during the park’s peak weekend hours.
The Shapell development application is expected to go before the Planning Commission in March, and should reach City Council for final approval by April.
If all goes according to plan, the park may be headed down the road to long-term success.
Kraemer reported to City Council last week that the park expects significantly lower expenses in the coming year as a result of reduced legal fees and an adjustment of the city’s tax assessment on the property. He estimated the combined savings would exceed $1 million.
Meanwhile, the park appears has boosted its revenue totals and turned a profit in the last year. After just three quarters in 2004, the park’s net revenues have already surpassed its 2003 totals by $137,000, according to financial figures distributed to City Council.
And those figures do not account for the Holiday Light’s spectacle, which drew thousands of people on the weekends leading up to Christmas.
“There’s no question the park has incredible value for special events,” Kraemer said. “We just touched the tip of what we could do. The uncertainty of the park every year since we’ve been open … has held back weddings, company picnics, all of those types of activities. I think the future is continuing to do more of those types of things.”
For the moment, bondholders seem to be going along with the plan, despite the fact that the park’s reserve fund will zero out after the next debt payment.
“From what I know of the program, that is to be expected,” said Chris Lippman, a bond broker in Reno, Nev., whose firm represents $2 million worth of investments in the park. “It will raise concerns if the program derails.”
Bonfante Gardens, located off Hecker Pass on the western edge of Gilroy, will open to the public March 25. The park will remain open the entire following week, before returning to a weekend schedule until schools let out in June.
For information on the park or to purchase tickets, visit www.bonfantegardens.com.
