Summit Village project served with loan default notice; resort group responds with federal lawsuit
In this file photo, construction continued on the Summit housing development Friday, July 21, 2017, on Powder Mountain near Eden.
An architect's artistic rendering of the planned Summit Village development at Powder Mountain in 2018.
EDEN — Summit Village, the intended core of activity for the visionary, rich and famous at the reimagined Powder Mountain resort, has been hit with a $51 million development loan default notice.
In response, Summit Mountain Holding Group, the entity managing a series of developments at the resort east of Eden, has filed a federal lawsuit against the lenders, alleging breach of contract and fraud.
The resort general manager said Friday the loan dispute won’t stop the village development, an estimated $207.2 million centerpiece of the Summit group’s vision for transforming the resort into a haven for thought leaders, influencers, business titans, artists and entertainers.
“The status of the project is moving forward,” Mark Schroetel said. “We are seeking additional financing and we are in the process of receiving term sheets. We don’t see (the loan dispute) as an impediment to moving the project forward.”
Summit bought the ski area from local ownership in 2013 and began holding invitation-only events, called the Summit Series, that attracted A-list people to an environment designed to foster big thinking, learning and mountain recreation.
The group then planned a series of developments, with Summit Village as the centerpiece, and two other housing development phases.
Schroetel said the village’s infrastructure is built, but nothing beyond that yet. One housing neighborhood outside the village area “is all moving forward in various stages of completion” and the newer Overlook neighborhood is advancing with some construction and more construction permits.
He said the ownership is in the process of “reimagining” the master plan due to market pressures and the effects of the COVID-19 pandemic. “The overall main concept is still intact,” he said.
The village is a 4-acre area that Schroetel said likely will include commercial, restaurant and retail spaces, some high-density housing such as condos or townhouses, plus hotel and event space.
“Based on the interest we’re getting and the term sheets we are having there to complete this, it is not in question,” he said. “The bigger question is what is it we are going to be building?”
In 2016, Summit Mountain Holding Group, acting as a guarantor for the project development entity SMHG Village Development, entered into loan agreements with Summit Village Development Lender 1 LLC and Grand Canyon Development Holdings 3 LLC. Court records show those two latter entities are controlled by Hong Kong-based Celona Asset Management.
On July 6, Celona sent a default notice saying Summit has defaulted on the $120 million loan and must may $51.3 million plus $360,600 in interest. The loan had a five-year term and Celona said in the notice that Summit was required to have finished construction by now.
But in a suit filed in U.S. District Court in Salt Lake City on Wednesday, Summit accused the lenders of breach of contract by not delivering loan proceeds on schedule, and not sending any more than $42 million by 2019.
Summit said it had already fulfilled providing more than its share of equity requirement by then, $35.9 million.
Summit further accused the lenders of using the remaining $78 million raised for the loan on other projects — even after Summit fulfilled the lenders’ requests to secure an appearance at a project fundraising event by basketball star Kobe Bryant.
Because the lenders allegedly pulled the rug from beneath the project, Summit has been deprived of at least $50 million the project would have generated by now, so it cannot pay back the $42 million received, the suit said.
Summit said the lenders wanted Bryant at the Hong Kong fundraiser in 2018 because “he was very big in China at the time.” The lenders promised that with Bryant there, the full $120 million for Summit Village “could be raised in a manner of weeks,” the suit said. Bryant was killed in a helicopter crash in 2020.
One of the eventual investors was Chinese billionaire Joseph Tsai, cofounder of the Alibaba Group and owner of the NBA’s Brooklyn Nets.
Had the loan money been delivered, Summit argued, the village would have made $25 million in sales each of the last two years. The suit said the loan default demand is interfering with Summit’s effort to land a new $150 million round of financing.
Summit further blames the lenders for its trouble with a previous potential lender. That lender had failed to raise funds for Summit Village when the defendants in the suit convinced Summit to drop the first group, the suit alleged. Now, Summit has had to pay the previous lender $1.3 million in settlement payments.
The lawsuit has not been served on the lenders yet. Efforts to contact Celona for response to the suit were unsuccessful Friday.
In court documents, Summit said buyers of single-family home sites at the resort so far include Netflix co-founder Reed Hastings, former UNICEF secretary general Ann Veneman, General Electric chief marketing officer Beth Comstock, WeWork co-founder Miguel McKelvey, Virgin Group founder and recent astronaut Sir Richard Branson and actress-director Sophia Bush.
“They do own lots and we have at least three very high-profile people in completed homes,” Schroetel said. He declined to name those owners.