Chris Bongartz considers himself one of the lucky ones.

Bongartz doesn’t anticipate his villa at Three Bears Resort will drive him into foreclosure or bankruptcy. He’s fairly optimistic he can hold on until the resort is sold.

“We’re fortunate enough to sit tight and see what happens,” he said.

He’s not as optimistic about the fate of many others who own villas connected with the troubled Warrens resort.

“This is going to be a pretty hard-hit area for foreclosures,” Bongartz said. “These aren’t primary residences.”

Bongartz, who lives with his wife and two children in the Twin Cities suburb of Ramsey, Minn., estimates 80 to 90 property owners are impacted by the resort’s Sept. 15 closure. The resort closed shortly after the Bank of Mauston filed a Sept. 10 motion in Juneau County circuit court to foreclose on the property. The resort defaulted on two loans totalling $29 million.

In addition to the loss of 244 jobs, the resort’s failure also impacts dozens of individuals who bought the villas as investment properties. Bongartz, along with the other villa owners, signed lease agreements with Van Der Molen Recreational Properties that allowed the company to rent the villas. People who rented the villas had access to the resort’s amenities, which included an indoor waterpark and a skatepark.

In exchange Van Der Molen Recreational Properties paid the villa owners eight percent of the property’s value per year divided into 12 monthly payments. Van Der Molen Recreational Properties also agreed to pay the property taxes and homeowners insurance. For Bongartz, that meant a payment of $1,640 per month.

“That went well for the next two years,” Bongartz said.

The situation suddenly changed in March 2008, when the payments stopped. A month later, Van Der Molen Recreation Properties CEO Ed Van Der Molen convened a meeting with the villa owners and disclosed the resort’s financial troubles. He asked the villa owners to accept a payment cut from eight percent to four percent. Most agreed, but Bongartz did not.

“Going from $1,640 a month to $820 a month — that’s quite a hit,” Bongartz said.

Bongartz said Van Der Molen made the May and June payments, and the payments stopped again after that, although Bongartz said Van Der Molen continued to rent the villas through September.

Foreclosure

The failure of the resort could drive Bill Paris into bankruptcy. He paid $1.5 million for five villas and expects all of them to fall into foreclosure soon. He’s faced with mortgage payments of $12,000 a month and no revenue coming in.

“I’m giving everything back,” said Paris, who owns a water treatment business in Roscoe, Ill. “I can’t hold on. I’m sure bankruptcy is in my plan.”

Paris said the villas looked like a good investment at the time and said a private investigator he hired discovered nothing in Van Der Molen’s background to indicate a fraudulent past. Even now, Paris doesn’t accuse Van Der Molen of dishonesty or fraud; he simply believes Van Der Molen got in over his head.

“He’s squeaky clean — he just bit off more than he could chew,” Paris said. “He’s finished. He’s done. He’s lost a lot more than I have.”

Both Bongartz and Paris believe local units of government could have done more to help. Bongartz was stunned to see his tax assessment rise from $165,000 to $232,000 even though the resort on which his property’s value depends is closed. Bongartz said the village assessor told him that the property must be assessed based on its value as of Jan. 1, 2008.

“There are no real village services out here — we require no municipal services,” Bongartz said. “Without the resort, it’s an overpriced log home in Warrens.”

Paris wonders if Monroe County could have done something to keep the resort afloat.

“It’s too bad the county couldn’t have done something for them like maybe giving them some breaks on their taxes or something,” he said.

Paris said he’ll not only lose his villas, he’ll also lose his business and two lakefront properties in Washburn County.

“I’m 45 years old, so I’ll have a chance to start over,” he said. “I’ll just chalk it up as a learning experience.”

Bongartz, who began bringing his family to the Jellystone campground eight years ago, still sees a future with his villa.

“At the end of the day, we like this place,” he said. “We do enjoy the area — we like being here. We’re determined to make this work.”