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Paul Golden: Resort Still in the Works Despite Court Action

Nov. 8, 2007 — After more than six years of delays, numerous extensions to its casino license and lawsuits by environmentalists and competitors, Paul Golden of Golden Gaming says it's full steam ahead for his plans to build a several-hundred million dollar resort, despite the latest bump in the road — a foreclosure judgment filed on the land for the project.
"We are prepared to break grounds no later than March of next year," Golden said. "We are ready to go."
Asked about the Superior Court judgment signed on Oct. 25, Golden said all the parties had come to an agreement, with the land still his and the project still on.
"I don't deny there was a foreclosure action," Golden said in a phone interview Thursday. "I called Judge (Eileen) Petersen and I disclosed it to her the day the papers were filed in August."
Eileen Petersen is the chairwoman of the Casino Control Commission, overseeing Golden's casino license.
The land was not actually foreclosed, however, Golden said.
"We clearly have a stipulation," he said. "The foreclosure has been stayed. The project is not in jeopardy, and we are moving full steam ahead. … Back in October we came to an agreement and settlement with the lender. We got more money and are good until sometime in 2008."
The court document says all liens secured by the property "are hereby foreclosed." At the end it says, "The execution of this foreclosure is stayed until the earlier of January 15, 2008, or upon appropriate application, the occurrence of another termination date as defined in the stipulation of settlement." This separate, confidential stipulation settlement — which is not filed with the court — means the property is not foreclosed, Golden said.
The difficulty with the lender arose because of delays caused by ongoing legal issues, Golden said. By the same token, as soon as those issues are settled, so will be the concerns of the lender.
"Quite honestly, this would have been resolved long ago," Golden said. "But the courts are backlogged. There were over 300 cases ahead of us, and we didn't get heard for a year. … Looking into my crystal ball I never imagined it would take this long."
According to the foreclosure order issued by the V.I. Superior Court, the terms of the mortgage from Silver Point Capital require that a much larger loan to develop the project be acquired. Golden said that much larger loan was held up because of an unresolved lawsuit.
How did it get to this point? The Golden Gaming project has met considerable opposition and permit difficulty from its inception. Golden Gaming waited for all of 2004 for action on its request for a Coastal Zone Management permit. In January 2005, the Board of Land Use Appeals granted the permit by default due to the CZM's failure to act.
The project, which was expected to be worth more than $275 million, has also faced fierce opposition from environmentalists, who were concerned about its ecologically sensitive location near St. Croix's Great Pond. In February 2005, Andrew Simpson filed suit in V.I. Superior Court on behalf of the V.I. Conservation Society (VICS)seeking to block the permit. The suit argued the BLUA did not have jurisdiction to make the decision.
When the suit came before the court, Judge Maria Cabret ruled in favor of Golden Gaming. VICS filed a writ of review in Superior Court in 2005. The society asked the court to review the Board of Land Use Appeal's decision to grant Golden a coastal zone permit. However, in May 2006, Cabret upheld the issuance of the permit. Simpson and VICS appealed Cabret's decision, and the appeal was heard in October.
Golden said he is now waiting for the written decision of the court, which he expects within the next few weeks. He expects the District Court to uphold the Superior Court's dismissal of the litigation, and he is anxiously awaiting a favorable decision. He believes the District Court's decision will allow Golden Resorts to move forward with its lender and begin breaking ground. But as long as there is a pending lawsuit, the large loan will not be released.
"When you have that cloud, no lender in the world will lend that kind of money," he said. "For example, take the CZM permit. If, hypothetically, you were to spend money from a loan on putting footers into the ground and then the permit is overturned, how do they get their money back?"
These bumps in the road and the long time it has taken to get to this point should be taken as testament to his dedication to seeing the project through to its conclusion, and to the difficulties involved in attempting a large development on St. Croix, Golden said.
"This has been a learning curve for me," he said. "It has been a very serious learning process through each phase. I can tell you, though, now I'm an expert and can help the next person work through it."
The project is much farther along in the planning process than other proposed development projects, Golden said, and he anticipates breaking ground many months, if not years, before them.
"We are the only project that has CZM permits," he said. "We've done soil tests and dug test wells. … We've been rezoned R-3, medium-density residential."
While he believes he will break ground before other projects, he said he does not see other developers as the enemy.
"I am all in favor of other projects," he said. "They feed off each other. In Las Vegas, when new casinos announce, they don't file lawsuits."
As more hotels are built, there is more reason to come to St. Croix. With more hotel accommodations will come more airline flights. And, Golden said, more flights benefit everyone, including himself.
But before any of that may happen, the VICS appeal must be resolved in his favor.

Editor's note: In an earlier story that has since been removed, the Source incorrectly reported that the foreclosure heralded the demise of Golden Resorts.
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