Kelowna Mtn under commission scrutiny

Operators of the Kelowna Mountain development may have to pay back millions of dollars to people who have invested in the project.

The BC Securities Commission made the order to the embattled development as part of a decision which would allow Kelowna Mountain to again seek investment in the development.

In August, 2012, the BC Securities Commission issued a Cease Trade Order against Kelowna Mountain Limited Partnership for failing to prepare and file an offering memorandum in accordance with the Securities Act.

"We’ve been under a cease trade order for almost 15-months now but we think that process is coming to its conclusion this week and we will of course release the results of that rescission then," shared Mark Consiglio, Developer and Owner of Kelowna Mountain Park.

The original OM, provided in April, 2011, did not contain all of the required information about Kelowna Mountain and investment in its limited partnership units.

Before the order can be lifted, Kelowna Mountain was required to provide an updated offering that includes information that was not included or clearly explained in the original offering and offer to buy back people's investment in the project.

“Kelowna Mountain continues to fully cooperate with its investors and the BC Security Commission through the rescission process,” says Consiglio.

On October 28 of this year Kelowna Mountain sent its investors an updated offering memorandum.

In that document, the company confirmed it had sold 529 of 849 units with gross proceeds of more than $22.8M.

The remaining 320 units would fetch an additional $46.5M if sold at face value.

Investors who choose to take advantage of the buy back offer would receive the original purchase price without any interest.

Consiglio says this does not mean all of the money invested will have to paid back, but that investors can decide whether to continue on with project or leave with a full refund.

Those investors with an aggregate value of units over $1M would receive a promissory note stating they would be repaid through proceeds of future unit sales in Kelowna Mountain.

Consiglio purchased properties south of Kelowna within the Regional District of Central Okanagan in 2005 and 2006 with the intention of building an elaborate resort destination including vineyards, a ski hill, golf course, suspension bridges and residential accommodations.

To date, the ski hill, four suspension bridges and a Welcoming Centre have been constructed.

Kelowna Mountain has been at odds with the RDCO for several years in an attempt to move on with construction.

In 2012 the regional district approved an updated Official Community Plan for Okanagan East which includes Kelowna Mountain, however, the property was not included in the plan.

Instead, the land was designated a 'Recreation Resort Study Area,' meaning several issues would need to be addressed by the developer including water, sewer and road access as well as various studies and reports required for any development application.

Meantime, Kelowna Mountain has filed a petition in Kamloops Supreme Court.

The Regional District of Central Okanagan and building inspector John Hailstone are both named as respondents.

In the petition Kelowna Mountain is asking that an 'occupancy not approved' order be quashed or set aside to allow occupancy of the Welcome Centre.

In the claim, lawyers for Kelowna Mountain are asking to set aside or quash the decision that states:

"However, occupancy not approved until outstanding zoning, health and safety, and access issues are addressed to satisfaction of RDCO staff. Business Lic. continues to require amendments to conform with the provisions of Zoning Bylaw No. 871 related to AgriTourism use on the subject properties. All outstanding issues are to be addressed prior to issuance of an approved Buis (sic) Lic. and approved for occupancy by the public."

Kelowna Mountain is claiming the issues mentioned which resulted in the denial of occupancy were outside the duties set out for a building inspector.

It also claims the definition of AgriTourism in the RDCO's zoning bylaws is vague, unintelligible and contradictory.

While he has not seen the documents pertaining to the court action, RDCO Board Chair, Robert Hobson says he believes the regional district fulfilled its obligations.

"We are confident we have followed all the rules and regulations under our bylaws and will be defending ourselves," stated Hobson.