See Part 1 here if you missed it. We continue with two more subdivisions which I believe epitomize the excesses and unrealistic expectations of Red Lodge area real estate.




Dot Calm Ranches
The Premise: Large lots, mountain views
The Problem: It's on a dry, treeless bench that's miles from anywhere

Red Lodge real estate agent and developer Jeanne Rizzotto was distributing the above flier in 2006. It promoted her new "Dot Calm Ranches" subdivision 16 miles north of Red Lodge (near Roberts). Dot Calm promised big lots and prices far below what you'd pay in town.

Some people do want to live out in the country, so I'm sure there's some demand for lots in this area. But Dot Calm seems to combine the worst of both worlds-- you're fairly close to your neighbors (2-4 acre lots), yet miles from town. The development is on a treeless bench instead of down in the more protected and scenic Rock Creek valley. Are there really 159 buyers that want all these factors together, for $25,000+/acre?

Evidently not. Take a look at the photo below (click to enlarge), taken two weeks ago, and see how many houses you can find:



Note that the original flier claimed "40+ lots already on hold." I don't know how many of those actually closed, but I do know how many houses have been built in 3 1/2 years-- Zero. There is one house at Dot Calm, but it's one that Rizzotto had moved there for a relative.

Dot Calm was perhaps the first example of Rizzotto's overblown pumping of her real estate developments. But it certainly was not the last.




Of Course! RV and Golf Resort
The Premise: Purchase a lot for your RV, then come park it and golf
The Problems: Too many to list

You may find it hard to believe, but the photo above shows a location that Jeanne Rizzotto believes will quickly become a $60 million, 190 acre "RV Resort" and golf course north of Red Lodge. The idea is that instead of leasing a space for your RV by the month, or parking it for the night, you "buy" the lot (actually it's a 99-year lease). Then you can come and park whenever you want, and play golf.

Sounds a little crazy, but maybe there are some retirees that would go for this. Those retirees might have a heart attack when they see the prices though: The smallest lots are 50x60 (3,000 square feet) and start at $159,000. This works out to an insane $2.3 million/acre.

Think about it. 3,000 square feet is less than half the size of a standard city lot. We're talking about a glorified parking space for $159k-$400k. You can't even build a house there, except for some lots that allow "park models" which are like tiny mobile homes.

A quick but important aside: Red Lodge was not the only area that Rizzotto targeted with her RV golf course idea. In March 2008, she came to Navajo country in Arizona promising that she wasn't one of the "fast-talking" swindlers they'd all seen before. She claimed to have already sold 203 of the 522 lots in a proposed "Hole in Juan" development on the San Juan River. By September she had gone missing, leaving a "trail of worthless checks and empty promises."

Anyway, back to Of Course! Rizzotto had a course designer, landscaper, and Engineering, Inc. lined up in 2008, and expected to be playing golf "before the snow flies" that fall. But something went wrong. Just a year later, she declared bankruptcy.

At this point, I thought the whole silly idea would just go away.



Not so fast. Thanks to bankruptcy court and a debt settlement plan, the Of Course! idea has new life. "I'm back" is what a "gleeful" Rizzotto was quoted as saying in a recent Gazette article. The plan is to continue development of the RV resort, and hopefully it will make enough back to cover Rizzotto's debts.

Creditors might not be feeling quite as gleeful as Rizzotto is. Billings' upstart Beartooth Bank somehow got mixed up in financing Rizzotto's messes, and they are owed $1.9 million. Her debts total close to $5 million. Nevertheless, the hype machine for Of Course! is already running at full speed. From the article:

Rizzotto expects the development to bring in about $10 million in its first year ... Rizzotto said she has 196 reservations from people who have expressed interest in making the initial leasing payment of $50,000.

Where have we heard all this before? Remember how Dot Calm and Hole in Juan also started with claims of huge sales numbers? They've gone nowhere. Besides, if Rizzotto really had so much interest, why did the Of Course! development never take off in the first place?

“There’s no comparison to it in Montana. These sorts of developments are found in California and Arizona,” said Rizzotto’s special counsel Rob Stephens.

Hmmm. Perhaps it's because those states tend to have more than 5 months of golfing weather. The Gazette article contains two more jaw-dropping quotes. First:

“You’re dealing with a different clientele that is generally insulated from the consequences of the recession,” said Rizzotto’s special counsel, Rob Stephens

Has Mr. Stephens been completely isolated from any news in the last year? Did he perhaps miss the fact that prices have been free-falling even here in Montana, in high-end places like Big Sky? Outside the state, did he happen to hear that Park City UT prices are up to 45% off? And the "clientele" he refers to have even been avoiding the supposedly bulletproof Jackson Hole market-- sales are down a staggering 80% since 2005. And we won't even get into RV sales..

Because there’s nothing else like it in the Rocky Mountains, Rizzotto said, she expects the leasing to proceed smoothly. “This is the easy part for me,” Rizzotto said. “This is what I’m good at — selling.”

I want to laugh at all this, but I can't. From the article, it appears that Rizzotto will be seeking additional financing for construction of the course. Who's going to pony up the funds this time? And is it really wise to allow Rizzotto to blow more money on this project that could easily fail once again?

Maybe I'm misreading this market and underestimating the demand. Maybe this will work out and everyone will get paid-- but given Rizzotto's track record so far, I'm not too optimistic.