KEY POINTS:
When developer Patrick Fontein rolled into Orewa, his enthusiasm was infectious. His plans for an old camping ground a couple of blocks back from the main drag pressed all the right buttons. He promised a mix of housing types and styles; medium-density allowing open space, walkways and shops; amenities including pools, a sauna and gymnasium - even a lake.
This was no carve-up of a hillside but a master-planned community. One which was eco-friendly and energy efficient, as you'd expect from the chairman of the Green Building Council. With a clocktower.
The numbers further whet appetites: 750 homes and apartments over five years on the 15ha site in a $500 million development.
The Rodney District Council rolled out the welcome mat for Kensington Park, co-ordinating the resource consents through a "case-managed" process. Contractors and subcontractors anticipated five years of work.
"He was 10 feet tall - he was bulletproof," one recalls.
When construction began in 2006, Kensington Park quickly became one of the biggest employers on the Hibiscus Coast. A lot of the work went to local building firms and allied trades who geared-up for the long haul.
Two years on, the project is at a standstill, with just 50 homes completed and 65 under construction. When the BNZ bank called in receivers in September, the Orewa development became a surprise casualty of the international financial and property sector meltdown. It had just won an Asia-Pacific industry award in Singapore for best overall development and best marketing.
When a project of this size falls over, shockwaves spread well beyond the padlocked security gates. More than 100 subcontractors were engaged at Kensington Park; several are owed in the hundreds of thousands. The victims range from one-man-bands to firms who'd taken on 30 staff.
Some, like Silverdale-based Sunrise Earthmovers, have been placed in receivership. Others have taken loans to pay wages or money owed to suppliers; raising mortgages against their homes. They're turning down new work because they can't afford to bid.
In Orewa, they're feeling the pinch at Le Croissant Cafe on Moana Ave and nearby Walnut Cottage, which had planned to issue discount vouchers to incoming residents.
"Lots of young men used to come in for filled rolls," says Le Croissant owner Suzanne Lipanovich.
"It's not good for the whole town. I hope they get it back up and running - it's marvellous for the community."
Many of the tradesmen live nearby in Whangaparaoa, Silverdale, Albany and the East Coast Bays. Everyone knows of someone who's struggling.
But victims are sprinkled around greater Auckland - suppliers from as far as Pukekohe; plumbers from Howick; trees and shrub growers from Takanini.
Gary Wheatley of Clevedon-based structural steel manufacturer IEC Ltd recites what he's owed like a mantra: "202 thousand, 666 dollars and 28 cents," he says. "It's a lot of money for a three- to four-man business."
He's had to borrow money to repay suppliers. Like others he's being propped up by his parents, who formed a family trust to help.
"Even the local area of Clevedon is suffering - I used to get my vehicle serviced at the local garage and I haven't been able to pay him.
"It's bewildering how far it goes beyond the people [Kensington] were directly dealing with."
Fontein was no cowboy; his high media profile was built around award-winning office parks including Harbourside in Avondale and Pacific in Mt Wellington. His Kensington group of companies had also completed top-end apartment complexes in the eastern suburbs. In the booming Auckland housing market of 2005, he wanted to extend the master-planned business park concept to housing - a trend gaining favour overseas.
The mix of houses on the hill and apartments and houses on the flat would be connected by walkways and pedestrian-friendly streets with names like Landmark Terrace, Panorama Heights, Puriri Boulevard and Parkside Drive. Balconies would face the road to encourage interaction. Garages were discreetly tucked away. A fee-paying residents' association would look after the shared amenities.
The master-planned community found no shortage of buyers. The idea appealed to empty-nesters looking for quality, low-maintenance and neighbourliness; a fair number of families were attracted for similar reasons.
For owners and intending purchasers who signed up for $70 million in sales, enthusiasm has given way to uncertainty. Will the master-planned community for which they paid a premium ever eventuate? What will happen to resale values?
For those who have paid deposits, can they get their money back? Sunset clauses allowing them to escape will come into play if homes aren't built in time. Lawyers are hovering - but many are sitting tight. A residents' action group has formed - but they're not commenting ahead of an announcement expected from receivers KordaMentha next week. Main lender, the BNZ - owed $41 million when it pulled the plug - is understood to be preparing the project for sale. Few of the tradespeople expect to see much of what they're owed.
The angst of homeowners and tradesmen was laid bare in media coverage when the receivers moved in two months ago. While they are victims through no fault of their own, their plight is not dissimilar to investors burned by finance company collapses in the past year - many of which foundered on the falling property market.
Yet there is hope that Kensington Park may somehow avoid the same inexorable fate. The homebuyers and subbies so vocal in September are now holding fire; some even express sympathy for Fontein.
Peter Baker of garage door supplier Dominator North Shore had worked for several years on Fontein projects. "I don't doubt the project was feasible but when the market turned down, the bank started changing the rules and Patrick had nothing to secure against.
"Nobody is going to get $40 or $50 million to build without borrowing. But to get title you need to get to a certain point so it's chicken and egg. They were that far away [from further sales] - it was a cashflow thing."
Baker says both the bank and the Rodney District Council could have been more lenient. He is owed $8500, having received a big payment a couple of months before the project collapsed. "I'm thanking my lucky stars, otherwise we would have been in big trouble."
The best outcome - a buyer picks up the whole site and follows the master plan to fruition - may be a pipe dream in the current financial climate but it's a dream many are clinging to.
Some owners fear "another Gulf Harbour" - the site carved into chunks with competing developers maximising quantity and compromising on quality. If planned amenities including the gymnasium and pool complex, shops, parks and walkways are axed, will buyers who paid in anticipation suffer a loss? Will the residents' association - fees paid are with the receiver - survive? Will the landscaping and gardens continue to be looked after?
The worst scenario has the eerie silence continuing, unfinished homes deteriorating in the weather and the lawns no longer mowed - but even the receivers say the site is too valuable to let it languish.
The owners may have gone into their shells but many remain optimistic. "It's a wonderful concept - I'm very happy here," said one who declined to be named. "I want to see it carry on."
That would be the best outcome for the subbies, too.
"People are trying to be constructive," says Justin Savage of concrete specialists Harbour Construction. "The hope is that a new buyer comes in and there will be ongoing work - but a new buyer's not going to accept liability for past debts."
Harbour is owed a six-figure sum for foundation and block work. "We're probably their biggest [unsecured] creditor - fortunately we have other work to get on with."
Like others, the firm has repaid suppliers and wages owing - "we've taken a hit".
Unlike some high-fliers who have walked from similar train wrecks, climbed into their expensive cars and distanced themselves from creditors, Fontein is still around, working hard to stem the bleeding. In fact, he's sold his two BMWs - along with the $8 million family home in Remuera - to repay the bank. He and his financial backers sank an extra $20 million into the development as valuations fell and the bank demanded more collateral to satisfy changing asset-to-loan ratios, he says. His businesses are being wound up. "I don't have anything hidden away."
The 42-year-old has signed an agreement giving half his income for the next three years to repay parties he gave personal guarantees to, including some suppliers.
He's anxious that all trade creditors are treated fairly and talks of a possible deal whereby subbies are re-engaged by whoever takes over and, as each stage is completed, receive instalments of what they are owed.
His efforts to revive the project may explain the comparative lack of vitriol from victims - but the civil engineer with a corporate finance MBA, the developer with the Midas touch, has been badly tarnished.
Some subbies endured late and slow payment problems for months before Fontein called a meeting in April to explain the difficulties.
"He told us he was seeking an injection of capital," says Paul Askew of Floorcraft. "The next month the subbies were paid half of what they were owed."
Critics accuse him of going too far, too fast - starting construction on hillside houses before apartment blocks on the flat were completed - while undertaking a similar big master-planned project at the same time in Taupo.
"I still think it's a great project apart from the financial aspects," says Tony Rean of Rean Construction. "It's just a result of the times, though he perhaps could have been more up front so we didn't hang around six weeks too long. At the end of the day I've kissed my money goodbye. If the bank is packaging it up for sale, there won't be anything left for us subbies."
Some saw the writing on the wall and got out in time. Others have thousands of dollars of equipment locked up on-site. "We bought in $300,000 worth of gear," says Craig Mathers of Hibiscus Coast Scaffolders. "Eighty per cent of it is in there and I'm trying to start up another business." But he has received payments allowing him to repay some creditors.
Some subbies yet to sign producer statements certifying their work hope this will give them clout. "If the receivers wish to sell houses they will need producer statements before they can get building consents. We won't release them until we get paid," said one firm.
The Rodney District Council is also anxious to get the project back on track. "This was the first case-managed resource consent in Rodney, with sewage, stormwater, roading and urban design issues all co-ordinated," says policy director Warren Maclennan. "This led to some really good urban design outcomes and we wouldn't want to lose any of that in future."
The council holds some sway. "We will be enforcing our building consent and resource consent conditions," says Maclennan.
"We would really like one developer to take it over and complete it as the master plan envisaged. This would make future consents more straightforward. It may be that somebody asks for a variation in the resource consent but that hasn't happened. [If it did] we'd be looking for a comprehensive development plan for the remainder of the area."
