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Mexico's Trump Condo Project Dies, Just Like Tampa's Did

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The Associated Press

Published: March 6, 2009

SAN DIEGO - SAN DIEGO Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.

The Southern California couple paid a $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first construction crew arrived.

But admiration for the celebrity developer and star of "The Apprentice" has now turned into anger and disbelief as Trump's luxury hotel-condo plan fell apart, leaving little more than a hole in the ground and investors out of their deposits, which totaled $32.2 million.

"I can't even stand to see Trump's face on TV," says Linda Drake, a psychologist, whose husband is a commercial airline pilot and financial adviser.

The collapse of the Baja plans sound strikingly similar to details of 52-story Trump Tower Tampa, which also wasn't built. Buyers in both projects said they were lured to purchase by the Donald Trump name and believed the project would succeed because of his involvement.

However, buyers in both condos later discovered that Trump had merely licensed his name to other developers. He didn't finance either project.

In Tampa, Trump pulled out of the deal when the developer, SimDag LLC, couldn't obtain financing. The developer ended up filing for Chapter 11 bankruptcy and faces lawsuits from buyers who want their money back. Trump sued the developer for violating their contract, but the parties reached a mediation agreement last fall. The land along the Hillsborough River remains vacant.

Investors in the Baja condo were told last month their money was spent and they won't get a penny back. A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities. A Los Angeles-area businessman lost a deposit of more than $1 million on four Trump units, including two penthouses.

The project's collapse comes at a delicate time for Trump, whose casino company, Trump Entertainment Resorts Inc., filed for bankruptcy protection last month. He also is embroiled in a lawsuit to avoid paying debt on the struggling Trump International Hotel & Tower in Chicago.

Trump and his children heavily promoted the northern tip of Mexico's Baja California coast. He sold 188 units for $122 million the first day they went on a sale at a lavish event in a downtown San Diego hotel in December 2006.

"I went out and saw this site, and I was blown away by it," Ivanka Trump told The Associated Press in June 2007. "From the minute I saw it, it was a deal I had to do."

The location was a contrast to more expensive Mexican coastal markets such as Puerto Vallarta, Los Cabos and Cancun, she said.

The Trumps remained buoyant even as the U.S. housing market began to crumble. Ivanka assured buyers in an October 2007 newsletter that all Trump projects were immune to a slowdown.

"In characteristic Trump fashion, Trump Ocean Resort Baja will be the best of the best, and consequently always in demand," she wrote.

All that remains of Trump Baja is a highway billboard with a large photo of Donald Trump that advertises condos for sale. It hovers over a closed sales center and showroom, a paved parking lot, a big hole that cuts a wide swath, drainage pipes and construction equipment.

The failure of Trump Baja is a big blow to a real estate market just south of the border from San Diego that was booming two years ago with U.S. buyers looking for second homes and easy profits but is now similarly swooning. The market has been hammered by Mexico's drug-fueled violence and the global economic crisis.

Other developers completed big projects nearby in recent years and the area remains home to thousands of Americans, but the cliff-lined coast is pocked with partially built towers. The steel frame of one oceanfront high-rise is rusting, with air ducts hanging from one floor and an idled crane out front. A wind-tattered sales sign hangs outside twin towers nearby, one that appears almost complete and the other a much shorter steel skeleton.

Trump Baja demanded about 30 percent down for units that sold from less than $300,000 to $3 million, buyers said.

Trump's condos went on sale when Southern California home prices were near their peak, offering a lower-cost alternative in the Mexican border city of Tijuana.

The Trump Organization teamed up with Los Angeles developer Irongate Capital Partners LLC, the partnership behind Trump International Hotel & Tower Waikiki in Honolulu.

Ivanka Trump told the AP in 2007 that her father "is the boss" when asked about his role in the project.
"He is involved in every capacity," she said.

In response to a request to interview Donald and Ivanka Trump, the Trump Organization issued a statement that said its partner violated an agreement to license the Trump name, missing deadlines to obtain financing and begin construction.

Timothy Hughes, an attorney for Irongate, said the project "will not be going forward" but declined to answer questions.

One buyer sued Trump and Irongate in Los Angeles Superior Court last month and more litigation is expected.

"They put their trust in this project and feel betrayed," said Bart Ring, a Woodland Hills attorney who says he represents about 75 buyers who haven't sued.

Homeowners and brokers in Baja welcomed the publicity and higher prices that Trump brought. Now they wish he never came.

"It was a two-edged sword that's cutting the wrong way," said broker Brian Flock. "Everybody is shellshocked. I call it post-Trump syndrome."

Tampa Tribune Reporter Shannon Behnken contributed to this report.

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