Posted 5/10/16 (Tue)
(Editor's Note: Simon Calton a representative of Carlton James and who also sits on the board of Sky Watch Group on Sept. 14, 2016 , provided the following assertions in clarification to the Tioga Tribune’s reporting of the May 2016 article displayed directly below.)
1.Carlton James is a lender for Sky Watch Group.
2.Simon Calton at no point has stated that Sky Watch Group is no longer associated with Rycal Group. Rycal Group are appointed as a support team by Carlton James. This association is controlled by Carlton James, not by Sky Watch Group. Rycal will be affiliated with Sky Watch Group until their relationship with Carlton James concludes.
3.Sky Watch Group were given an official Offer of Lending on the site in Ray from a lender called “North Star LLC.” This lender was recommended by the National Association of House Builders as a reputable lender. This lender did not act in good faith and left Sky Watch Group with an incomplete site.
4.Carlton James has no association with North Star LLC and Carlton James were in no way involved with the problems that were incurred in the North Star lending problems.)
By Kevin Killough
Williams County last week revoked the building permit for the undeveloped Skywatch Inn in Ray.
The county is demanding Skywatch Group restore the site to its original condition by June 15. It also warns the owners will be fined if they fail to do so.
But Skywatch Group board member Simon Calton said the investors have not abandoned the project.
“I am determined to get this site built in Ray,” Calton said.
He said previously reported information has been inaccurate and left out important details about what has impeded the project’s completion.
Calton alleges the investment group behind Skywatch Inn was defrauded by its original lender, Northstar, LLC.
In May of last year, the Securities and Exchange Commission filed a complaint against Northstar, accusing the company of engaging in a fraudulent “prime bank” scheme.
According to the SEC, these schemes “claim investors’ funds will be used to purchase and trade ‘prime bank’ financial instruments on clandestine overseas markets in order to generate huge returns in which the investor will share.”
The defrauders give investors documents that seem sophisticated and official, and make it appear the investments have little risk. However, neither the instruments nor the markets on which they are said to trade actually exist.
Calton said much of the financial plan for the project rested on lending from Northstar, and when it turned out the company was not going to provide the lending the hotel needed, the project stalled.
“Obviously, we were devastated,” he said.
The letter notifying Skywatch of the county’s decision to revoke the building permit cites a number of issues that led the building department to take action, including the failure of Skywatch Group to provide complete plans for the project.
According to Melody Mileur, communications manager for the county, building division staff made visits to the site and held in-person meetings with representatives of Skywatch. From the site inspections and meetings, the county believed substantial changes had been made to the project and requested updated plans, which Skywatch provided.
Mileur said the plans were incomplete so the county is unable to determine the extent of the changes that have been made.
According to Calton, Skywatch has made no major change to the use of this site. The only alteration to the original plan is a structural element change from insulated concrete forms to structural insulated panels, which would allow the contractor to build faster when the project moves forward.
They also changed the concrete deck to steel and wood.
“I can confirm no change of use plans were submitted on our end,” Calton said.
Speaking prior to their permit being pulled, Calton said it’s possible the building plans could be updated when construction moves forward to reflect current market conditions. They may, for example, change the number of rooms. However, he said the footprint will not change.
“It’s still the same hotel,” Calton said.
He said the group hasn’t discussed changes with the city or county, because any such discussions would be speculative.
Safe and secure?
The letter notifying the group of the permit revocation also states the site has not been secured “in such a way to protect life and property” and provides photos showing standing water at the bottom of the excavation, as well as dilapidated fencing.
The letter, signed by Development Services Director Katie Lima, states the site shows “clear signs of abandonment.”
Also noted, previous owners Randy and Cindy Semingson, sold the property to Skywatch Inn-Ray, Inc. without notifying the county. The original contractor for the project, Rycal Construction, is no longer in good standing with the state of North Dakota.
According to video posted by Calton in February, Skywatch Group is no longer associated with Rycal.
Previous reports in the Tribune quoted Mike Sizemore, who was building inspector for the county up until two weeks ago, suggesting the erosion on the northern edge of the site could impact U.S. 2. Calton disagrees. He said he has no expertise in these matters but had been told by people who are involved in the construction that it’s not a problem.
Lonni Fleck, engineer for the City of Ray, said the erosion is not an imminent threat to the highway, however, with the traffic lights at that location, solid soil is important for the integrity of the road, and over time the erosion could cause problems.
It’s not something that should be ignored, she said.
“At some point, enough is enough . . . Why invite trouble?” Fleck said.
John Seibert, an associate of Skywatch Group, said the revocation is the result of miscommunications he is attempting to resolve with Lima and the county.
“We have already addressed part of their concerns and are working on the balance of those concerns as it relates to protecting life and property,” he said.
Seibert said the group will appeal the revocation.
Calton said he is trying to find a new lender and proceed with construction.
He said the attitudes towards Skywatch are unfair, as they are not factoring into consideration the fact Skywatch Group was allegedly defrauded.
“It’s really rude . . . We’ve been pretty open with what we’re up against . . . we were basically screwed by the lender,” he said.
That’s been compounded by the difficulty in finding a backer in the current economic atmosphere of the post-boom Bakken. Lenders are shying away from any building investments until there’s some stability in commodity prices.
“We don’t need to see oil prices come back to where they were. We don’t even need them to come back. We just need them to stabilize,” Calton said.
Calton said he’ll continue updating the Ray Commission and the group will secure the site better.
“We’ve done everything we can,” he said.