“MR. JELLY-BEAN”

A) Meeting

You might say that it was time that the Verigin Brothers got themselves into trouble. We were building custom houses for reliable clients but there was not enough volume to sustain a family business. We had to expand Verigin Industries Ltd into larger projects so that Russel could expand his talents in Construction supervision and Lawrence would have more volume in the millwork line and Elmer could utilize his Engineering and technical knowledge for a much wider scope.

Into the open door walks John Holcombe, “Hokie” as he was known to his immediate associates. It would be soon enough that we would find that that the name was synomonus “Hocus Pocus” or some like name that is foreboding with, “hang on, you are all in for an experience!”

As he gave us compliment after compliment:

• “my knowledge and your building expertise is what I have been always searching for”
• “with your reputation we can conquer the development business”

That should have been enough to warn those farm boys to keep an eye on their rear ends. But then again, what harm would there be in listening to a few ideas After all we were smart enough to understand construction and if a project dropped in our laps, could we not handle it? It does not matter how large the deal could be

One day at a social time he talked about his salesmanship while he worked as a Representative for Nabob Foods. He convinced the Prime Contractor on the construction of the Alcan Smelter in Kitimat, B.C. to purchase jelly-beans, as a Xmas treat, for all the children of the workers on that project. He smiled as he said, “My boss in Toronto, could not believe that I had sold an entire carload of jelly-beans. “ I have to admit that was impressive.

And so, we gave him the nickname of Mr. Jelly-Bean

B) Elkford Square Concept

Jelly-Bean continued with his association with us while looked around for a project that he could promote that would provide him with a “Promotion Fee” for a concept that he would sell. After all what is wrong with all that, the Verigin boys get a construction project, Hokie gets a fee and if all that is within a budget that works, is that not the way t is done?

The new town of Elkford created by Fording Coal Ltd needed a town center and Mr. Jelly-Bean salesman extraordinaire was there promoting. What is needed here is a 22 room hotel, beverage room, lounge and restaurant and a shopping center with a food store, pharmacy, liquor store, bank, post office and clothing store. “Hey, your guys, this will be a Plum” he said. “Think about it, where will 700 thirsty Coal Miners wash out the coal dust?”  The more he talked about the greater the excitement all around.

“All we need to do is convince Fording Coal Ltd that we are the team! With the Verigin reputation and my knowledge and contacts, we have a sure winner!”

C) Promotion

Hokie started using his best persuasive tools that the had every mustered along with his upmost salesmanship to keep the newly selected Mayor and Council of Elkford abreast of his concept.

Harry Soloveoff used his talented artist ability to paint a conceptual plan so that John Holcombe could present to his audiences in Elkford and wherever else he needed to go. Soon he had prelease agreements with the Royal Bank and other agencies

The long wait to get a commitment for the proposal was on but Hokie persisted

D) Commitment

There may have been an omen when the Cominco management called me into their offices in Trail, B.C. for a special meeting.

“How much do you know about John Holcombe? There seems be many little matters in his record that is not serious but concern us. We wanted to talk to you first and see how you feel about them.”

I responded with “yes, we have heard the same about him and he has had money problems since he quit working as a Greyhound Bus Driver and started selling for Nabob. Now he is a practicing Promoter and this occupation is a hit and miss proposition at best. It is understandable for a man to have financial shortfalls as he dos not have a steady income”

“You do know he is in jail!”

“Yes he had alimony issues with one of his wives”, I responded

“As long as you know about all this, that is fine”, the Cominco people responded. “The Elkford Project is yours as long as you are in control of its development”

Was I sure how I was going to continue? No, but what did we have to lose?

The plot thickens!

E) Mortgage Financing

Hokie’s answer to mortgage financing was to meet with a Mortgage Broker and convince them that he had a Shopping Center fully leased backed by Verigin Industries Ltd and personal guarantees. He was very excited that he had succeeded and the project was a go. When I asked him that it appeared to me that all the liability rested on the Verigin Brothers ability to ay the bills, his response was “so what did you expect?”

Obviously the answer goes without saying that the Verigin expectation was to design and construct and there was no intent to extend liability to the Verigin family.

So started the beginning of a time that the development process became two separate understandings

It was shortly after this that in the fall of 1972 that the project ground to a halt so that the financing package could be more acceptable. This was when Hokie suddenly disappeared and we found out later that he was incarcerated.

F) Interim Financing

Since the Royal Bank of Canada was financing Fording Coal Ltd and was also a potential tenant in the Shopping Center, it was decided that Interim Financing (the “bridge” between the mortgage on permanent financing and the regular financing to construct the project) could be arranged with this Bank.

This was the first experience that I had with preparing cash flow forecasts whichcombined a construction schedule with the need for funding and a shortfall of mortgage funds that equated to the need of interim financing.

Since the Mortgage Holder had not been established at this time nor any terms of a possible mortgage, the idea of an inexperienced designer of the cash flow being able to make a credible presentation was indeed a challenge

Ingenuity, perseverance and many draughts resulted in a meeting being scheduled with senior RBC staff in their head office in Vancouver. After two hours of presentation, many questions answered, the staff indicated that there was agreement in principle to create a $250,000 “Bridge Financing” fund subject to a satisfactory “Takeout Mortgage”.

A formal letter followed within two weeks, Note that Hokie had nothing to do with this part of the process

G) Leasing

Now that Hokie was in jail and interim financing was set, the final mortgage financing was a function of how good were the prelease agreements. How much steady income was available and were they triple A leases from banks, government, or unsecured new businesses?

After a review of the letters that Hokie had, it was evident that the rental incomes would not service the debt. I proceeded to meet with these contacts and begin the negotiations to emend the rental rates.

Progress was made in some agreements but most were reluctant to renegotiate since they had a valid signed pre-lease agreement with Hokie. It was either the agreements had to be changed or the project could not proceed Persistence achieved success

H) Its A Go!

I had already given up on the project since the Take-out Mortgage became enmired in a long review since early winter and the optimum time to begin a project in Elkford (April 1) had past.

It was mid August 1973 when I got a call from the Federal Business Development Bank in Cranbrook, B.C. that the wished to discuss an offer for financing. The project required $950,000 in financing but the offer was $750,000 with a $100,000 guarantee from Fording Coal Ltd and personal guarantees from all the shareholders. Sign the agreements and proceed.

I needed time to contemplate how the difference of $200,000 was to be generated. I started my drive o Elkford and at Jaffray, I called my brother Lawrence in Trail to let him know of the offer. His answer “well it’s a project and so let’s get on with it!” I still did not resolve in my mind how I was going to make it fit together.

I arrived into the site office left over from the failed attempt in 1972, sat down and started to cry from frustration.

First visitor was the Manager of the Royal Bank of Canada satellite office in Elkford. His message “ your $250,000 interim financing is in place, the RBC does not want to be the agency that will stop this fundamental project in Elkford from beginning!”

A short while later, Larry Sapriken of Sapriken Brothers n Kelowna arrived and introduced himself. “Our company can undertake the Insulation, Drywall, Steel Studs, T-Bar Ceilings and Stucco. Can I offer you my Tender Price ?”

While Larry was still there, Hank Tarasoff from Acme Plumbing arrived and announced that he was ready and willing to undertake all the Plumbing

Doug Fisher opens the door and introduces himself as the Clerk of Works for Fording Coal Ltd and charged with inspecting the construction of Elkford Square Ltd. “When is this project starting? “

When they all left, I sat down and cried as I had no clue how I was going to make all this happen.

Then, Stuart Matheson arrived from Fording Coal Ltd and asked whether Verigin Industries Ltd could get a thirty (30) unit apartment building being built by Fording.

Yes, the Elkford project had started but but the “Captain of the Ship” had few drawings, no realistic budget and a schedule that had big letters on it “Go as fast as you can”

I) Construction

Snow had already covered the surrounding mountains which meant the “window” for economic construction was over and the heavy additional costs of winter construction were evident. In addition to a $250,000 deficit in construction financing, this additional pressure was not a minor threat to the success of this project.

This was the time to combine construction expertise, with design to achieve an apparent impossible budget and so was the continual vigil for more ingenuity for ideas and research to the budget of Elkford Square.

J) The Promoter Lawsuit

It was about the time that Elkford Square became operational, that I heard from John Holcombe, alias “Hokie”, alias “Jelly-Bean”, again. This time it was in the form of a claim to our bank account for $20,000 in Promoter Fees as a “Contract” for services rendered.

Yes there was agreement that the entire “Promotion Fee” would be $20,000 but that was for:

• Concept marketing to Fording Coal and the Village of Elkford
• Leasing
• Financing
• Operations Initiation of the Hotel

I had advanced $5,000 to Hokie but he never completed satisfactory leasing, Mortgage Financing, Interim Financing nor any credible business plan for hotel operations. He was in jail when all the finalization was completed.

From my prospective, this was a frivolous matter that can easily be settled but the lien was presented to the Bank of Montreal and needed to be either contested by 1200 noon that day, or it had to be paid out. So the temporary solution was to pay the money into court and let Hokie proceed to the courts to get that money if he had legal access to this money.

Well Hokie did and the court date arrived. The Elkford Square Lawyer was sure that he had a winner and an entire pay was sent in court

The ruling was not immediately obvious (depending on which side the view is from) and the Judge ruled that since the project went ahead and that in order for success the work had to be done and so Hokie was entitled o the entire sum of $20,000 less what was paid out previously.

Interesting !

J) Aftermath

I never did see John Holcombe (Hokie) (Jelly-Bean) again.

The Elkford Motor Inn had great revenues but a tremendous staff theft problem and eventually was sold (after creating a $250,000 deficit) to a former local employee foe BC Telephone company.

Elkford Square Shopping Center was expanded in 1982 and eventually sold to George Wood of Supervalu, the largest Lessee in the Center just after the turn of the century.

I have many memories but they were all developed under considerable stress and I have not been to Elkford since the Shopping Center sold.