Foreclosure plague hits beach projects
In a sign that Ventura County’s residential real estate market may be nearing a bottom, a $37.5 million, 150-home development in Port Hueneme faces foreclosure and an Oxnard developer trying to launch a handful of condominium projects has filed for bankruptcy with $19.5 million in debt.
In both cases, the loans go back to 2006 and 2007. They are part of a wave of bankruptcies and foreclosures slamming tri-county residential and commercial developers who started projects a few years before the credit markets crashed.
Here is a closer look at each developer’s troubles.
Wells Fargo is angling to take control of the Bungalows at Beach House project, a development of 64 single-family homes and 86 townhomes in Port Hueneme. In a lawsuit filed in Ventura County Superior Court, the bank alleges WL Homes, the project’s developer, owes it more than $10 million on a $37.5 million loan it took out in 2007.
Los Angeles-based WL Homes filed for Chapter 11 bankruptcy in February listing about $1.4 billion in assets and liabilities of about $937 million. The case has since been converted from a reorganization to a liquidation.
That bankruptcy filing put a hold on Wells Fargo’s attempts to go after the development in Port Hueneme, which WL Homes had used as collateral for its loan. But in mid-July, a bankruptcy judge gave the bank a green light to pursue the property because the developer had no equity in it, according to bankruptcy court documents.
Wells Fargo and WL Homes declined to comment on the Port Hueneme project.
Greg Brown, community development director for the city of Port Hueneme, said 32 of the 64 single-family homes are already built. Fourteen of the 86 townhome buildings are finished, as are the townhome portion’s clubhouse and pool. Streets and utilities are all in place.
“It’s in a relatively good condition to kick start again, in my opinion,” Brown said.
Brown didn’t have exact figures but said the homes sold so far have gone to a mix of owner-occupants or investors. If Wells Fargo wins the property in court, the big question is whether the bank will try to sit on it until home values begin to recover or sell it to a builder who can finish the project sooner.
The development’s fate is out of his hands, but Brown said the city is ready to work with whoever the new owner is to get the project finished. No one has requested new permits so far, he said.
“We haven’t done anything at this point – it’s in limbo. We don’t even know who to talk to,” Brown said. “Ultimately, if there’s a company that’s building or investing in this, we would look to facilitate reissuing permits from the city’s end.”
Oxnard DEV. files Ch. 7
Oxnard-based Channel Islands Building & Development filed for Chapter 7 bankruptcy on July 22, listing $6.6 million in assets and $19.5 million in debts.
In four separate projects, the firm was trying to build 67 residential condominium units and 18 homes and had control of 18 industrial condominium units, according to bankruptcy court filings. It didn’t yet have building permits.
David O. White Jr., the firm’s president, said delays and market crashes caused the bankruptcy filing.
“Channel Islands Building & Development Partners Inc. was forced to file for Chapter 7 bankruptcy because select flagship projects were delayed beyond their original schedule, which resulted in market delivery delays that proved to be economically catastrophic when combined with market meltdowns experienced since mid-2007,” White told the Business Times via e-mail.
White’s father is the force behind Plaza Development Partners, the firm developing RiverPark in Oxnard, a decade-long $750 million mini-city. White said his firm is completely separate and his bankruptcy filing has no effect on any of Plaza’s business.
“Years ago Channel Islands Building & Development Partners Inc. had provided consulting services to Plaza Development Partners,” White said. “They are separate entities and do not have the same principals.”
One of the largest creditors to Channel Islands Building & Development was Solvang-based Los Padres Bank, which has about $7 million in claims listed in bankruptcy court filings. Bank President Butch Phillips declined to comment on the case, citing bank policy against publicly discussing its customers.
A tough year
Residential and commercial real estate developers who started tri-county projects a few years before the credit crisis have suffered in 2009. Some of their troubles:
• In early April, successful Santa Barbara developer Jeff Bermant faced claims by Rabobank that he failed to repay $9.8 million of $21.4 million in loans on the Monte Sereno community under construction in Arroyo Grande.
• Also in April, Don Hughes, owner of the condo-and-commercial Chapala One in Santa Barbara, said the $40 million project “has been removed from the market until further notice.”
• By late April, Santa Barbara developer Nick Narang’s companies had filed for Chapter 11 bankruptcy, listing among their debts $24 million used to build Lavender Court, a project with 40 condominium units and a 5,000-square-foot retail space on Carpinteria Avenue in Carpinteria.
• On May 28, two big San Luis Obispo County developments – Vaquero de los Robles, a luxury resort near the Paso Robles airport, and Spanish Springs, a development planned near Pismo Beach — filed for Chapter 11. Vaquero de los Robles listed $11 million in assets and $11.6 million in liabilities, and Spanish Springs listed $17.5 million in assets and $6.6 million in liabilities.
• On June 1, Westlake Village-based Double R Real Estate filed for Chapter 11 bankruptcy, listing $10 million in debts and $9 million in assets. The firm built Rancho Serrano Townhomes, 22 upscale condominiums near the Thousand Oaks Civic Arts Plaza.
• Later in June, DBN Development, the Laguna Hills company trying to redevelop Radio Square in Santa Barbara, said it would have to walk away from the project after facing a foreclosure on the property for allegedly failing to repay a $5.3 million loan. A few weeks later, the company faced foreclosure on another $5.5 million loan for a Yanonali Street property in Santa Barbara it purchased in 2006.
• In early July, Phoenix-based Opus West Corp. said it would put up for auction Camarillo Ranch Business Park in Camarillo and Westlake North Land in Westlake Village. The firm had declared bankruptcy and faced claims from Bank of America that it has not repaid $25 million of a $31 million loan made in 2007 for the Camarillo project.