Pine Canyon will be the next luxury golf community to declare bankruptcy, joining other local developments Flagstaff Ranch and Seven Canyons Sedona that went under due to the housing bubble crash:
(photo: Arizona Daily Sun)
Pine Canyon on financial ropes
by JOE FERGUSON
Arizona Daily Sun
August 13, 2010
Hit hard by the housing recession and faced with a negative balance sheet, the owners of the Pine Canyon luxury housing and golf course development in Flagstaff are close to filing for bankruptcy protection. The managing partner of Pine Canyon, Mike Greenbaum, told property owners on Wednesday to expect a filing for bankruptcy protection as early as next week. No jobs are expected to be lost.
He said the development has required constant cash infusions since its inception and has been unable to reach an agreement with its bank for a loan extension. "For the past many years, my partners and I have endeavored to maintain the Pine Canyon community at the highest level of excellence. That level of service and ambiance has necessitated consistent subsidies on our part," Greenbaum wrote. A demand to pay down outstanding debt from Johnson Bank has only served to exacerbate the financial troubles for the luxury development. The bank has locations in Arizona and Wisconsin. "With our lender now demanding a substantial paydown on our loan, the time has come for us to face reality and that has led to our most difficult of decisions .... we have sustained nothing but losses with the project and to continue to add to those losses makes no sense in this economic environment," he said.
Warren Smith, the president of Pine Canyon, said the development is current with all of its payments to the bank. He declined to comment on how much Pine Canyon currently owes Johnson Bank or how much debt it was asked to pay down. Smith hopes the bank and the development could still work out a solution in the coming days to avoid bankruptcy. However,
the 300-plus residents of the largely second-home community will not see any services or jobs affected as a result of the planned bankruptcy filing. The development, including its 18-hole golf course and 35,000-square-foot clubhouse, has roughly 100 employees. In the last six months, only five homes and six lots have sold in Pine Canyon, according to information from Northern Arizona Association of Realtors Multi Listing Service.
This isn't the first luxury housing and golf course development in the Flagstaff region to file for bankruptcy. Flagstaff Ranch west of Flagstaff went bankrupt in 2006, after disputes about an unfinished clubhouse, and with a golf course that later closed. The state had put a hold on new property sales there in 2005 until potential buyers were notified that amenities were unfinished. The development was later put into receivership, meaning outside agents were put in charge of sorting out how to pay the bills. Flagstaff Ranch emerged from bankruptcy in 2009. Several local Realtors noted the bankruptcy filing depressed home values in the Flagstaff Ranch development.
For more info.:
http://www.pinecanyon.net/
http://www.flagstaffranch.com/
http://www.sevencanyons.com/