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SunCal properties bankrupt

Posted: November 13, 2008 12:14 p.m.
Updated: November 13, 2008 10:14 p.m.
 

NorthLake in Castaic, a proposed development where a Castaic high school was planned for many years, is among more than a dozen SunCal properties that the developer placed in bankruptcy Thursday, a spokesman confirmed.

Another property on SunCal's bankruptcy list is in Acton.

Joe Aguirre, spokesman for the Irvine-based land developer, said each of the 11 separate SunCal partnerships and two entities associated with a 12th are now listed in bankruptcy court in Santa Ana.

Locally affected interests include SunCal's NorthLake project to develop property overlooking Castaic Lake and the Acton Estates project promising to develop beyond Santa Clarita Valley's eastern border.

What happens with the wild, hilly terrain atop Castaic Lake is now a mystery.

"They (SunCal) own the land and the entitlements that go with that land," said Paul Brotzman, the city of Santa Clarita's director of community planning.

"The question now is: ‘What's the value of those entitlements if it's not feasible to build there?'"

SunCal was forced to scuttle each of its separate partnership projects by putting them into Chapter 11 bankruptcy after Lehman Brothers Holdings Inc. failed to come through with the money needed to keep them afloat, according to Aguirre.

"The action by SunCal was precipitated by the Lehman Brothers bankruptcy," he said. "Despite our ongoing efforts, Lehman Brothers has provided no meaningful response to our repeated funding requests."

Two months ago, Lehman Brothers Holdings Inc. of New York, a 158-year-old investment bank choked by the credit crisis and falling real-estate values, filed for protection from creditors in the biggest bankruptcy filing ever and said it was trying to sell off key business units.

Lehman invested heavily over the last few years in California's real-estate market through its financing of SunCal Companies.

"They effectively starved these developments of the capital they needed to pay consultants and contractors," Aguirre said.

Partnership companies placed into bankruptcy by SunCal include:

n NorthLake in Castaic,

n Acton Estates in Acton,

n Marblehead in San Clemente,

n Oak Valley in Riverside,

n Emerald Meadows Ranch in Riverside,

n Heartland Coastal in Beaumont,

n Arbor Ranch in Beaumont,

n Ritter Ranch in Palmdale,

n Johansson Ranch in Modesto,

n Bickford Ranch in Northern California's Placer County,

n SJD Partners Ltd., a company associated with the development of Pacifica San Juan and

n SJD Development Corporation, associated with the same development.

Aguirre stressed that SunCal does remain a viable ongoing interest with new money backers for its projects.

"The Chapter 11 applications solely apply to each partnership and not to SunCal.

"These legal entities were placed into Chapter 11 bankruptcy in order to acquire the funds to address various issues at each development," he said.

Since Lehman declared bankruptcy, SunCal has found a new backer with $75 million that will cover the cost of the "critical expenses of these projects."

Aguirre would not say if SunCal went looking for a backer or the investor approached SunCal.

The land development projects - many of which are rendered in attractive online images depicting a lavish upscale lifestyle - are in various stages of development. Some, like NorthLake, have seen no physical work done to the property, while others such as Oak Valley have homes already built.

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