December 14, 2010 - 12:00 am
An official for KB Home said the company is disappointed that JP Morgan Chase chose to file bankruptcy against a consortium of three homebuilders that controls a Henderson master-planned community.
“We believe this action is entirely without merit and disagree with the assertions that have been made,” Craig LeMessurier, director of corporate communications for KB Home, said Friday. “Although the unprecedented housing downturn has presented challenges in moving the Inspirada project forward on the timetable originally envisaged back in 2004, we believe there is a better long-term solution for the continued development of this growing residential area of Las Vegas.”
LeMessurier’s comments came after JP Morgan Chase Bank filed an involuntary bankruptcy petition Thursday against South Edge LLC, the consortium that controls the 1,940-acre Inspirada master-planned community.
Executives at Toll Bros. in Horsham, Pa., declined to comment.
Chase alleges that South Edge mismanaged the $1.5 billion project and used a “hostage ransom strategy” to avoid liability for a $585 million loan.
South Edge reneged on its commitment to invest $270 million in the project, Chase alleged in the bankruptcy filed Dec. 9 in U.S. Bankruptcy Court.
“These insiders are sacrificing the project and repudiating debtor’s obligations in a quest for great profits at the expense of not only approximately 39 lenders to whom the insiders seek to shift their losses, but also the city of Henderson,” Chase said in the court document. “The project can endure neither the insiders’ persistent neglect, self-dealing and abuse, nor the drawn-out litigation favored by the insiders and their affiliates.”
Focus Property Group led the consortium in acquiring the land for $557 million in 2004 through a Bureau of Land Management public auction. Focus, developer of Mountain’s Edge and Providence communities in Las Vegas, stopped making payments on loans secured by its land in Nevada and California in early 2008.
KB Home has a 48 percent stake in South Edge. Other investors include Toll Bros. and Beazer Homes. Woodside, Kimball Hill, Pardee and Meritage were also involved in the original purchase.
Inspirada continues to be a top-performing community for KB Home, largely due to its desirable location near Henderson Executive Airport, LeMessurier said.
KB Home has been building in Las Vegas for 17 years and was the No. 3 builder in 2009 with 574 closings at an average price of $192,000, Las Vegas-based SalesTraq reported.
Focus presented a “new urbanism” planning concept for Inspirada that featured diverse housing in smaller, more traditionally designed neighborhoods. The pedestrian-oriented design connects residential, commercial and open space, officials said.
Developers passed on buying the land at a previous auction because of an “inclusionary zoning” requirement that a percentage of homes be sold at less than fair market value. Those encumbrances were later lifted by the city of Henderson.
Inspirada was going to be home to 26,000 residents with 300 acres of recreational land and 20 miles of trails. Cost of infrastructure had been estimated at $226 million.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.