Developer Files for Reorganization Under Chapter 11
The limited partnership that owns the troubled Coronado Pointe luxury home project in Laguna Niguel has filed for bankruptcy reorganization and protection from creditors’ claims.
Work at the hilltop development stopped early last year. Residents of the handful of completed Coronado Pointe homes have contrasting views of the Pacific Ocean and of a chain-link-fence-enclosed neighborhood of partially completed homes at dozens of other lots in the project.
In a Chapter 11 bankruptcy petition filed Friday in federal court in Santa Ana, the partnership, Coronado Pointe L.P., listed assets of $15.7 million and liabilities of $14.5 million.
The biggest creditor, which claims a debt of $11.4 million, is City Federal Savings, a New Jersey thrift that was seized by federal regulators in December, 1989.
Officials of Custom Living Communities of Southern California, the Newport Beach home builder that owns 47% of the partnership and serves as developer, could not be reached for comment Wednesday.
In earlier interviews, however, Custom Living officials blamed their problems on the collapse of the S&L; and government regulators’ subsequent refusal to continue funding the loan.
Custom Living was founded in New Jersey as a luxury and resort home builder. The company moved into Southern California in 1987 with its purchase of the Coronado Pointe property.
Plans originally called for a total of 72 homes to be built and sold at prices ranging from $775,000 to $1.2 million. To avoid the pitfalls of a slow market for high-priced properties, Custom Living planned to build just a few units at a time.
Unable to obtain construction financing after early 1990, the company stopped work on several homes even though they had already been sold. In all, Custom Living has eight unfinished homes and a number of empty building pads in the project.
In an interview in March, Custom Living’s finance officer, Lou Mont, said the firm faced foreclosure on the property because of a cash shortage.
By filing the bankruptcy petition on behalf of the limited partnership, Custom Living has forestalled any foreclosure action.
The building firm originally had three other projects in Orange County--all in the exclusive Dove Canyon golf course community near Rancho Santa Margarita.
But the same financial constraints that stalled Coronado Pointe affected two of the Dove Canyon projects.
In March, Custom Living sold 28 homes and 34 lots in two Dove Canyon developments to the newly formed Laguna Landmark Development Co., a subsidiary of Pacific Landmark Development in Newport Beach.
The new owners slashed prices by as much as $100,000 and quickly sold many of the remaining homes, which originally were priced from about $450,000 to more than $700,000.
