Choice Acreage May Not Attract Many Bidders
A 73-acre swatch of vacant residential land in the hills overlooking the Pacific Ocean here is set to be sold in a foreclosure auction Dec. 20 unless the former owner comes up with $32.5 million in principal, interest and penalties.
But the former owner, Denver-based Richmond American Homes, doesn’t want the property, which it turned back to its lender in 1990.
And there is some doubt as to whether there is much other interest in the land, once considered among the choicest properties in the county.
Because it is located in San Clemente--a city that has limited residential construction to no more than 500 homes a year since 1986--the acreage could take years to build out, each year costing the owner millions of dollars in interest.
One major Orange County builder, who asked to remain anonymous, said the land is probably worth only half of what is owed on it because of the length of time it would take under San Clemente’s restrictions to completely develop it. Officials at Richmond’s San Clemente office declined to discuss the situation.
Richmond American acquired the land from Western Savings & Loan of Phoenix in 1988, borrowing $26 million from the thrift to pay for the three separate parcels.
The builder obtained city approval the next year for a plan to build almost 300 homes on two parcels totaling 63 acres. The company never sought city approval for development of the third parcel, which contains 10 acres.
But Richmond, a unit of Denver-based MDC Holdings Inc., was turned down for building permits in 1989 and 1990.
Then in mid-1990, federal regulators declared Western Savings insolvent and seized it. As part of an ensuing settlement of accounts, Richmond deeded the land back to Western Savings, according to an MDC staff attorney.
Federal regulators, however, still consider Richmond to be responsible for the loan.
It is unclear whether Richmond, once a major home builder in California, defaulted because it ran into financial difficulties or because it decided that it was just too costly to keep paying for land it could not build on.
After regulators seized Western Savings, many of its assets, including the three San Clemente parcels, were turned over to the federal Resolution Trust Corp.
The RTC in turn contracted with a San Francisco company, Icon Associates, to manage liquidation of a portfolio of seized assets that includes the San Clemente land, said Icon assets manager Pat Keadle.
She said that if no bidder in the Dec. 20 sale matches or exceeds the minimum bids needed to clear the debt on each of the parcels, the land would remain in the RTC portfolio.
The agency a-lready has taken control of more than $21 billion worth of real estate from seized thrifts and banks.
In recent months, the RTC has staged large, professionally run auctions to try to rid itself of some of its holdings. At the most recent auction, held in Cathedral City, land and buildings with a combined worth of about $215 million, as listed on the books of the thrifts that had financed them, fetched $106 million from bidders seeking bargains.
The RTC has scheduled its next auction, of 85 pieces of real estate, for Jan. 30. The agency has said that nine properties in Orange County, including a $12-million, 20-acre commercial parcel near John Wayne Airport, will be included in that auction.
