Following the burst of the nationwide real estate bubble, large Wood River Valley developments are falling into the hands of banks rather than homebuyers.
The high-end Village Green subdivision north of Hailey has about one-third of its planned 43 homes built. Of the 13 homes on the ground, seven have been sold, with the remaining six owned by three banks.
According to district court records, D.L. Evans bank took over ownership of two of the houses in June 2009 after development company Valley Club Homes LLC defaulted on a pair of loans totaling nearly $4.5 million.
The loans were secured by local developer Henry Dean, who built a number of residential developments in Ketchum, and Linda Badell, a valley real estate agent.
D.L. Evans, headquartered in Burley, Idaho, joined U.S. Bank and Mountain West Bank, which both own two houses apiece, as current owners of large, upscale, mid-valley homes. U.S. Bank also holds the title to the 30 remaining undeveloped lots.
Ketchum-based real estate agent Dick Fenton, the listing agent for four of the Village Green homes, said interest in the available homes has been increasing, even during a time of year typically slow for home sales. Fenton said that could be due to the fact that the price ranges of the 4,000-square-foot homes have decreased from $2.5-$3 million to $1.5-$1.8 million.
"This is not the only project where the developers had ambitions predicated upon a much stronger market," Fenton said.
Another such large-scale development in the hands of lenders is Chilali Lodge, which sits largely vacant on the corner of Sun Valley Road and Second Avenue in downtown Ketchum.
Of the lodge's 25 condominiums, three have been sold. Two of those are affordable housing units sold to buyers on the Blaine County Housing Authority list.
Chilali Lodge, completed in 2007, has changed hands twice, first in the summer of 2008 when developer and original owner Barclays North sold the project to Seattle-based Bingham Capital, for an undisclosed amount.
The property again got a new owner last month when it was taken over by Washington-based Frontier Bank, which was owed well over $10 million, according to Fenton, who is familiar with the deal.
The future of the vacant units is unclear, as none have been on the market since last year. A call to Frontier Bank was not returned by press time.
Ketchum Community and Economic Development Director Lisa Horowitz said she has been talking with potential buyers in recent months to find a way to get the vacant units occupied as expeditiously as possible.
"Chilali is the most conspicuous fallout of the economy," Horowitz said. "It's a whole new level of concern for our community."
Horowitz said that while city officials are looking for ways to keep the project's windows from remaining dark in the long run, they are committed to ensuring that a potential owner would propose a use for the building compatible with the already occupied units.
Horowitz said one use that's been discussed is a small hotel, but that idea has yet to gain any traction.
She said Ketchum at least found itself in better shape after the real estate crash than some resort towns did.
"We're lucky that we don't have half-finished projects where the concrete has already been poured," she said.
However, the largest planned residential development in Blaine County, Sweetwater in the Woodside area of Hailey, appeared headed that way late last year. The development has 49 completed townhouses and 22 partly completed ones out of a planned 421 units. Tennessee developer J. Kevin Adams staved off foreclosure on the undeveloped portions of the 21-acre project by restructuring debt and by coming to an agreement to pay the city $330,000 in fees to gain final plat approval, necessary to sell the finished units.
Blaine County Commission Chair Larry Schoen said he is able to see both positive and negative aspects to these bank-owned developments.
"It's easy to observe that our entire society was over-leveraged, and when we're relying on that much leverage we have to feed it with real cash at some point," Schoen said. "It happened here and elsewhere. It is an issue for the county because we approve projects under the assumption that all of the homes will be built and will be interconnected with future developments."
In the case of Village Green, Schoen said perhaps the most significant negative impact is the economic loss to the contractors, construction workers, electricians and other workers who would have found employment building out the remaining 30 home sites.
The silver lining, Schoen said, is that the correction will bring down home prices, opening the market up to more prospective buyers.
"In the long term, these foreclosures can be positive because people have to be able to afford homes," Schoen said.
Jon Duval: jduval@mtexpress.com
A vacant house and lot dot the landscape at the Village Green, a high-end residential development north of Hailey. Of the 43 homes proposed for the project, 13 have been built, with six remaining on the market and owned by a trio of banks after the developer went through foreclosure last year. Photo by David N. Seelig
