Monday, April 14, 2008

Suncrest Going Downhill

Well, not physically. At least not yet. Financially is another matter. It has defaulted on $58 million in loans from Zions Bank, and on Friday it dived into Chapter 11. The developer is shopping the project, and Zions says it will continue to fund it (Little choice there. Unless the development is built out, it won't come close to securing the loans.), so the homeowners up there don't have to worry about those issues for now. They should worry, though, about the causes of the bankruptcy.

The recent real estate downturn had an impact on SunCrest, but it isn't what sank it. SunCrest is embroiled in a series of lawsuits arising from the fact that the whole thing is built on a sandpile. There's a reason there are sand and gravel pits all around Traverse Ridge (There's a fault line up at the east end, too, but I'm not going there right now.). But the project was greenlighted anyway, and the inevitable result was a pile of lawsuits over deteriorating streets, inadequate water retention and drainage, and whether the houses themselves will one day come slaloming down the hillside. Default and bankruptcy loomed from the start.

Over 20 years ago, as the houses went marching up the benches in the Avenues and Olympus and Canyon Coves, people talked blue-lining (setting an arbitrary "do not build" mark at a certain elevation). I told them not to bother because such restrictions always get tossed out in court. What was needed was an engineer putting his liability insurance behind the geological stability of a project. That and bonding would have stopped the riskier projects or at least provided funding for fixes. Wasn't done, though, and now the bench communities are finding that Yeats was right and things really do fall apart.

I seem to recall a parable about building your house on sand.

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