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Benson housing developer files Chapter 11
Thelma Grimes/San Pedro Valley News-Sun
The Whetstone Ranch development on State Route 90 is the latest to buckle in the recession. The Tucson-based Whetstone Development Co. filed Chapter 11 bankruptcy last week.
The development company was involved in a 13,000-home project with Pulte Homes.
Benson city officials said they met with developer Ernie Graves last week, who said the filing is not abandoning the project, but realigning their business affairs.
While Graves has confirmed the development company has filed Chapter 11, he said the company was current with payments, but the bank was calling for their money.
Graves said the company has encountered problems over the last few years with the Environmental Protection Agency, and added costs to add a sewer system, and improve roads and utilities.
Graves estimated those costs at about $20 million.
"There was just a lot of improvement costs that came up, and the EPA delayed us from being able to sell some of the property," Graves said. "The market is tough, but we will move forward and keep trying to sell the land. We are in the process of reorganizing and we will create a new plan, and work under the protection of bankruptcy laws. It was just unfortunate; we had too much debt and too many delays."
In the filing, the Whetstone Development Co. estimated its assets are worth between $1 million and $10 million and liabilities are between $10 and $50 million. Among the creditors listed in the filings, the company is said to owe Graves and Whetstone Partners LLC around $15 million.
Graves purchased nearly 15,000 acres of land east of SR-90 in the early 1990s with plans to build the major housing development known as Whetstone Ranch. It was originally estimated that it would become a 20,000-home project, with groundbreaking and homebuilding beginning in December of 2005.
Public Works Director Brad Hamilton said when a project like this struggles, as many are in the current economy, it doesn't hurt the city or change plans.
Hamilton said city officials keep up with all actions being taken by developers, but there is little they can do.
The economy has hurt what looked to be major growth in Benson a couple years ago. Besides Whetstone Ranch's plans for 20,000 homes in 2005, there were also plans submitted by other developers throughout the city for an additional 17,000 homes.
However, several others have run into problems and many have stopped construction altogether. Hamilton said in the current fiscal year, which ends on June 30, there have only been 17 new home permits pulled.
The House Ridge project on Pearl Street didn't go well, and Hamilton said the bank took the land. The Water Crest property off Ocotillo has also ceased development, and the property was returned to the financer.
Hamilton said no matter who owns failed projects or developments on hold while the economy remains unstable, plans have been approved and changes to the properties cannot be made without council approval.
As many are halting work and struggling, Jerry DeGrazia of San Pedro Partners LLC continues to move forward with a planned 850-acre development.
DeGrazia has asked the council to annex another 43 acres of the development planned west of SR-90.
DeGrazia said he plans to move forward with the project, and once the economy recovers, the property will be ready for development.
The Whetstone Ranch development on State Route 90 is the latest to buckle in the recession. The Tucson-based Whetstone Development Co. filed Chapter 11 bankruptcy last week.
The development company was involved in a 13,000-home project with Pulte Homes.
Benson city officials said they met with developer Ernie Graves last week, who said the filing is not abandoning the project, but realigning their business affairs.
While Graves has confirmed the development company has filed Chapter 11, he said the company was current with payments, but the bank was calling for their money.
Graves said the company has encountered problems over the last few years with the Environmental Protection Agency, and added costs to add a sewer system, and improve roads and utilities.
Graves estimated those costs at about $20 million.
"There was just a lot of improvement costs that came up, and the EPA delayed us from being able to sell some of the property," Graves said. "The market is tough, but we will move forward and keep trying to sell the land. We are in the process of reorganizing and we will create a new plan, and work under the protection of bankruptcy laws. It was just unfortunate; we had too much debt and too many delays."
In the filing, the Whetstone Development Co. estimated its assets are worth between $1 million and $10 million and liabilities are between $10 and $50 million. Among the creditors listed in the filings, the company is said to owe Graves and Whetstone Partners LLC around $15 million.
Graves purchased nearly 15,000 acres of land east of SR-90 in the early 1990s with plans to build the major housing development known as Whetstone Ranch. It was originally estimated that it would become a 20,000-home project, with groundbreaking and homebuilding beginning in December of 2005.
Public Works Director Brad Hamilton said when a project like this struggles, as many are in the current economy, it doesn't hurt the city or change plans.
Hamilton said city officials keep up with all actions being taken by developers, but there is little they can do.
The economy has hurt what looked to be major growth in Benson a couple years ago. Besides Whetstone Ranch's plans for 20,000 homes in 2005, there were also plans submitted by other developers throughout the city for an additional 17,000 homes.
However, several others have run into problems and many have stopped construction altogether. Hamilton said in the current fiscal year, which ends on June 30, there have only been 17 new home permits pulled.
The House Ridge project on Pearl Street didn't go well, and Hamilton said the bank took the land. The Water Crest property off Ocotillo has also ceased development, and the property was returned to the financer.
Hamilton said no matter who owns failed projects or developments on hold while the economy remains unstable, plans have been approved and changes to the properties cannot be made without council approval.
As many are halting work and struggling, Jerry DeGrazia of San Pedro Partners LLC continues to move forward with a planned 850-acre development.
DeGrazia has asked the council to annex another 43 acres of the development planned west of SR-90.
DeGrazia said he plans to move forward with the project, and once the economy recovers, the property will be ready for development.
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The following are comments from the readers. In no way do they represent the view of bensonnews-sun.com.
Charlie Baker wrote on Jun 4, 2009 8:50 AM:
" Benson should do a “hostile takeover” on all the property in Cochise County to get more property taxes.. As far as servicing these properties they can ignore them as they have done with much of the properties now within the city limits. Being within the city limits does not mean the city will provide services. It is all about getting the property taxes, not providing services.
NO NEW ANNEXATION WITHOUT SERVICES TO ALL CITY PROPERTIES!!! "
NO NEW ANNEXATION WITHOUT SERVICES TO ALL CITY PROPERTIES!!! "
Robert of Benson wrote on Jun 3, 2009 9:20 AM: