Spanish View Towers teeters on bankruptcy, foreclosure

Las Vegas Foreclosure News & Information

BY TONY ILLIA

A moment of truth has arrived for Spanish View Towers. The swanky luxury condominium project, is now facing foreclosure, possibly as early as today.

The development at Buffalo Drive and the I-215 Beltway calls for three 18-story buildings with a combined 444 residences above four-story garages. Homes range from 1,835 square feet to 9,500 square feet in size, priced from $795,000 to $8 million. A new single-family home, by contrast, runs about $317,300 -- or nearly 62 percent less, reports Home Builders Research, a Las Vegas residential analyst.

Developed by Rod Yanke, a longtime local custom-home builder, Spanish View soon flatlined after breaking ground in early 2006. Now there are lawsuits and mechanics liens lodged against the project. Nevada Ready Mix, for example, has $1.5 million outstanding for the foundation pour in February 2006. Helix Electric has $500,000 due and HB Parkco says it is out $25 million for concrete work.

They aren't alone. Allison Gaynor, Barbara Chandler and Saralee Bowers are owed $600,000 in cash deposits on three units inside Spanish View Tower. The law firm of Marquis & Aurbach filed suit on May 23 in Clark County District Court on their behalf. The suit seeks deposit returns plus $1,500 in damages. Roughly 91 people have placed deposits with the project.

"This project is more than 18 months behind schedule," said Terry Coffing, Marquis & Aurbach's managing member. "To date, there is no construction above the first floor of the first tower and the sad truth is even that floor is not substantially completed."

D-DAY APPROACHES

The 2.38 million-square-foot development was scheduled to open in June. But there has not been noticeable construction progress since groundbreaking. The project's tower crane was recently disassembled and moved offsite, leaving a largely raw-dirt site with some concrete footings.

Future construction seems unlikely, given a 40.6 percent project-cost increase, from $475 million to $800 million, despite remaining the same size. Spanish View additionally faces competition from nearby rival projects like Sullivan Square, an $800 million mixed-use condominium project underway at Sunset Road and Durango Drive.

"Construction ceased long ago and we have learned there is no financing in place to move the project along," said Coffing. "The developer is currently a defendant in at least nine lawsuits and faces more than $30 million in mechanics liens."

Yet contract language could make it difficult to recover funds. Buyers, per their agreement, let Spanish View pledge their deposits as security for another loan. It's an uncommon industry practice that usually signals shaky project financing. Most residential developments place buyer deposits in protected escrow accounts.

"Ultimately, this class action is going to be fighting with the bank," Coffing said. "I'm deeply concerned."

The 15-acre project currently faces foreclosure by OneCap, which has four deeds of trust on the property. It's scheduled for foreclosure sale June 4. The developer, who financed the land purchase as part of the project, has until today to come up with the money or file for bankruptcy protection.

DISINCENTIVES ABOUND

But the land sale may not garner enough to clear Spanish View's heavy debt load. The property, for example, would have to garner a minimum of $2 million per acre just to clear its liens. The buyer would additionally have to demolish and re-grade the site in order to create a developable property. Both items could prove costly and deter bidders.

Vacant property prices, meanwhile, averaged just $793,000 per acre valley-wide in the first quarter, which is 60 percent less than needed to clear the project liens, reports Applied Analysis, a Las Vegas-based research firm.

And Spanish View's troubles come during a market-wide downturn in luxury-condominium sales. "There have been relatively few suburban-residential, luxury high-rise products in the market," said Brian Gordon of Applied Analysis. "The majority are concentrated around the resort corridor and South Strip, places supported by entertainment amenities.

"It would have been an unreasonable expectation to believe that all of the projects in the development pipeline would enter the market as planned," Gordon said.

Article Source http://www.lvbusinesspress.com/articles/2007/06/01/news/iq_14666296.txt