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Housing Stops Not Starts

SunCal Stone Soup

The bankruptcy of SunCal is no surprise. What was surprising was how many people believed in SunCal in the first place - believed there was a pot of gold at the end of a SW mesa rainbow.  Forbes magazine made this analogy in a scathing 2007 story about the greedy dealings behind the Westland board's sale to SunCal. 

Sustainable* community development is more like the stone soup fable where everybody gives a little bit to make a delicious stew.  Sure, they get tricked into it by a couple of sneaky soldiers but at least everyone eats.  Contrast that with the sneaky short dude moving the gold that he has no intention of sharing.  Stone-Soup

The development paradigm for SunCal's success was as old as the post war housing boom.  It depended on the belief that Albuquerque has only one possible way to grow  - SunCal's direction.   The tax benefits contemplated would have added weak but damaging substance to what was always an illusion - that unrestricted development of all 57,000 acres was inevitable and beneficial to the rest of us.  If you can corner the market on sprawl, SunCal tried. 

Not everyone shared the vision.  It was not in the public planning documents until we stopped paying attention in the 1980's.  The Albuquerque Bernalillo County Comprehensive Plan restricted growth in most of the former land grant through a designation as Grazing Reserve.  This was amended and redesignated as Planned Community Reserve in the late 1980s.  Then the Planned Community Criteria were simply never adopted by the County.  They still get the grazing tax benefit, though you don't see cows out there. 

Albuquerque's jurisdictional control of the Westland area was further eroded by actions in the Roundhouse during Manny Aragon's final years there - including elimination of Albuquerque's extraterritorial planning and annexations, and creation of the Water Authority. 

The table was all set but few wanted to hear the bubble popping.  Maybe it was just too good to be true - too much of a good thing.  Certainly too much land.  More land than water.  More land than demand.  More land than sense.

Westland was a cash cow for the board members and they, along with many shareholders, got a windfall with the sale.  Barbara Page and Sosimo Padilla alone split $18 million.  Hopefully that stayed in the local economy.  And there was the creation of the Atrisco Heritage Foundation, the Campo Santo (cemetery) and the LLC for Oil and Gas Board(s).  The new board was supposed to get a million a year for a hundred years but I doubt that they ever got more than the initial $2 million - nothing to sneeze at but hardly enough to maintain a cemetery.  Might as well have promised a hundred dollars a year for a million years. 

The future undoubtedly means multiple subdivisions and land sales of the former land grant area.  The results depend on many factors and measures.  The stone soup fable is about generosity, imagination, multiple contributions and multiple beneficiaries, not rainbows and windfalls.  Oh, and it helps to have a  basic recipe.  A general plan.

*Search me. But I'm sure you know what it means. 

Image Child's Play Books.

Comments

Evangeline

The future ownership of the Atrisco land will be decided by a bankruptcy court judge in Delaware. Likely, it will be the group which holds the first lien mortgage on the property. Their names are in the bankruptcy court filing called "Declaration of Bruce Cook" whose link is below.

However, the ultimate identity of the members of that first mortgage holders group will probably never be public. Wall Street players who own "pieces" of big mortgage loans, that first mortgage on Atrisco, trade those those pieces like boys trade baseball cards. That trading of pieces of the Atrisco first mortgage loan has occurred and will continue to occur in private meetings at investment fund, hedge fund and vulture fund's private offices.

Ultimately, on the date the Chapter 11 Plan for this bankrupt land owner becomes effective, that trading will stop, and those with the Atrisco baseball cards in hand will own "membership interests" in a new Delaware limited liability company organized by the Wall Street fund which holds the most Atrisco baseball cards.

All of SunCal's and D.E. Shaw's "promises to the community" and "promises to the Atrisco heirs" are considered unsecured contracts under bankruptcy law, and will simply be erased and released by the Chapter 11 Plan that bankruptcy court judge ultimately approves.

Monahan's comment, on his blog today, that the Atrisco heirs might get the property back is simply foolish, unless they pool their money and buy the first mortgage, i.e. get in on the game of buying Atrisco baseball cards...not a chance in the world.

If you want to read the interesting bankruptcy court documents which have been filed so far in the bankruptcy case of the Atrisco LAND OWNER, go to the link below, which in turn has a link to the Scribd posting of the Bankruptcy Petition and Declaration of SunCal's General Counsel Bruce Cook.

Among the other interesting information he imparts, Mr. Cook says this SunCal/DE Shaw land owner entity which is in bankruptcy, and which owns the Atrisco land grant, has stiffed New Mexican contractors, service providers, consultants, and a whole lot of lawyers to the tune of $6.4 Million. Unless D.E. Shaw steps up to the plate, as a matter of honor, those people and companies will never see a dime for their $6.4 Million in goods and services.

To see the actual bankruptcy court dockets, go to:

http://fwix.com/albuquerque/share/7db7331e4b/westland_devcosuncal_bankruptcy_was_no_surprise_to_tidd_opponents

Click on the line which says: "Here’s a copy of the bankruptcy filing."

Coco la Boca

Thank you for consistently filling us in.

Hunter

So my prediction of March, 2008 was off by one year. Sue me.

Evangeline

Cocoposts:

I just wanted to let you know that on May 10, 2010 the U.S. Bankruptcy Court in Delaware granted Barclays Capital's motion to dismiss the bankruptcy of the owner of the 55,000 acre Atrisco land grant property, Westland Devco LP. The actual transcript of the court hearing where the motion to dismiss was granted is "sealed" from public view until 8/5/2010.

However, the motion to dismiss filed by Barclays Capital alleged that Westland Devco LP is an entity that only owned one piece of real estate (albeit a huge one) and that as a result, contrary to bankruptcy law, Westland Devco LP's owners filed the bankruptcy "in bad faith" as a mere artifice to delay the foreclosure of the property which was occurring in the New Mexico state courts.

So, eventually Barclays Capital as leader of a whole group of investors will foreclose on the property. Officials of Lennar Corporation have, in the recent past, had a good working relationship with Barclays Capital, so it is my expectation that Lennar will make a run at joint venturing the ownership and development of the Atrisco property with their friends at Barclays Capital after the foreclosure.

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