Clovis News

Bankruptcy looms for Clovis subdivision

The developer of a beleaguered Clovis subdivision has filed for bankruptcy protection, leaving the neighborhood of large homes without finished streets and other improvements that were part of the original project.

Los Angeles developer David Schwartzman, owner of LB/L-DS Ventures Clovis that also is known as Patriot Homes, recently filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Fresno.

His development on the south side of Shaw Avenue west of Locan Avenue went up for auction last month, said Kathy Millison, Clovis city manager.

At the time, no buyers came forward, but last week the city learned that an offer has been made.

Officials were not told who made the offer, said Tina Sumner, the city's economic and community development director.

Messages left for Schwartzman's lawyer in Los Angeles were not returned.

Bankruptcy papers filed with the court show about $11.7 million in disputed claims, nearly all owed to a Honolulu bank.

Clovis city officials have been working with bonding companies for the development, seeking money to make improvements in and around the subdivision, including roads, traffic signals, streetlights, curbs and gutters, that had been promised by the developer.

City engineer Steve White said the city-required improvements probably will cost about $1.5 million.

The developer insured the improvements with a city-required bond, a guarantee that improvements would be built. White said he expects the city will receive that money eventually.

The project was divided into two tracts and two companies issued bonds, said Scott Cross, assistant city attorney.

Performance bonds for public improvements in developments such as subdivisions are required under state law, he said.

When subdivisions are successful, developers use fees from home sales to pay for infrastructure improvements such as roads and sewers. But since the housing market crashed three years ago, few homes have sold.

The costs to revive the Patriot project will be difficult to cover unless a prospective developer can buy it at a bargain price, likely about one-third of what is owed, said Mike Prandini, president and chief executive officer of the Building Industry Association of Fresno/Madera Counties.

About $11.4 million of the Patriot Homes debt is owed to Central Pacific Bank of Honolulu. Wayne Kirihara, the bank's chief marketing officer, declined to comment.

About a dozen homes are in varying stages of construction. Some are so damaged by weather and vandalism that they will need to be knocked down to their foundations, while others must have pieces removed and replaced, city officials said.

In addition, the community also is not gated or enclosed and a homeowners association has not been established as originally planned.

The project's new homes likely will be smaller than those now in the tract to meet market demands. That creates another challenge -- getting support from existing residents, Prandini said.

But residents say they are not concerned about smaller homes, gates or a residents' association.

"I just want to see the neighborhood done," said Steven Rosa.

He said he is tiring of the overgrown weeds and would like built-out streets and other basic elements of a nice neighborhood.

Neighbor Caroline Barsamian said getting the development finished will reduce vandalism.

"Even bringing in smaller homes ... as long as this gets developed," she said.

  Comments