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  • Big bets, mixed payoffs
  • Big bets, mixed payoffs

The year was 2005, and Flagstaff's community development department had more work than it could handle.

Commercial real estate projects worth hundreds of millions of dollars were either in the planning pipeline or just emerging, fueled largely by an easy credit market and skyrocketing prices in the local housing market.

Several out-of-town developers had plans for mixed-use, planned communities on more than a thousand total acres that held out the promise of not just affordable housing but also walkable commercial centers.

By 2007, only a handful of the projects were still moving forward, and today, even a smaller number have succeeded. Following is a rundown on their histories and current status.

PRESIDIO SLIDES INTO CHAPTER 7 BANKRUPTCY

Presidio in the Pines, with 900 housing units along with stores and offices planned for 91 acres in west Flagstaff, was one of the first mixed-use, planned communities announced for Flagstaff. Interest among potential buyers soared when it was announced that home prices would start at $130,000.

Many put up down payments without even a model home having been built.

But today, although most of the streets and sewers have been built, not a single building has gone up, and the project has been in bankruptcy protection for more than a year.

The Flagstaff City Council opted to allow the developers to use $3.6 million in performance bonds to finance the completion of several infrastructure projects.

Senior Project Manager Reid Miller, who oversees the release of the bond monies, said the infrastructure is largely done. Some of the roads need to be paved, a water tank needs to be built and most of the landscaping still needs to be installed.

Four months ago, a state bankruptcy judge moved the entire development from Chapter 11 bankruptcy protection to Chapter 7, said one of the owners, Clem Stubstad.

Chapter 11 would have allowed the developers to come up with a plan to pay off debtors without having to liquidate the assets. Chapter 7 is specifically used to liquidate the assets.

Stubstad said any new owner would initially need to abide by the adopted master plan for Presidio. But if parts of the project are sold again and new plans approved by the city, the eventual buildout would resemble a patchwork quilt of building styles and layouts.

HIGHWAY COST KILLS VILLAGGIO

Plans for the massive Villaggio Montana master-planned community that would have built as many as 3,600 homes on 1,020 acres near Fort Tuthill were scrapped in 2007.

One of the developers behind the project said the decision was primarily due to the high cost of two highway interchanges for which Villaggio would have been partially responsible. One estimate put that figure at $170 million to build the two interchanges.

At least part of the project - roughly 330 acres - has been sold to another developer who plans eventually to build a large-lot residential subdivision known as Tuthill North.

A BANKRUPT EMPIRE

Construction by Empire Communities of townhomes in the Pinnacle Pines development, once touted as "fairy-tale cottages," stopped abruptly in late 2007.

Empire Communities, once the largest homebuilder in northern Arizona, declared bankruptcy in 2008.

The 102-unit Pinnacle Pines project was sold as part of a trustee sale earlier this year, according to federal bankruptcy documents.

JUNIPER POINT DELAYED UNTIL 2011

The developer behind the 1,600-home, mixed-use development known as Juniper Point has adopted a "slow but steady" philosophy.

Michael Naifeh hired local land-use attorney Bill Ring to change the underlying zoning of an area located east of Coconino Community College between Interstate 40 and J.W. Powell Boulevard. But despite getting the rezoning in 2006, Naifeh said at the time he wouldn't begin construction of the 320-acre development until at least 2008.

Today, Naifeh said he will wait until at least 2011 before breaking ground on the master-planned community.

The reason? The project relies on form-based codes that have never been used in Flagstaff and is taking longer.

"Everything seems to be taking longer than we like," Naifeh said.

The Tucson-based developer said the key to the success of Juniper Point will rest in timing the market, noting he will phase the development over the course of a decade if necessary.

SAWMILL BEHIND SCHEDULE

Don Meyers, the developer behind the 40-acre commercial/residential project at Butler and Lonetree known as Sawmill at Aspen Place, said in 2006 that the millions spent cleaning up the old Stone Forest Lumber Mill would be money well-spent.

The CEO of the Aspen Group, Meyers knew he would eventually need to remove roughly 7 million cubic feet of dirt from the former sawmill site, where the ground is filled with sawdust, shards of lumber, large pieces of concrete and abandoned utility lines.

The $120 million project showed promise in 2007, as the anchor for the development, the New Frontiers grocery store, opened right on schedule.

Since then, only Pita Jungle has opened its doors in a strip of completed but vacant storefronts adjacent to New Frontiers. Wildflower Bread Company, another popular Valley-based eatery, is expected to open its doors early next year.

But with no signs of another phase of planned retail spaces being built in the near future, Aspen Place is behind the schedule announced by Meyers in 2006.

At the time, Meyers predicted the project would now be selling its final phase — hundreds of residential units located at the south end of the development.

Multiple calls left for Meyers were not returned.

FLAGSTAFF MALL'S PHASE 2 STILL ON THE HORIZON

In late 2007, a Westcor vice-president for development, Randy Scheel, said renovations at the Flagstaff Mall and the 248,000 square-foot Marketplace at Flagstaff Mall cost more than $40 million to build. The expansion boasted several stores new to Flagstaff - including Best Buy, Linens-N-Things, Marshalls, Old Navy, Petco and Shoe Pavilion.

But roughly a year later, two of those tenants - Linens-N-Things and Shoe Pavilion - left after their corporate parents declared bankruptcy.

Amy Malloy, the senior manager of development at Westcor, said one of the top priorities is to permanently fill the two large storefronts. The former Shoe Pavilion was rented out briefly as a Halloween costume shop this fall, but it was again empty the week after Halloween.

"We are trying to backfill those spaces," she said.

As of Friday, Malloy said she couldn't announce any new signed leases.

Another announced tenant for the remodeled food court, Irish pub Molly Brannigans, never got off the ground because of financing issues.

Malloy said Westcor is also marketing a narrow tract of developable land between the Mall and the Marketplace, generally referred to as Phase 2.

Early plans called for a cineplex and a few small boutique stores to open in 2006, but those plans never got off the ground.

Malloy said the tough economy has played a role in finding suitable tenants for the site, but she did not elaborate.

AUTO MALL STUCK IN THIRD GEAR

Scott Baugh, the owner of Planet Nissan, Jeep and Subaru, was an early advocate for the Auto Mall.

Although his Nissan dealership on Route 66 saw 35,000 people pass by every day, most did just that: drive on by.

With the Auto Mall, Baugh believed, he would get more interested buyers.

A year after he poured millions into the new facility, Baugh said the new auto mall is working. He believes he has been able to weather the recession in part because of the new location.

But Baugh did say part of his success was due to Chrysler giving him a contract to do warranty work on thousands of vehicles after Chrysler severed ties to Diamond Dodge Chrysler.

The federal "cash for clunkers" was a boon for Baugh as well.

However, Baugh's success has not translated into a full auto park. The city has been successful in selling only five out of the 11 city-owned parcels, although Baugh said he is interested in buying a second, adjacent lot.

The city spent roughly $10 million on infrastructure between the construction of the Auto Mall and improvements at the Flagstaff Mall.

The city estimates that among the five dealers, more than $17 million has been invested privately in construction of the various dealerships at the Auto Mall.

DEVELOPMENT PROCEEDS ATOP OF MCMILLAN MESA

Outside of the occasional blasting, the Phoenix-based Cavan Opportunity Fund has been quietly developing the 111 acres its owns on McMillan Mesa.

The company bought some of the land from local developer Stan Ritland for $6.8 million in 2006, and since then it has been building roads and installing water and sewer pipes and other infrastructure.

One estimate by the city suggests Cavan has poured more than $24 million into developing the property.

Cavan has city approval to build five separate business parks and several residential complexes on the mesa.

Multiple calls to Cavan were not returned.

Joe Ferguson can be reached at jferguson@azdailysun.com or 556-2253.

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