Doucette Flagstaff

November 2009

doucette — Tue, 17 Nov 2009 00:11:22 +0000

Since my last update of September, some progress has been made in the continuing bankruptcy proceedings. The Chapter 7 Liquidation events have included numerous meetings between all of the concerned creditors and/or related parties. The Presidio HOA and the individual builders have all pursued some form of action or communication with the City of Flagstaff to determine the timing and method for completion of the bonded improvements. The Bankruptcy Court has taken some action to dissolve the agreement between the Bonding Company, the debtor (Presidio in the Pines), and the City of Flagstaff which dealt with the ongoing improvements that were underway onsite. With the agreement being undone, there is now a clearer path for discussions between the City of Flagstaff and the insurance company that posted the bond as assurances for completion of public roads and related improvements. As you might imagine, weather is now a major restriction so it is likely that improvements will not commence again until Spring, 2010. In the interim, we will be communicating with the other builders and the City of Flagstaff to try and put a schedule in place that will allow construction to begin as soon as weather will allow.

I know that our lot owners with GMAC financing have received some communications from the lender. If possible, I encourage you to communicate with them and negotiate a mutually acceptable resolution for the existing financing. I believe you will find them to be reasonable in arriving at a solution that is helpful for both parties. When construction is able to commence, we will try to match buyers and owners of lots with financial sources that will allow your home to be completed.

August 09 Update

doucette — Sat, 01 Aug 2009 19:46:05 +0000

Update on Presidio in the Pines – Doucette Flagstaff

The events of the past week, with regard to the bankruptcy proceedings of the developer, were not particularly positive. This may be the cloud with the silver lining. The future course of the project is still somewhat uncertain with regard to the completion of site improvements and future ownership of the undeveloped lots. The presiding judge for the bankruptcy action has entered an order converting the current Chapter 11 Bankruptcy reorganization filing into Chapter 7 Bankruptcy liquidation. The result of this order and the fallout from it will occur over the coming weeks. The developer (Premiere Acquisitions and Luxury Lofts), represented by Rick Elsey, was simply unable to raise the necessary capital to complete the entire project, pay the creditors, and initiate a new marketing effort. It is our opinion that Rick Elsey made a diligent, sincere effort to pull together the creditors, the builders and individual buyer’s interests, the City of Flagstaff, and the secured and unsecured creditors. Ultimately, the current economic environment and the need for significant capital was too great a task to accomplish. The court was fair and gave the developer every opportunity to put a plan into place that would work but it just did not happen. Now, the court will appoint an outside trustee whose task it will be to accomplish as much as possible with the disposition of the assets owned by the development. These assets are approximately 150 unsold residential lots and several parcels that were planned for the commercial center, condominium site, and community improvements. The ownership of these parcels is subject to a lien held by the FDIC (after taking over First National Bank of Arizona) and this lien is the primary debt or obligation of the development. In addition, there are certain obligations to secured creditors which will be sorted out after the value of the project assets are determined. Another major factor in moving forward will be the role of the City of Flagstaff in determining how the public improvements will be completed which are subject to assurances provided for their completion. The work currently underway is likely to cease which is unfortunate as the progress has been substantial. The resolution of all of these issues will be important to us with approximately 110 residential lots and our buyers who account for another 23 lots. We are not alone in this situation. TGC Homes and several individual builders hold title to residential parcels as do a significant number of individual owners. We will all have a important interest in the events as they unfold and the timeframe attached.

This next step of Chapter 7 Liquidation is not a totally unexpected or totally negative event. It will add some certainty to the resolution of issues for the community. Once the new trustee or receiver is named by the court, it is likely that a new entity will purchase the interest of the FDIC in the project and the remaining obligations will be paid or extinguished by the completion of the bankruptcy proceedings. That means that someone will own the balance of the project free and clear of any liens and will be in the position to determine how the project moves forward with either completion of improvements or marketing efforts. At the same time, the current builders and individual owners have a significant investment in their lots and we will be determining how to move forward with a plan to complete our goals in the most efficient manner possible.

Doucette Flagstaff intends to honor any commitments that we have made and we will do everything we can to assist our buyers with financing or other accommodations to see their homes completed. The current level of site improvements is near enough to completion that a cooperative effort among the builders and others will result in our ability to move forward with home construction. I believe that the City of Flagstaff will be as helpful as they can in working with the builders and the individual owners to coordinate necessary improvements with actual construction of homes. However, we are dependent on the timing of the completion of necessary public improvements, clarification of ownership issues, and resolution of financing for construction on individual homes. I do expect that we will be able to move with a little more independence now that the bankruptcy issues are determined to be a liquidation action. As soon as we can determine a course of action based on a reasonable schedule of decisions by the City of Flagstaff, the Court, the bonding company, and others, we will announce a plan of action and put our construction plans into effect. The plan for the Presidio in the Pines still provides an excellent opportunity for a unique living environment. The general market conditions are showing some encouraging signs of stabilizing and the values and pricing inherent in the community still exhibit a strong opportunity for long term success. We have to deal with the circumstances as they are and not as we had hoped them to be. We needed a clear path of resolution to all the uncertainty and I believe that the court’s ruling provides the first step to accomplishing our primary goal of building homes in Presidio in the Pines.

June 09 Update

doucette — Tue, 16 Jun 2009 23:10:15 +0000

The improvement work onsite continues as curb and gutter, base for the public roads, and related activity is making daily progress. The site contractor is maintaining a steady schedule of activity for the completion of the Phase I bonded improvements. Once curb and gutter is completed, the paving of the streets should begin. Frankly, once paving begins, it should be completed relatively quickly.

While the work above continues, the process of amending the Development Agreement is underway between Rick Elsey and the City of Flagstaff. The current projected review date for the development agreement is August 4th. The approval of the revisions is a necessary condition for the City of Flagstaff to allow the commencement of house construction. The amended development agreement allows us to begin building homes on the public streets that are under contract. Doucette will be requesting addtional latitude for adjacent homes which will require us to extend some of the public improvements into the private street area. Our goal is to incorporate as many of the presold homes into the first phase of home construction as possible.

The overall completion of all improvements is still a major issue in the ongoing court proceedings. The developer is continuing his efforts to ensure that sufficient funding is available to complete the balance of the streets and utilities for the entire community. The bankruptcy proceedings will continue for the coming months and there is not a quick or easy route to completing this portion of the ongoing saga. We will continue to update you as often as we can. Thanks for your continued patience.

May 09 Update

doucette — Tue, 05 May 2009 00:18:14 +0000

Work is underway on the public portion of the Phase I streets in the Presidio. LP Excavating is installing the remaining sewer and installing the base for paving along with curb and gutter on Mission Timber Circle. At the same time, the necessary work has resumed on the off-site water tank. The water tank is crucial to the future release of homes for occupancy by the City. Woody Mountain Road has some engineering issues that still need to be resolved before any work can resume. The builders are working with the City of Flagstaff in amending our development agreement to allow us to resume construction on individual lots that take their access off the public road. This is a relatively small number of our buyers but is very important to us and the project that we get these houses under construction as soon as possible. The Chapter 11 re-organization and business plan is still awaiting a ruling and more hearings are scheduled in the coming months. The principal focus of the business plan is the source and amount of funding for completion of the entire remaining improvements to complete Presidio in the Pines. Completion of these improvements provides the necessary funds to pay all creditors and complete the remaining street and utility work for the entire community. We are all watching and patiently awaiting the resolution of this aspect of the bankruptcy. It can and should happen as it is in the best interests of almost all interested parties.

March 09 Update

doucette — Tue, 31 Mar 2009 00:08:53 +0000

As the weather has improved and finally begun to get warmer, the snow has melted and there is some good news to report. The Developer has signed a contract with LP Excavating after many months of negotiations and bidding. The contract is for the completion of the bonded public improvements. These improvements include the public portions of sewer, water, and streets as well as completing Woody Mountain Road and the offsite water tank. This is a part of what still must be completed, but this is a major step toward getting Presidio in the Pines back on track. Equipment is on site and working on various parts of the subdivision at this time. As soon as a schedule is available, we will update this website to reflect the progress being made.
The funds needed to complete the entire subdivision are still pending a ruling on the business plan that has been submitted to the bankruptcy court. The next hearing on the business plan is scheduled for April 14th. We are anticipating that the Business Plan will be resolved to the benefit of Presidio in the Pines, buyers, builders, contractors and creditors.
As we finally progress with the public improvements under way, ability to deal with alternative lenders for existing buyers and future sales activity will improve dramatically. We still need some assurance that the site development work will continue making it more attractive to new and existing lending sources.

February 09 Update

doucette — Mon, 16 Feb 2009 18:35:54 +0000

As everyone is aware, our Flagstaff winter has been a long cold one with plenty of snow. However, work has not stopped on the developer/owner working with the court and creditors to develop a business plan with a consensus that meets the court’s requirements. The funds required to complete phase 2 and 3 are incorporated in the developer business plan and will require court approval.

The temporary access road that was given the green light last fall was in the process of completion when the snow began to fall and we haven’t seen the ground since. The access road reached 75% completion and the balance of construction work will resume once the snow is significantly gone.

The insurance company is obligated to fund completion of the public improvements for Phase I under an agreement between the City of Flagstaff and the other parties. The bonding company and developer have agreed on a contract bid amount to complete the public improvements for our Phase I work. LP Contracting (our existing contractor) has been awarded the contract and it should be signed shortly. LP has done the majority of the infrastructure and they are prepared to move to completion. Construction on the public improvements will begin as soon as our weather conditions allow.

The existing GMAC loans continue to be a major issue and they are yet to be resolved. GMAC seems to be in a holding pattern pending the variety of bankruptcy issues and, possibly, federal actions on loans. Once it is clear that we can proceed, we can resurrect our communication with alternative lenders willing to finance the completion of homes under contract.

November 08 Update

doucette — Wed, 03 Dec 2008 00:12:10 +0000

We finally have some news worth reporting. The City of Flagstaff, the bonding company and the owner/developer reached an agreement that was accepted by the owner, Bonding Company, City Council and the bankruptcy court. This agreement has had the affect of releasing over 3.6 million dollars held in an account to be used for the purpose of completing Phase I of the public improvements in Presidio in the Pines. The bulk of the funds are now in the hands of the Bonding Company. The developer has authorized LP Excavating to begin work on an emergency access road deemed necessary by the City of Flagstaff. The construction of this road is only a beginning at this point but is necessary for our ability to restart construction on our homes. An agreement with the bonding company to approve funds allowing contractors to proceed with curb and paving has still to be reached but the owner is hopeful it will happen in the coming week. The developer intends to submit his reorganization plan with the bankruptcy court by December 3rd. The plan will detail how the owner/developer intends to proceed with the funds available and any other funding needed to finish the entire project. We can assume a thirty day process to review the plan by the court. Once the plan is accepted by the court, a more definitive timetable can be announced. Once the developer has finalized a site construction schedule, we will be able to provide a strategy for our home construction and prospective schedule. Our intent is to resume construction as soon as the complete funding becomes available to finish the Phase I streets and associated improvements.

The existing GMAC construction loans are still an issue to be resolved. Once we have the construction schedule for Phase I in hand, we can continue with our communications with other lenders for the replacement of the GMAC loans. Our fingers are crossed for a mild winter as it will benefit our construction efforts greatly.

City Council meeting update September 29, 08

doucette — Wed, 01 Oct 2008 22:55:16 +0000

The City of Flagstaff convened a special session of the council on Monday September 29, 2008 to hear comments and suggestions from the public on ways to assist in the completion of improvements for Presidio in the Pines. The developer / owner presented a plan that in cooperation with the city, the current bonding company holding a letter of credit, and the bank that currently holds approximately 3.5 million as collateral for the letter of credit, would give city’s approval of the release of the 3.5 million to go toward completion of public improvements in the timeliest fashion. After a long night and comments from several interested parties in support of the plan, the council, after an executive session with the City Attorney, agreed that the best way to move this project forward is to draft an agreement with the developer leading to the release of approximately 3.5 million with stipulations of City oversight that have yet to be determined. This agreement is to be voted on and hopefully adopted at the next City council meeting Tuesday October 7^th. Once the council approves this agreement, the developer / owner will have to submit it to the bankruptcy court for their approval. If the court approves this agreement, the understanding is that the 3.5 million could be released in a matter of days, allowing for site construction to resume almost immediately. This agreement has the effect of postponing a bankruptcy hearing that was scheduled for October 1^st until the afternoon of October 8^th, the day after the anticipated council approval. As well, the developer / owner reorganization plan was to have been submitted to the bankruptcy court on or before October 2^nd. The developer has asked the court for a continuance until after the city council approval of the agreement as this agreement will be an integral part of the overall business plan.

This negotiation and proposed action by the City of Flagstaff is a significant step in the process of reinitiating development activity on the site allowing construction of homes to begin as soon as possible. We will continue to monitor the activity and report any changes or progress in the process. We are providing two lenders with information on the existing lots owned by our buyers and we will be in direct contact with GMAC, in particular, as progress is being made with the Phase I improvements.

September 08 Update

doucette — Thu, 11 Sep 2008 16:42:08 +0000

We have been informed that those buyers who have utilized GMAC for financing are beginning to receive letters demanding payoffs of their loans within forty five days of notice. The letters also include threatening language regarding the communication being from a “debt collector”. I am surprised and disappointed that GMAC has taken this track to resolve the delays that we are experiencing with the completion of Presidio in the Pines infrastructure. We are in the process of initiating contact with GMAC to discuss this matter. It is symptomatic of what is occurring around the country as financial institutions are scurrying to clean up their loan portfolios in the wake of the financial concerns by the regulators. Unfortunately, we have all become part of this drama due to the delays we have experienced. It is frustrating for everyone. In order to address this issue, we are contacting several alternative financing sources to replace GMAC and resolve this particular aspect of our project relationships. For Doucette buyers, we are in discussion with Wells Fargo and Compass Bank to try and put a plan in place to transfer these loans to a new lender with the same terms and financial requirements preserved. We only have one loan with M&I Bank and about twenty with GMAC. Of course, all of our financial issues, as well as the other builders and owners, are affected by the Chapter 11 financial proceedings for the project.

At this point in time, there are a number of significant steps being taken to move forward with the completion of infrastructure which allows us to proceed with construction of our homes under contract. The owner/developer, represented by Rick Elsey, has been actively working on and negotiating for new financing to complete the improvements for the overall community. He is also seeking the release of funds held in a neutral account which serves as an assurance for the City of Flagstaff on the primary or first phase of street and infrastructure improvements. These improvements are particularly important in that they affect all of our buyers and owners with loans that are coming due. A hearing is scheduled on October 1st in Phoenix with the Bankruptcy Court to discuss the very topic of releasing approximately 3.5 million dollars held in a bank account to assure completion of the Phase 1 improvements. The owner/developer is also obligated to file a plan of reorganization with the court by October 2, 2008. I have been told the current reorganization plan will be filed prior to the October 2nd deadline. The reorganization plan will include disclosure as to how the owner plans to complete the project, pay the creditors, and meet its’ obligations. They will show a commitment for the balance of financing needed, explain how the existing funds will be used, and disclose the value of the assets to secure the completion the community. All of the creditors for Presidio in the Pines have already filed claims as to how much they are owed and the principal entities involved are First National Bank of Arizona, the subcontractors who have performed work on the site, the builders, and property owners. From a building standpoint, my principal concern is the timing of completing Phase I Improvements because of the inevitable weather issues which are headed our direction. From all outward appearances, the financial matters are moving forward in a positive manner and I believe that Rick Elsey has exhibited a sincere desire to complete the remaining tasks for the community. It has required a incredible level of patience for everyone involved. To the extent that we can provide a level of communication and straight answers to your questions, please let us do so. After reviewing some of the comments and postings, there seem to be some misconceptions about the current situation regarding ownership of lots and the loans that are in place as security for that ownership. The sooner everyone is on the same page, the less frustration or problems down the line there will be. Please keep us up to date with any communications you may have with your lender so that we can be of the most assistance we can in helping resolve the expiration of existing commitments. Based on the communications by GMAC, it appears that they have made a decision on a national basis to eliminate their lending on residential construction. Collectively, we need to ensure that the transition is as smooth and facilitative as it can be. The introduction of a new lender or lenders will require that completions of the improvements are underway once more and that a reinstituted Public Report is in place. This will require a cooperative relationship between the City of Flagstaff, the bankruptcy court, the owner/developer, our banks, and our buyers. Please feel free to contact us in Flagstaff and provide us with information or input. We will attempt to provide updated information via email to individual buyers, updates on the www.doucetteflag.com website and posting to the Presidio community website.

August 08 Update

doucette — Thu, 14 Aug 2008 00:02:36 +0000

Progress since our last update has been slow and minimal with the proceedings under the Chapter 11 taking most of the attention. Several significant events have been completed. An order was approved by the court to release funds for the completion of some required offsite sewer work which involves a crossing of Route 66 and some additional work in the area of NAU. With regard to the bankruptcy hearings, the court ordered completion of the reorganization plan prior to October 2^nd of this year. This plan requires the owner to provide a detailed plan for the completion of the project and payment of all obligations. Prior to that submittal, we have been informed that the developer will seek approval for the release of an additional sum of money to pay for and commence construction on the balance of the Phase I improvements. These improvements will allow us to re-commence construction activity on our first homes.
The developer is awaiting the completion of a new appraisal for the property. The appraisal will help to complete negotiations for new overall financing and provide the basis of a new bond with the City of Flagstaff to provide assurances for completion of all Presidio in the Pines site improvements. Once these important items are completed, the developer will be able to proceed with our remaining street improvements. We will need an accurate schedule of their completion dates which will allow us to establish a schedule of construction for our buyer’s homes. We are following the court’s activity closely and intend to stay in contact with all of our buyers.