The clubhouse, pool and tennis courts were never built, some of the roads are crumbling and, with just two dozen homes built, the Ravenna development in Douglas County feels like a ghost town.
The developers ran out of money to complete Ravenna, intended to be an exclusive enclave nestled in red-rock outcroppings on 636 acres in Waterton Canyon. In October, they were forced to give the project back to the lender, creating uncertainty over home values and the fate of its private golf club.
Meanwhile, the lender is close to selling the Golf Club at Ravenna, as well as 166 vacant lots in the luxury community, developed by River Canyon Real Estate Investments LLC, an entity controlled by Glenn Jacks and Dan Hudick.
River Canyon defaulted on a $36.5 million development loan from Beal Bank, owned by Texas billionaire Andy Beal. The developers also failed to pay about $85,000 in real estate taxes.
With the luxury real estate market struggling and River Canyon unable to restructure its loan, the developers had no choice but to give the project back to the lender, Jacks said.
“We put a lot of our life into it,” Jacks said. “It was very bad timing. No one saw it coming.”
Delays in getting approval from the county meant the developers weren’t able to start selling lots until early 2007, just before the economy entered the recession, Hudick said.
“We had a lot of presales that we had stored up in 2006 and we were able to get them to close, so we had a year and a half of good times before the end hit,” he said.
Golf course maintained
Beal Bank assigned Mike Staheli of Denver-based Cordes & Co. as the receiver in charge of selling the property.
“We’ve had quite a bit of interest from the development and investment community for the assets of Ravenna,” Staheli said. “We’re hoping to have the property under a contract to sell within the next month.”
Cordes retained the golf superintendent, his assistant, a mechanic, an engineer and an irrigation technologist to maintain the Jay Morrish-designed course, named one of the top 100 modern courses by Golfweek magazine, Staheli said.
“We’ve done everything we can to make sure the course handles the winter weather and can handle the play when the weather warms up,” he said. “The fact that there are members there who love the course and want to play it — certainly any new buyer is going to look at that and want to keep those people happy.”
Owners of the completed homes in the community declined to comment.
In addition to the golf club, the lender took back 166 of the project’s 243 lots that had not sold. Staheli said he does not expect the golf course and unsold lots to fetch as much as the $36.5 million Jacks and Hudick owe on the property.
“It’s not worth that today,” Staheli said.
The downturn in the economy has left a number of developers owing more on their projects than they are worth, said Byron Koste, executive director emeritus of the University of Colorado Real Estate Center. “One of the alternatives is to give the project back,” Koste said. “It happened in the ’80s, it happened in 2001, and it’s happening again now. Is it a lot of people? No. Is it more than usual? Yes.”
The more affordable housing developments started unraveling first, Koste said.
“The upscale projects lasted longer but certainly weren’t immune because there was aggressive developing at all levels, including the upper end,” he said.
Some of the golf club’s members hired real estate attorney Tom Ragonetti to determine what their rights are and what happened to their initiation fees.
Deposits not in escrow
Based on agreements Ragonetti reviewed, 25 percent of members’ deposits should have remained in escrow because the clubhouse never was built.
“However, we contacted the escrow agent and were informed that the escrow agent no longer holds any membership deposits in escrow, as all such deposits have already been disbursed to River Canyon,” Ragonetti wrote in a memorandum to the members who hired him.
Banks also have foreclosed on several of the homes that builders were unable to sell after they were completed.
American National Bank, controlled by Don Sturm, now owns four houses at Ravenna, according to public records. Front Range Bank and First Community Bank also have foreclosed on houses in the development.
The lack of residents also has created an issue with the quality of Ravenna’s drinking water. The developers had to build the system to provide water to all 243 homes in the community. But with only 26 homes built, the water sits in a storage tank for enough time for the disinfectants to break down, creating elevated levels of byproducts that could be carcinogenic over a lifetime of exposure.
“People who have bought there still need water, but they just have so much water out there that they can’t cycle through it fast enough,” said Rick Koplitz, compliance assurance monitoring and enforcement unit manager for the Colorado Department of Public Health and Environment. “Until something happens and they can get more homes built and people out there, this is going to be an ongoing problem.
“They could flush their system out, but you don’t want to waste water. It’s almost a Catch-22. What you could do to fix the thing would cause problems that you couldn’t fix.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
