New West Network

Another Harbinger of The Crunch

Idaho’s Village Green Development Files for Bankruptcy

By Matthew Frank, 5-05-08

The Village Green at the Valley Club, a new high-end subdivision and golf course development in Ketchum, Idaho, filed last week for Chapter 11 bankruptcy protection, owing more than $24 million to its creditors.

The development plan includes 43 custom homes -- valued at about $3 million each -- and a nine-hole Tom Fazio golf course, but so far only 13 homes have been completed and only seven of those have been sold, according to developer Henry Dean.

"We expected to do a lot better," Dean said. "We just fell off of our pro forma."

	"Even though you're wealthy doesn't mean you don't go to the sidelines to watch to see what happens."

It's the latest in a string of bankruptcies among developments in the West, from Tamarack Resort in Idaho to Promontory Club in Utah, further evidence that the high-end real estate market in the West has been deeply affected by the credit crunch. (See the "Project Watch" section of this Spring's The New West magazine here.)

The filing, under the name of Valley Club Homes, LLC, was submitted last Tuesday, April 29, in Twin Falls, Idaho. It reveals that the development owes banks at least $24 million, collateralized by multiple parcels of Village Green property. The filing puts the company's assets at $32 million.

The largest creditor is CalNational Bank. The bank was unwilling to work with Village Green, Dean said, despite numerous proposals to settle the matter out of bankruptcy court.

Dean said Ketchum-specific forces are behind the development's struggles, most notably the Castle Rock fire that ripped through Sun Valley last summer and "killed sales during the biggest sales period in Sun Valley." But he acknowledged the effects of the national market flux: "Even though you're wealthy doesn't mean you don't go to the sidelines to watch to see what happens."

The infrastructure required for the Village Green's build-out is in place, Dean said. The project is an add-on to Ketchum's 12-year-old Valley Club country club, which boasts an 18-hole Hale Irwin golf course and a $5 million fitness center. The bankruptcy is separate from and will not affect the Valley Club, Dean said.

Dean, named in the filing, is the managing member of Sun Valley Development, LLC, which in turn is the managing member of Valley Club Homes, LLC.

"I've never had to do this in my life," Dean said, "and it's not how I wanted to end my development career."