(UPDATE: Revised to include additional details.)
Irvine-based SunCal Cos. has filed an involuntary bankruptcy petition against its own Marblehead Coastal partnership in an apparent bid to get the stalled 308-home development and an adjoining outlet mall in San Clemente back on track, a company statement issued today says.
The bankruptcy petition was filed Wednesday by SunCal Management LLC, its subsidiary, SCC Acquisitions Inc., and a law firm representing SunCal against the SunCal Marblehead LLC, a separate development partnership. SunCal Management, SCC and the law firm claim they are owed $2.6 million in fees by SunCal Marblehead.
Along with the Dana Point headlands, Marblehead is one of the last big tracts of undeveloped coastal land left in Orange County. After 30 years of planning, developers broke ground on the project in 2005, with plans for luxury homes, a soccer field, parks and trails and an outlet mall including a hotel and restaurants.
Luxury homes are sprouting up in the Dana Point project, but work stalled on the ocean-view bluffs at Marblehead as funding dried up in the midst of the housing market crash. SunCal’s financial partner, Lehman Brothers, filed bankruptcy in New York in mid-September after it was rebuffed by a potential buyer and failed to get a U.S. government bailout.
Eleven other Lehman-backed SunCal projects throughout California also have ended up in bankruptcy court in Santa Ana since September.
In a statement released today, SunCal said this week’s bankruptcy filing had “the goal of obtaining new funding” for the 248-acre master-planned Marblehead development. (Click on the map at left to see a bigger version of the plans!)
“The bankruptcy of Lehman Brothers, sole funding source for the Marblehead Coastal project, forced such action, as Lehman is unable to fulfill its financing obligations,” the statement says.
SunCal developments operate as separate entities, many with different owners and investors. The parent company, however, is not in bankruptcy, the company said.
This week’s bankruptcy filing is the latest development in a project that has dragged on for more than 30 years. Because of community objections and difficulty getting city and Coastal Commission approvals, the project has been whittled from nearly 3,000 homes to just over 300.
The mall and homes originally were to be completed this year. But the housing slump and economic meltdown affected project funding. A lawsuit filed in January alleged that SunCal had at $2.4 million in unpaid bills at Marblehead.
The San Clemente City Council voted last month to call in performance bonds to finance completion of the stalled development, including work that SunCal is obligated to do on the adjoining mall site. The city has been counting on the commercial center to increase its tax base and keep residents’ shopping dollars at home.
Steve Craig, the outlet mall’s developer, said he welcomes the bankruptcy if it gets the project going again.
“We would be encouraged to find any positive news regarding their ability to complete their obligations. That’s all we’ve wanted them to do,” he said. “Now that it’s in bankruptcy we’ll have to wait and see what happens.”
In today’s statement, SunCal said work is incomplete on the concrete Vista Hermosa Bridge (click on photo at left to enlarge), five public streets, a sports park, other parks and other improvements within the site. Completing streets is a priority for the city, the statement says, since existing residents need to use them.
The statement says in part:
“The bankruptcy action can lead to the development of new sources of capital. SunCal has an alternate funding source of up to $75 million to cover critical expenses at projects such as Marblehead. However, that funding commitment is conditioned upon a court-approved priming lien in the Chapter 11 case.”
Click here to see the full text of the SunCal statement and a Marblehead timeline.
Previous posts on SunCal …
- 14 projects by O.C. developer file bankruptcy
- Judge wonders if O.C.-run home projects are ‘DOA’
- O.C. developer $300 million in the hole
- San Clemente says it’ll fight to get Lehman-backed seaside project finsihed
- Wall St. backer of O.C. seaview project bankrupt
- Sales halted at San Clemente oceanview villas
- Homebuyers’ deposits refunded at stalled seaside project
no surprise here.
we are witnessing a complete collapse of the US Economy.
the worst is yet to come
Mulligan, you out there?…… talk about a mulligan for you on this and your LEN call…… lllooolll…..
No more Talegans. No more marbleheads.
Can we restore it to its natural state and just stare at the ocean instead of a shopping mall?
Loan mods. Loan mods. Rah, rah, rah!
I guess those greedy bank executives will be crying all the way to the bank instead of laughing!
Wasn’t it just a few days ago that someone said that marblehead hasn’t asked for anything because coastal communities hold value, blah, blah, blah…. oops.
No kidding. What an eyesore. I am glad I moved from San Clemente as this mostrousity was being built! That land was soooo beautiful before.
I have to say that I understand the perspective of those folks that believed Marblehead wouldn’t fold. Just goes to show you we will be reading the following more and more often:
“I did not think it was that bad.”
The point to be learned from this is that certain opinions and statements should probably be kept to ourselves if the risk of losing credibility is real.
I guess that is where you can quickly discern one of many differences between those whom are simply working in a profession (like RE) and those whom are professionals with advanced technical degrees - and that is… folks with a massive investment in their technical expertise are much less willing to make forward looking statements that have little to no substantiative evidence - even at a cost to themselves.
Credibility comes before earnings.
Most here would be amazed as to how some people touting themselves as professionals could make statements with little factual data to support the argument.
Fortunately for most in that category, they usually have the character that goes along with such nonsense so they have little issue with looking at themselves in the mirror at night.
How could this get Coastal Commission approval but not the Toll Road? This place is right on the beach while the Toll Road isn’t even close.
CCC is flawed… surprise
I agree with Dina. Can we have some open space to breathe in the ocean and enjoy the view for all? Maybe there is a reason this isn’t happening like planned. Becuase it wasnt supposed to from the beginning.
To repeat what I posted on this blog so many months ago: while I admire the optimistic “half-full vs half-empty” mindset, this time the glass is empty. All the mullys and other deniers declared that I was unwholesome and such. So now, just as they rub a dog’s nose in the stinkpile it made, I say to you filthy animals: how you like them apples! But Jimmy says that beach property will always bubble up, blah, blah, blah. And then there is reality. As was sagely declared in Full Metal Jacket: it’s a huge s**t sandwich and we are all gonna have to take a bite. But we need some knifecatchers to keep the lights, go on, knock yourself out.
Make a good Motocross Track…
I think it used to be a landfill . . . But I agree: the weeds growing over the dirt that was covering the trash were so beautiful.
Would have made a better motorcross track . . . before they graded it all out. Maybe a dirt flat track for a while?
They can’t even finish this monstrosity of a strip mall and now they want to ruin the North Beach area with another strip mall. Shame on you San Clementeans who voted yes on Measure W.
Down Jones, you have no idea about the Toll Road. It would go right up to the beach and destroy many pristine areas which have an impact on the beach environment such as the last unspoiled watershed in Southern California.
I am here mav…I was wrong on LEN.
And OC homesellers are still in denial.
To those who want to keep it as “open space”: How much are you willing to spend? If it were my land I sure as heck wouldn’t just give it away.
Make it a State Park, Camping, Wilderness, Trails, Great View. San Clemente has enough homes.
Looks like another Woodbridge development… rape the land and file BK