Jim Davis / Arizona Daily Star

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Crushing Crew

Half of the partnership responsible for developing a 2,400-home residential community in Marana has filed for bankruptcy, while the other is in the process of selling its interest to another developer.

Ontario, Calif.-based Empire Land LLC filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court on April 25.

The company, which had teamed with KB Home to develop the Saguaro Springs neighborhood on Twin Peaks Road just west of Rattlesnake Pass, had been trying to sell its interest in Saguaro Springs since the two sides decided to put the project on hold last fall.

KB Home Tucson Office President John Bremond said his company is "in the process of negotiating a new contract for the sale of the property." He said he has potential buyers lined up but wouldn't disclose any names.

Bremond said the first step in selling off Saguaro Springs, though, is gaining control of the project, which is governed by a Community Facilities District that the Marana Town Council approved in 2007 in order for the developers to be able to issue bonds to pay for upfront infrastructure costs.

Bremond said Empire was considered the managing partner of the project. He said it would continue to have an interest in the property, if sold, but it would be bound by the terms of the bankruptcy.

Any sale of Saguaro Springs cannot go through, however, until the many liens that have been filed by various contractors are paid.

Among those liens is one for more than $600,000 filed by Granite Construction, which was hired to build the main roads through the planned 2,462-home community.

"There's a litany of other liens that have been filed," noted Dave Richards, Arizona branch manager for Granite Construction.

Darci Wood, operations manager for Nevada-based Spirit Underground LLC, said her company's $1.15 million lien is mostly for retention money that was due when grading, paving and underground utility work was completed.

She said that work was wrapping up last winter when payments from Saguaro Reserve LLC, the name of the company that Empire and KB formed for the Saguaro Springs project, stopped.

"We had no idea until the end," Wood said. "They had paid very well. They were paying about every 35 days. It was not until we were almost done out there."

While Granite's lien only amounts to about 10 percent of the $6 million contract and Spirit's claim is for about 13 percent of the $9 million deal it had for Saguaro Springs, other contractors and subcontractors are having a much harder time waiting to get paid for work they finished almost a year ago.

"The small guys like us are the ones that take the brunt of this," said Winston Shelton, owner of WCS Electric. "We had eight or 10 guys on that project for seven months."

Shelton said he's still owed about $250,000 on the $519,000 contract he had for installing lighting on the development's main streets. He said his company was about two weeks from completing the work when payments stopped.

As a result, Shelton said, he owes more than $80,000 to one of his main suppliers, who he says is reluctant to work with him on future projects.

"We've got commercial jobs that we're waiting to get started," Shelton said. "I'm still working, trying to keep things going."

Bremond, of KB, said he hopes to have Saguaro Springs sold to a new owner — and consequently have all of the liens on the property settled — within the next 60 to 90 days. After that, KB intends to return to the Saguaro Springs project, but as simply a home-builder and not also a developer.

"I would like to think we could do 20 to 25 percent of the homes out there," Bremond said, adding that it was never KB's intention to be the sole builder in the community.

"At our peak thinking we weren't thinking (of building) any more than a third. We always thought in terms of there being two or three builders in the community."

Calls made by the Star to Empire's offices and to lawyers representing the company in its bankruptcy case were not returned.