Wednesday, Feb. 2, 2000 | 11:29 a.m.
Carson City-based Commerce Associates LLC is buying Henderson's Palm City master-planned community from Las Vegas homebuilder Rhodes Homes.
The deal, which includes assumption of debt, is valued at $30 million.
Rhodes' decision to sell the 521-acre property was spurred by the ongoing court battle over insolvent Interstate Mortgage Group of Las Vegas.
Rhodes officials say the development of Palm City was threatened by IMG's failure to provide $14 million of a $40 million loan as promised.
The funds were needed to pay for infrastructure improvements on the land, and to build its 2,375 single-family and multi-family home units, as well as an 18-hole golf course.
The Palm City development is bounded by Olsen Road, the Henderson landfill and Sunset Road. In the summer of 1998, Rhodes began grading the existing gravel pit in order to begin construction on the golf course.
Company officials believe the decision to sell the property was the best option available.
"We looked at several options, but decided this (sale) was the best way to go," said Don Purdue, Director of Land Development for Rhodes Homes. "We believe this is a win-win situation for both companies."
Peter Sidlow, spokesman for Commerce Associates' owner R.P. Weddell, said the company expects the development to continue as originally planned.
"There's a crying need for house lots in this market, and we saw this as a chance to add 2,000 lots in the near future," he said. "Also, the principals involved with our company are in the underground utility business, and that's a key element in the development of this project."
Sidlow said the company did not expect foreclosures on two parcels of Palm City land scheduled for Thursday and next Monday would take place.
"Negotiations are under way right now, and we're very confident that won't happen," he said.
Interstate Mortgage's inability to meet its Palm City funding obligations is the result of legal and financial difficulties that began last November.
At that time, the state took over the mortgage firm, citing the loss of collateral securing $5.7 million in loans.
In December, the Nevada Financial Institutions Division assumed control of Interstate, alleging financial improprieties and misrepresentation by company owner David Ferradino.
Attorneys representing IMG investors are currently trying to block the state appointment of George Swarts as company receiver.
Purdue said much of the preparation work has already been done at the Palm City master-planned community.
"The grading permits (for homes) have been issued, and the grading is also done for the golf course," he said.
Purdue said that although the capital raised from this sale would be "helpful," even without the cash infusion the company expects 2000 will be one of its most successful years ever.
"We plan to build out 650 homes this year in the southwest area," he said. "In addition, we expect to have another 700 homes sold the year after."
Purdue said another potential problem for the company was also recently resolved.
Two weeks ago, Rhodes settled a lawsuit filed in District Court over ownership of its Rhodes Ranch master-planned community.
Rhodes filed suit last year against Asset Management Services and its owner Wes Adams alleging Adams breached an agreement to convey house lots to the company.
Adams later filed a counter suit, alleging Rhodes violated an earlier agreement for Adams to purchase the master-planned development.
Purdue declined to reveal details of the settlement, but said it ensured that Rhodes would continue on as project developer.
"We're excited by our prospects, and believe Rhodes Ranch will be a major part of our success this year," he said.
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