SunCal development slowing due to financial trouble

BARSTOW — Ambitious plans to build a 25,000 home development south of Barstow have slowed as the developer faces financial troubles in a slowing housing market.

Representatives of SunCal Companies, which plans to triple Barstow’s population with its Waterman Junction development, say that the company fully intends to complete its plans, but say less than expected housing demand has caused delays. SunCal currently owes the city of Barstow $59,000 in unpaid invoices, bills company spokesman Joe Aguirre said will be reviewed when representatives meet with the city next week.

Several business units of the Irvine-based developer have been sued since October for failing to pay more than $105 million in debts, none of which are related to Waterman Junction. Additionally, the company faces foreclosure on some of its properties and claims that it owes contractors for work already performed.

Aguirre said that each of the company’s business units are a separate financial entity with its own funding source and the company’s troubles in its other project are unrelated to its Barstow development. He declined to name the investor or the type of financing.

“The investors can vary from project to project,” he said. “It’s a separate funding source and is secure.”

Aguirre said that although the project has slowed somewhat, the company intends to fully complete its plans over the 30-year span of the project.

“Yes, Waterman Junction is moving forward. However, we are adjusting the pace of our timeline in response to the current market demand,” he said.

Aguirre said the company has slowed work on the project in part to wait until Interim City Manager Richard Rowe has time to adjust to his new job. Rowe began working at the city March 1. Council member Julie Hackbarth-McIntyre said that despite the slowing, she expects the company to proceed with its Barstow plans at a faster pace with Rowe in place.

“As soon as he (Interim City Manager Richard Rowe) gets his feet wet, we want to start back with the oversight committee,” Hackbarth-McIntyre said. “I know it’s a little bit slower, but I think it will kick back into gear.”

Other city officials said they were aware of the delay.

“We received assurances that the project is moving forward but at a much slower pace,” said city spokesman John Rader. “We are aware of some of their financial difficulties across the corporation, and we are meeting with them next week to bring us up to date.”

In February 2007, SunCal deposited $100,000 into a city account to pay for expenses related to the project. Contractors and consultants bill the city, which is reimbursed by SunCal. Currently, the account shows a negative $59,000 balance, $20,000 of which was due in early February. Rader said that the account also reflects several large payments, for which invoices were only recently sent out. The city plans to discuss the account and the status of the project in its regularly scheduled meeting with the company on March 12, he said.

“We don’t consider it to be a delay,” Rader said. “It’s not like they are 90 days late in paying us. However, we are concerned about their overall financial health.”

He said city officials understand that the developer faces a housing slowdown. In recent months, several steps on the project have faced delays. A series of four public workshops to discuss the project were planned in November. Two were completed, but two others were postponed and have not been rescheduled.

Ken Koch, a principal with consulting firm Impact Sciences, said the planning team has not been told to stop. They are taking more time to study traffic and circulation, analyze traffic patterns and will reschedule the workshops soon.

“There’s a lot of stuff going on behind the scenes,” he said. “No one has given us a cease and desist order we just moving forward but a little more slowly. We just want to make sure we’ve dotted all of i’s and crossed our t’s.”

Hackbarth-McIntyre doesn’t expect slow demand for homes to last for long.

“Once housing starts to pick up down the hill it will still be just as pricey and just as crowded,” she said. “The High Desert is still the next place for economic growth.”

According to regional forecasts, growth is still expected for the long term. Jeff Lustgarten, spokesman for the Southern California Association of Governments, which develops a regional housing needs assessment, said in November that the region is expected to continue to grow. The six-county region that includes San Bernardino County will require more than 700,000 new housing units in the next seven years. Lustgarten said that a lack of homes, especially in the bigger cities, is driving up prices which could encourage homebuyers to relocate to Barstow and nearby areas.

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