SunCal faces rising claims from contractors, suppliers and lenders
Troubles are mounting for the Irvine-based developer that lost a battle last fall with the Walt Disney Co. over a proposed residential project in Anaheim’s resort district, then lost the land planned for the development.
During the past four months, liens, lawsuits and land repossessions have been piling up against SunCal Companies, the family-run business that’s behind such developments as Waterman Junction in Barstow, Marblehead Coastal in San Clemente and the failed attempt to build 1,500 homes in the Disney resort.
Last Wednesday, Irvine-based SunCal lost a 1,300-acre tract planned for homes and businesses in Sparks, Nev. In a separate foreclosure on Monday, a lender repossessed a north Santa Ana apartment complex. A third auction is scheduled for Thursday on two apartment complexes in Tustin.
In addition, seven lawsuits filed in Orange County since October accuse the company of failing to pay more than $105 million in debts. An eighth action maintains that the company hasn’t completed promised work on a future retail site in the Marblehead Coastal development.
A SunCal spokesman said the land developer is being plagued by the same problems besetting other developers: a housing slump that’s curbed sales and crimped prices, often on land bought during the height of the last housing boom.
“Many of our projects are very good. Others are in markets that have been hit harder in this downturn,” said David Soyka, SunCal’s senior vice president of public affairs. “Like any developer and builder, we’re facing financial challenges.”
Others affected
In addition to those filing lawsuits and liens, there are others who haven’t been paid.
Bill’s Sweeping Service of Orange, for example, held off filing a claim even though SunCal owed the firm $25,000 since July. For two years, the sweeping service kept the streets clean around SunCal’s Del Rio project in Orange as trucks hauled in dirt to convert an old gravel pit into home sites. Then, the company suddenly stopped paying.
“For 1 1/2 years, they paid like clockwork,” said Mark Carter, president of Bill’s Sweeping Service. “Then when things got tough, they clammed up. … We had to hound them (to get paid).”
Following a Register query, SunCal officials notified the street sweeper that its payment is in the mail.
Experts said SunCal’s woes are similar to problems faced by other land developers and homebuilders.
Land developers, who convert raw land into developable lots, are suffering because cash-strapped homebuilding firms have stopped buying home sites, experts said. That’s especially tough on developers who relied on financing to buy land since their carrying costs are eating them up.
“It’s a very challenging time for them,” said Steve Cochrane, the California economic analyst for Moody’s Economy.com. “Right now, it’s sit and wait for the bottom. … If it doesn’t come back in a year or two, you’ve got to find some other way to keep going.”
