Know what comes after 7? In this case, it’s 9.
Those are chapters in the U.S. bankruptcy code. They are stops along the way for one homebuilder coming to grips with the reality of failure.
The owner of Cadena Contracting Inc. of North Little Rock had a plan, a dream if you will, of building a 106-house development called the Villages of San Luis.
But the housing market had other ideas.
Today there are only 10 modest houses - three are on the market - on two long streets with grand Hispanic names - Salinas de Hidalgo and San Luis boulevards.
Otherwise, these are streets,crumbling in places, curbs and PVC pipes sticking out of weedy dirt lots in a remote part of north Pulaski County.
Cadena Contracting filed for Chapter 7 protection in 2011. That led to liquidation of all of its assets and dissolution of the company. Attempts to contact Jacquelynn Cadena, who had been owner of Cadena Contracting, failed.
The property owners association that was formed to make the project work had to throw in the towel and recently filed for Chapter 9, which is designed to protect governments.
Detroit, you may know, filed for Chapter 9 on Thursday, citing debt of as much as $20 billion and a $380 million budget deficit.
But what has the Pulaski County Property Owners Improvement District No. 4 - population a handful - got in common with what used to be proudly called Motor City?
Both are subdivisions of state government - and as such can issue tax-free municipal bonds for civic purposes,though that’s about it for the district.
Ideally, the undeveloped land at the Villages of San Luis will be sold off, bondholders will get some of their investment and perhaps someone will complete the dream.
There appear to be two views on property owners improvement districts.
Jim Smith, attorney for the debtors, sees such districts as stray dogs running loose in communities across the country. He suggested a state-level agency be created to audit them.
Graham Smith, owner of Graham Smith Construction Co., a Little Rock-based residential homebuilder, says theproblem lies with the masters, not the dogs.
He uses such districts, and “it’s like anything else. If you run them right they work great for the benefit of the public.”
Heath Abshure, Arkansas Securities commissioner, said that the improvement districts “certainly cannot obligate the state.”
He said that the problem arose during the housing boom when “every landowner in the state decided they were going to build a damn subdivision … [then] the bottom fell out of the market.” If you have a tip, call Jack Weatherly at (501) 378-3518 or e-mail him at [email protected]
Business, Pages 63 on 07/21/2013