Business

Friday, Sep. 26, 2008

Biz Buzz: Rabobank suit seeks to put unfinished condo unit into receivership

Rabobank suit seeks to place unfinished 84-unit project into receivership; builder retains hopes of finding a buyer

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Rabobank is suing the developer/owners of Southside Villas, an ambitious but unfinished 84-unit condominium project on San Diego Way in south Atascadero.

The suit seeks to foreclose on most of the property and place it under the control of a court-appointed receiver, according to documents filed in San Luis Obispo Superior Court.

The project, owned by JRCA Sales, was approved by the city in 2003 as one of the densest projects in Atascadero.

Only 16 of the condominiums have been finished, with eight of those now sold. Ten condos have stood halfway completed for more than a year, and 58 more remain to be built.

Rabobank is seeking possession of the 76 units that have not yet been built or sold, said Brook Carroll, the attorney suing JRCA Sales on behalf of Rabobank.

Until the suit is settled, the bank has appointed a receiver, Dave Ward, to take over the stewardship of the project, said

Andrew Charnley, JRCA’s managing partner and builder of the project.

“They started foreclosure proceedings over a year ago, but we’re hoping we can avoid that by working with the receiver and finding a buyer acceptable to the bank,” Charnley said. His firm is based in the North County.

According to the Rabobank-Southside Villas lawsuit, the bank lent JRCA Sales $7.5 million for two construction loans on the condo project in 2005. Those loans are now more than a year overdue. The unsold condos and property have been recently reappraised at $3.35 million, less than half of what is owed, Carroll said.

Since the market values of the foreclosed properties have gone down, a judicial foreclosure may be able to tap any other assets held by Charnley in order to recoup the bank’s loans, he added.

Charnley has a number of distressed properties under development or construction in San Luis Obispo County and the Central Valley, but the dropping values of real estate means he owes more than the properties are worth, Charnley said, and he’s now run out of cash to complete the projects. Some of his lenders include two North County-based firms, Heritage Oaks Bank and Stinchfield Financial, he said.

Other projects in default include unbuilt residential subdivisions in Templeton and Atascadero, and in the towns of Sanger and Dinuba in the Central Valley, Charnley said.

“I’ve been hoping that I can just wait things out — and not get foreclosed on — until the market gets better,” he said. “It doesn’t serve anybody any good to take over a piece of property that has lost so much value.”

Charnley has faced a number of lawsuits within the year over money he owes to banks, creditors or subcontractors.

Rabobank won a lawsuit in June against him seeking more than $400,000 that he borrowed, and failed to repay, on an unsecured line of credit, according to court documents.

American Express also has a pending lawsuit against the developer for $64,000 in unpaid credit card charges, the documents show.

Charnley’s contractor’s license was suspended Aug. 28 because of his failure to comply with an outstanding civil judgment, based on his failure to pay a claim of around $7,000 to a subcontractor, said Rick Lopes of the Contractors State License Board.

Charnley, who runs Pembrook Builders, Inc., said he hopes to settle that claim and have his license reinstated by the middle of next week.

“It’s been a tough couple of years,” he said. “It’s going to take time, but I’m going to keep the operation going and work things out as best as I can.”

—Melanie Cleveland

County offering home-buying program

San Luis Obispo County offers down-payment assistance to qualified low-income families through the First Time Homebuyer Program.

Since January, the program has helped 15 low-income families purchase homes mainly in the Atascadero, Paso Robles and Templeton areas, organizers said. The loans have a 50- year term, a 3 percent interest rate and payments are deferred during the first 20 years.

An open house on how to receive assistance will be held from 5 to 7 p. m. Monday at the Oceano Community Center, 1425 19th St. The county collaborates with the Housing Authority of the city of San Luis Obispo to help operate the program. For details, visit

www.sloplanning.org. —Tonya Strickland