Bankruptcy halts Ironbridge work
Glenwood Springs, CO Colorado
CARBONDALE, Colorado”I would think that if someone does buy (LB Rose Ranch), they’ll buy it with the intention to operate the golf course as it’s been operated, and hopefully, to continue to sell us lots so we can continue to build here,” Woelke said.
” A late check from a subsidiary of Lehman Brothers Holdings, the bankrupt investment bank and investment management company, resulted in a two-week work stoppage on 20 affordable housing units under construction at Ironbridge starting last week.
Though Lehman Brothers Holdings is in bankruptcy, the jobs and paychecks of the contractors and tradesmen building houses in the free market portion of Ironbridge most likely won’t be affected, an Ironbridge official said.
The developer of the residential project situated between Carbondale and Glenwood Springs, Ironbridge Homes LLC, is a separate company, buying lots as needed from LB Rose Ranch, LLC, the Lehman Brothers subsidiary corporation that owns Ironbridge Golf Club and about 100 building lots that haven’t yet been sold, said Mike Woelke, vice president of construction for Ironbridge Homes.
While its parent company is bankrupt, Woelke said, LB Rose Ranch is not. As the bankruptcy of Lehman Brothers proceeds, LB Rose Ranch will no doubt be sold along with Lehman Brothers’ other assets, he said.
Ironbridge Homes has a contract that allows it to purchase additional lots from LB Rose Ranch, but it’s not clear whether that contract will be honored.
“There’s no telling what the bankruptcy court will do with those assets,” Woelke said. But, he said he thinks that things will probably continue as they have.
Affordable housing at Ironbridge is being built under a different arrangement, and the Lehman bankruptcy has had a greater effect on that project, causing work to stop briefly. Ironbridge Homes is the contractor for those homes, building them for LB Rose Ranch, which owns the lots.
Garfield County required LB Rose Ranch to provide 30 deed-restricted affordable units as a condition for approval of the development. Currently, four of those houses are completed and 20 more are under construction. The county has held a lottery for those houses under construction, and has buyers for all 20 units.
All of the affordable dwellings at Ironbridge are single-family houses. LB Rose Ranch plans to provide six more affordable dwellings off site, Woelke said.
According to a written statement provided by Ironbridge Homes, LB Rose Ranch failed to make a payment to Ironbridge Homes for the ongoing work on the affordable project last week, a week after the Lehman Brothers Bankruptcy was filed. Woelke said the payments are supposed to arrive every two weeks.
Ironbridge Homes filed a notice of intent to place a lien on the 20 affordable houses under construction on Sept. 30 and stopped work on the affordable dwellings.
Ironbridge Homes received a payment Monday, and LB Rose Ranch officials assured Woelke that funding was in place to finish the 20 houses under construction. Woelke said that work will resume Oct. 13.
Woelke said the check was as much assurance as anything said by LB Rose Ranch officials.
“When we got a check from them, it told us that their process was continuing, sort of beyond the grave, so to speak,” Woelke said.
He said he’s not overly concerned over the possibility that LB Rose Ranch might not be able to make further payments.
“If Lehman had been unable to pay, between us and the county, we would have been able to finance those homes,” Woelke said.
The value of the houses is now greater than the amount LB Rose Ranch owes, and Ironbridge can still file a lien on them if needed, and find financing to continue, based on the value of the houses.
For local builders on the free market portion of the project, Woelke said, the worst that could happen is the project could be slowed due to delays in bankruptcy proceedings that could delay the purchase of lots.
“Potentially, sales could get slowed down, and that could slow down the work,” he said. But funding is in place for all work being done currently.
“They’re not in jeopardy of not being paid for work they’ve already done,” Woelke said.
“All that construction of homes will not be affected by anything Lehman Brothers is doing,” Woelke said. The financing essential to building houses on the project is through construction loans taken out by buyers, he said, and through Ironbridge Homes’ arrangement with Wells Fargo Bank. This funding is not in jeopardy, he said.
The golf and residential development is expected to have about 300 homes when complete, Woelke said. According to information sent by Ironbridge Homes, about 140 houses have already been sold, and the company has another 15 free market houses under construction. Ironbridge also owns about 37 additional lots and a couple of unsold spec houses it built on the bank of the Roaring Fork River.
The lots that LB Rose Ranch still owns, Woelke said, are mainly in the fourth phase of the development, an area that doesn’t yet have streets. LB Rose Ranch is in charge of building streets, water and sewer service and other such infrastructure, Woelke said, but he said he hopes LB Rose Ranch will be owned by some solvent entity by next spring, when Phase IV is scheduled to begin.
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