Owners of the SunCrest development have defaulted on $58 million in development loans, and residents there are worried the developer could try to sell its remaining assets and leave the state.
The notice of default was given to SunCrest management Feb. 26 after the company failed to meet its loan obligations Feb. 15. The Salt Lake County Recorder's Office received notification of the default the next day.
SunCrest's breach includes failure to pay on $58 million in loans, failure to maintain an interest reserve, failure to pay real estate taxes and failure to pay for improvements made to property in the development.
Properties listed in the 50-page notice of default include open space and many residential lots. SunCrest also leases a grocery store built in the neighborhood and had promised to build a clubhouse, residents said.
Many residents are confident they will be able to retain their property but are afraid the market will be shut down and the clubhouse may never be built, said Paul Tonks, a spokesman for the community organization SunCrestResidents.org.
Neither SunCrest nor its Dallas-based parent company Terrabrook returned calls Wednesday. But Draper City Councilman Bill Colbert said SunCrest has been able to sell only one-third of residential lots in the sprawling mountaintop development.
The developer has been plagued by problems inherent to building on steep slopes, and has also faced litigation from surrounding property owners and threats of court action over what residents have said is shoddy road construction.
The development has not provided any information about its financial troubles to the city or its residents, said Colbert, a resident of the development.
However, residents have heard rumors since December that SunCrest may be trying to sell, said Barbara Blackner, the only SunCrest resident on the five-member homeowners association in the area.
The rest of the homeowners association is made up of SunCrest representatives, Tonks said. But even if SunCrest sells or abandons its property, the association will remain intact, residents have said. Draper has also pledged to continue providing services regardless of the outcome and has expressed a willingness to work with any management group that could take over in the area.
"As a community, the attitude is still extremely upbeat and positive," Blackner said. "We're happy to work with whichever entities are working with us."
Blackner and Tonks also said they love their SunCrest homes and still believe that choosing to live on Traverse Ridge was a great decision.
"We live on a more intimate level with nature and wildlife than anywhere we've ever lived," said Blackner, who moved with her husband to Draper from the Washington, D.C., area. "The views, the night sky — it's beautiful."
Salt Lake County Recorder Garry Ott said a notice of default for a subdivision the size of SunCrest is very rare. Even if SunCrest intends to sell, it would be to its best advantage to keep its financial agreements intact, he said.
If SunCrest fails to pay on its loans and back taxes, Zions Bank could take action in court, Ott said. That could result in SunCrest's forfeiture of the property leaving the bank to manage the property. Alternatively, the property could be returned to its previous owners.