NWA Improvement District Files for Bankruptcy Protection
by October 31, 2011 12:07 pm 155 views
A Northwest Arkansas improvement district recently filed for Chapter 9 bankruptcy protection, listing $8.45 million in debts and $2.6 million in assets.
The Centerton Municipal Property Owners’ Improvement District No. 3 — Versailles, which is just outside Bentonville, was created in 2006, just before the housing market collapsed.
The district has about 130 undeveloped lots, but at least the infrastructure is in place with streets and connections for sewer and electricity. And a few homes.
Still, “it was caught up in the real estate bust that occurred,” said Stephen Chaffin, who is chairman of the district’s board. (He also is president of Smith Capital Management in Little Rock, but Smith Capital has no ties to the property.) Chaffin said he was not paid by the district and only joined it two years ago.
The terms of the financing prevented Centerton from selling any of the lots for less than $20,000 each, which has hurt sales of property. So the district’s board of commissioners decided to file for bankruptcy protection to have the $20,000 floor lowered.
The filing showed the lion’s share of the debt is to Cede & Co. of New York, which holds six bonds that mature between 2011 and 2026 and total $8.38 million.
If the bankruptcy judge approves the district’s request to lower the price tag on the lots, Chaffin said, the plan is to start selling property, creating “some activity in this district and, hopefully down the road, have that activity increase prices.”