Many of us recall the Desert Highlands project that was slated to put some 4,200 new homes in the currently undeveloped area just north of the Skypark and extending all the way to Dawn Road. 

The big real estate downturn in the early 1990's scuttled the project, but the following story in Tuesday, August 1, 2006 AV Press shows it didn't totally die.

Water fight may dry up development's revival

By VERONICA ROCHA
Valley Press Staff Writer

ROSAMOND - The town's Community Services District voted June 26 to hold off on approving a large-scale land developing contract after concerns arose about water.

"We simply don't have the water at this time," said board President Daniel Landsgaard. "There is absolutely no way to get water out there. We are not in the position to do that."

Highpointe Communities, a land developer company, requested that, regarding a bond and land developing contract, the district give out letters promising to provide water to housing tracts during construction phases. Highpointe is bidding with the district to take over bonds issued in 1991 and 1992 to build Desert Highlands community - a failed land development that acquired large debt.

"As a development company, we typically request will-serve letters, especially with a master plan community of this size," said Timothy England, senior vice president of Highpointe Communities.

"It is a huge concern, not only from a developer's perspective, but also from a bond owner's," he said. "The project is entitled to will-serve."

To receive financial commitment from bond owners, England said, the district must demonstrate that it could provide a long-term water supply to residents.

The district's policy is to issue conditional will-serve water letters to more than 500 constructed residential units, said Jill Willis, the district's attorney.

"There is no ultimate guarantee that water will be available at any given time in the future," she said.

Landsgaard questioned whether Highpointe Communities needed will-serve water letters to go ahead with the bond reassessment.

"We are putting the district at risk by providing water at any cost," Landsgaard said. "We would have to go out and buy entitled water. Entitled water is too expensive."

Previous land developers requesting will-serve letters were issued conditional letters, said Greg Wood, a district board member. He said in those cases the district issued will-serve letters when the land developer had a permit and the construction of 200 homes was completed.

"We don't know what tomorrow brings," Wood said. "For us to put our necks out on the chopping block by saying, 'OK, we're going to give you will-serve letters and promise to deliver water to you' when we don't have the water available, we would be in a real mess."

Because previous developers promised to take over bonds and failed to pay bonds on the Desert Highlands community, the district is reluctant to promise water unless it sees development, Landsgaard said.

The development accumulated a large bondholder debt when then-developer Harvey Stearn, president and chief executive officer of Pacific Gateway Homes of Irvine, dropped out of the development project that included more than 4,200 homes on 1,300 acres between Dawn Road and the Rosamond Skypark. The project also comprises 3,243 single-family homes and 1,007 apartments, 24 commercial acres, 37 acres for parks and two 10-acre elementary school sites.

The district debt is about $24 million, said Highpointe Communities legal counsel Kim Byrens of Best, Best & Krieger.

Highpointe offered to take over the community project's bonds and sell them to a limited amount of bond owners at approximately $20,000 to $25,000 increments.

"One of the problems in trying to resolve this assessment district delinquency is that you have a vast amount of bond owners, and because they were sold to people in $5,000 increments, you can't control and communicate who owns the bonds," Byrens said.

In a PowerPoint presentation to the district, Highpointe proposed to partially restructure the Desert Highlands community bonds. That means Highpointe would issue bonds to pay the amount of assessment district bonds.

Highpointe has until March 2 to issue bonds to fix the district's debt, Byrens said.

Worried about a recurrence of the land developer pulling out of the project, Wood said he was skeptical about Highpointe's intentions in taking over the district's debt.

"If everything would have gone according to plan, everybody would have made money on it and the community would have grown and developed," he said.

"But unfortunately, a lot of people got hurt and put their life savings on it."

Wood also expressed concerns about engaging a new land developing deal.

"What troubles me is which people in (this meeting) will be the ones left out in the cold," Wood said. "I don't want to see this district do something to basically add insult to injury."

Above courtesy of & © Antelope Valley Press

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Last modified: 04/08/08