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January 29th, 2010

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By Jim Wasserman and Dale Kasler
Sacramento\'s big developers have lost plenty of possessions since the real estate market collapse: private jets, vacation homes, expensive cars and multi-million-dollar tax refunds. But mostly they\'ve lost land. Lots and lots of it.
Their loss is Ray Sahadeo\'s gain. The 27-year-old has spent much of this year buying lots and building houses, capitalizing on the stumbles of his more established peers. The local real estate industry is in the midst of a massive reshuffling as developers who have long been in the top tier of Sacramento society see their fortunes fall, and others step in to fill the void left by their departure. Sahadeo, a relative unknown, has gained control of more than 400 home lots from distressed builders and banks. Buying low, he sells low, with homes starting at $139,000.
It\'s the Great American story: a son of immigrant parents from Guyana tapping private equity to \"make hay while the sun
shines.\" While Sahadeo and partner Mark Chisick stake a claim in the local housing market, some of the most prominent family names in Sacramento development circles have become synonymous with bankruptcy and losses. The list of those brought low includes royals like John Reynen and Christo Bardis, Sidney B. Dunmore and C.C. Myers. Collectively, as their businesses have collapsed, they\'ve lost status and well-paying livelihoods, and surrendered corporate jets, vacation homes and millions of dollars in tax refunds to creditors. Even so, they have managed so far to keep some vestiges of their opulent lifestyles.
As their stories unfold in bankruptcy courts, players like Sahadeo and others with access to money have moved into the game or gotten bigger. Last year, McClellan-based janitorial services partners and land developers Ron Alvarado and Charles Somers scooped up 879 building lots on 250 acres in growth-friendly Rancho Cordova from Pulte Corp. and Centex Corp., home building giants that were shedding assets. It was a \"prudent buy\" for a \"decent property\" said Alvarado, and reportedly for far less than Pulte and Centex paid and spent to improve it.
Investors from Granite Bay, Pleasanton and Southern California also have swooped in for bargains after implosions of John Laing Homes, Kimball Hill Homes, Dunmore Homes and Reynen & Bardis Communities.
Among builders that survived after selling assets and downsizing, none has a more formidable position for the region\'s next housing boom than Pulte and Centex. Last month, the giants merged into a superbuilder that accounts for almost one in five sales.
That giant is in place now to realize dreams of builders killed off by debt and plunging land values -- the same knockout punches that sent thousands of homeowners hurtling toward foreclosure and bankruptcy.
\"The critical thing with land is not to owe,\" said Angelo K. Tsakopoulos, owner of AKT Development Corp. and the region\'s largest land developer. Tsakopoulos, 73, said he is buying in this downturn just as he did in the 1990s recession and housing crash. Back then,
Tsakopoulos bought hundreds of distressed and discounted acres, especially in North Natomas, after landowners crumbled under debt.
\"Those were pretty bad days,\" he said. \"But this cycle\'s a bad one. People didn\'t see it this time. We never do. They come, and come quickly, and they\'re brutal.\" Brutal is an apt description of the past two years in the lives on John Reynen and Christo Bardis, partners for 36 years in Reynen & Bardis Communities, the Mather-based home builder and land developer. The pair filed for Chapter 11 personal
bankruptcy protection after they personally guaranteed $900 million in loans for land their company bought during the housing boom. Lenders are now selling off many of their possessions. Their bankruptcy filings offer a glimpse into how well Sacramento\'s development class lived when the market was booming, and how much it\'s losing now that it isn\'t.
Bankruptcy court records show that Reynen and his wife are giving up $26.8 million in cash to creditors, including $24.5 million in income tax refunds. They\'re surrendering a $2.5 million vacation home in Mendocino, a $325,000 property in El Dorado Hills, a $1.8 million vacation home in Cabo San Lucas, Mexico, and a vacant lot valued at $1.35 million in the same city. They\'re also giving up shares of numerous development ventures valued collectively at more than $8 million. Creditors voted to let the Reynens keep their Sacramento home, valued at $2.9 million, and a farm in Hartford, Pa., valued
at $500,000. They also get to keep a 2007 Mercedes-Benz automobile and $606,000 in personal property, including jewelry and artwork.
Records show that Bardis and his wife are giving up $32.7 million in cash, most from a tax refund, to creditors. They\'ll also lose their $1.7 million home in Los Angeles. Creditors agreed to let them keep the family home in Gold River, valued at $550,000. They\'ll also keep $757,000 in personal property, including jewelry and artwork. Finally, they\'re keeping memberships in private clubs, a $75,000 home in Greece and a 25 percent interest valued at $243,000 in a partnership that owns and trains horses. Bardis attorney David Meegan said more than 90 percent of the pair\'s creditors \"voted in favor of that plan treatment. If there had not been sufficient creditor support for the plans as proposed, the plans would not have been approved by the
Neither Reynen nor Bardis responded to a Bee inquiry seeking comment. Spokeswoman Michele McCormick said, \"So far they haven\'t seen any interest in participating in any of these stories.\" Reynen & Bardis Communities, which aimed during the boom to spread itself widely across a fast-growing Central Valley, is not likely to survive, though it is not in bankruptcy protection. Meegan, when asked if the company would try to regroup, answered, \"This probably won\'t be possible.\"
Another former leader in the home building market, Sidney B. Dunmore, is still fighting to keep a $12.8 million tax refund and his homes in Granite Bay and Palm Desert, nearly two years after his firm\'s 2007 bankruptcy and the sale of its Falcon 900 jet.
Separate lawsuits filed by Comerica Bank and Travelers Casualty and Surety Co. of America have aimed to take both homes and the tax refund. The refund, which Dunmore received after selling Dunmore Homes in 2007, remains deposited with the bankruptcy court clerk in Sacramento while proceedings continue.
Dunmore did not respond to a telephone call requesting comment.
Brutal, too, describes the journey of bankrupt highway and bridge builder C.C. Myers. After losing his 45 percent stake in his Rancho Cordova contracting firm C.C. Myers Inc. to creditors, he recently lost his 8,000-square-foot unfinished house at Winchester Country Club in Meadow Vista. It\'s for sale for $1.5 million in the upscale golf course community that Myers spent 20 years planning and building. He lost the project after personally guaranteeing more than $40 million in loans.
Even as the big names work through bankruptcy, the pain goes on. Richland Planned Communities recently joined the list
of those surrendering prime pieces of real estate, giving up title to 44 acres in Roseville\'s Stone Point.
The developer, one of the region\'s largest, planned and won city approvals in 2005 for 575 homes on the property. \"We were relatively conservative with our borrowing and had a grade A piece of property,\" said Steve Thurtle, a Richland senior vice president. \"We had deals lined up at various times for $50 million. But they all fell through because of a growing credit and real estate crisis,\" he said.
Recent history suggests that Richland\'s loss is sure to be someone else\'s gain. As foreclosed and lost acreage piles up across the region, Sahadeo and his backers are scouting for more lots, more land.
\"This window is closing pretty quickly,\" said the region\'s newest builder. \"I don\'t think I\'ll ever see this again.\"