By J. FERGUSON
Sun Staff Reporter
Tuesday, June 03, 2008
http://www.azdailysun.com

One of Flagstaff's biggest proposed master-planned communities has filed for bankruptcy protection.

Presidio in the Pines, with 900 housing units planned in west Flagstaff along with stores and offices, said it needed to file for Chapter 11 protection to stave off a list of lenders and contractors that have filed legal action against one of Presidio's primary developers, Premiere Acquisitions, as well as its affiliate, Luxury Lofts LLC. Two of the co-owners of the development, Tom Krause and Clem Stubstad, said in a press release they were reluctant to declare bankruptcy but believe the filing "will allow Premiere to take the steps necessary to move the development forward."

By filing under Chapter 11, the developers of Presidio in the Pines will be given time to come up with a plan to pay off its debtors without having to liquidate the assets of 91-acre master-planned community.

Presidio's primary lender was close to foreclosing on the property and a unpaid contractor had asked a Coconino County judge to put the property into receivership.

The developers had been holding weekly meetings with builders, contractors and lot owners in the development to give them information about progress within the project.

Krause and Stubstad said they had identified new investors for the development and had planned on selling property from an unrelated development to free up cash to pay off contractors, but imminent legal actions from creditors has endangered those plans.

The developers said they expect to emerge from bankruptcy protection quickly, moving on to development of the property.

"Premiere anticipates that post-petition financing will be finalized shortly and be submitted to the Bankruptcy Court for approval. This financing will enable Premiere to complete paving on street improvements in Phase 1 of the development, which in turn will allow the builders to begin construction of homes in Phase 1. These funds as well as other funds pledged to this project, also provide the basis to allow completion of the infrastructure for the entire project," a press release issued by the developers said.