Anaverde is a master-planned development that sits in the foothills of southwest Palmdale, CA.
It is currently in Phase 1 of the development, with approximately 1000 homes permitted for occupancy out of 1417 expected in the first phase. The total number of homes in the development was anticipated to be approximately 5000, to be completed over 5 phases of development.
Anaverde was originally named City Ranch. Kaufman and Broad (KB Homes) was the original developer of City Ranch, and they created a Development Agreement on May 8, 1993 with the City of Palmdale to develop this community. That agreement is a binding agreement, lasting 20 years, between the city and whomever develops the land.
KB sat on the project until 2002, when KB Homes and Empire Land Development formed Anaverde LLC for the purpose of mutual ownership of the development, with Empire having controlling interest. So KB sold City Ranch to Anaverde LLC, at which time City Ranch became Anaverde and the development began. Anaverde LLC also owns the undeveloped community Chandra, which sits in the southern foothills above Anaverde.
The first homes in Anaverde sold in April 2005.
August 2006 KB sold out of Anaverde LLC, and Empire took full control.
Early summer 2007, the city stopped issuing building permits for the development because Empire had not met the milestone obligations set forth in the Development Agreement. By the 900th house permitted a secondary access road was to be built. That road was still not complete when the 900th house was permitted for occupancy (and still isn’t to this day).
There was also a requirement by the city that was an addition to the Development Agreement that caused the development to stall. The Development Agreement requires that the developer construct drainage facilities to meet the drainage requirements of Anaverde and mitigate the impact to the surrounding areas. That drainage could not be defined until specific plans for each phase were submitted to the city.
When Empire submitted their plans for Phase 2, the design did not include drainage basins to accommodate the runoff that paving that area would generate. The city required that a drainage dam be built (named the Pelona Vista Dam) to mitigate the impact of runoff from Phase 2 to the Pelona Vista Soccer fields located to the north east of Anaverde. This construction was estimated to cost $25 million and became an impasse that the city and Empire would not be able to overcome.
August 2007, Anaverde LLC took out a multi-million dollar loan (in excess of $85 million) with CW Capital. CW Capital is a subsidiary of Cadim, which is a subsidiary of The Caisse, a multi-billion dollar Canadian international investment firm.
In early 2008, Farallon Capital Management LLC invested in Anaverde and became a co-owner with 49% interest in the development. At that point, all of the land in Phase 1 had already been sold to merchant builders (KB Homes, Forecast Homes, Beazer, John Laing, and Richmond America). Any profits to be realized by Farallon Capital Management would not come until all of the obligations of Phase 1 had been completed and the land in Phase 2 had been sold to merchant builders.
In April 2008, Empire Land filed for bankruptcy. They listed Anaverde, and the debt owed to CW Capital, as one of their debts in the bankruptcy.
Farallon successfully argued that Anaverde LLC did not file for bankruptcy, and its assets and liabilities should remain outside of Empire’s bankruptcy. Empire forfeited their managerial control of the project to CW Capital, and Farallon made a loan to Anaverde LLC to keep the development afloat. This loan is referred to as Debtor-In-Possession (DIP) Financing, as Farallon is a debtor of the company, who is also in possession of the company. So they made a large loan to Anaverde LLC, at a very high interest rate.
After reviewing the state of the development once Empire was removed from it’s position, Farallon (which is an investment firm, not a developer), hired development firm Brooks Street out of Orange County, CA to manage the development.
Brooks Street began working with the city and the school district to review the status of the particulars of the development. They began working on those projects that were mandated requirements of the development agreement to be completed by the 1000th house (which had already been built).
July, 2009 Anaverde LLC is in such debt, and so much work and financing is still required before development can begin on Phase 2, that the development came to a stop, and the relationship with Brooks Street was terminated, while Farallon reviewed whether or not they would move forward with this investment.
November 2009 The City of Palmdale and Anaverde LLC came to an agreement, which gives the City control over the remaining CFD Funds (Mello Roos) to complete the basic infrastructure requirements within Phase 1.
January 2010 the City of Palmdale and Anaverde LLC amended the November 2009 CFD Agreement with a new, bankruptcy court-approved agreement. The remaining CFD funds were used to complete Foothill Park, the Bike Staging Area at Avenue S and Mimosa, and place a new Slurry Seal on the streets.
As of June 2013, New Anaverde LLC owns the Anaverde development. This new corporation, made up of Principals from Brooks Street and Farallon Capital Management, bought the development out of Anaverde LLC's bankruptcy. The City is still requiring that Avenue S be completed before the development proceed any further. A portion of Avenue S will be constructed through the neighboring development of Ritter Ranch, which was in bankruptcy itself until recently. It is now out of bankruptcy and plans to construct Avenue S are being developed and reviewed by the City of Palmdale, New Anaverde, and Lehman, who currently owns Ritter Ranch.
The first school in Anaverde, Anaverde Hills Elementary will be opening in August 2013.
The original Development Agreement has expired and a new plan for Anaverde is being developed by New Anaverde.