HESPERIA • A real estate investment firm paid $45 million to buy bankrupt Rancho Las Flores, a nearly 10,000-acre master-planned residential community in Summit Valley.
Meanwhile, the city of Hesperia is trying to buy the property's water rights. The City Council will vote during Tuesday's public meeting whether Hesperia will issue bonds to buy the permanent water rights to Rancho Las Flores for $30 million.
Approved by the city in 1990, the Rancho Las Flores project was expected to boost Hesperia's population by more than 50 percent with 15,540 housing units.
When Rancho Las Flores went bankrupt in January, its land and water rights were put up for sale. The city then began pursuing the water rights while Terra Verde Group bought the land.
"The rolling terrain and the spectacular views of Rancho Las Flores combined with the attractive basis of the land and the proximity to the L.A. employment centers made this a great investment to add to our portfolio," stated Craig Martin, founding partner of Terra Verde Group, in a news release. "Rancho Las Flores has a lot of potential, especially since the area's supply of vacant developed lots is rapidly diminishing."
Martin said the timing to begin construction will depend on market conditions.
"I think everybody knows that the market is recovering ... and my expectation is that not in the distant future, market conditions will be ready," he said.
Martin said Hesperia officials pledged that the city would provide necessary water for the project. City Manager Mike Podegracz didn't give a clear answer as to whether the city made such a promise.
"The city will provide Terra Verde the same considerations that are provided to all development projects in the city; specifics can be discussed after the developer goes through the land entitlement process," city spokeswoman Rachel Molina said in an email.
For almost the same amount of money the city now pays each year for the lease of the water rights, the city can issue bonds and own the rights, Podegracz said. The city's lease for the 2011-12 year was $1.7 million.
Podegracz said the decision to go after the water rights had nothing to do with Terra Verde Group's attempt to buy the land.
It's not clear what would happen to the Rancho Las Flores project if the City Council votes against buying the water rights Tuesday.
"We don't see that happening," Martin said.
The Rancho Las Flores project included plans to build a community with a golf course, 60-acre sports park, bike and jogging trails and an elementary school in each of eight villages.
After failing to take off for more than 20 years, however, Rancho Las Flores was foreclosed and the developer filed for Chapter 11 bankruptcy.
The debtors struck a $45 million sale agreement of the property with Terra Verde Group, LLC, according to a bankruptcy court document. The developer announced the closing of the purchase Tuesday.
The City Council meeting will begin 6:30 p.m. Tuesday at the City Hall, 9700 Seventh Ave. in Hesperia.
Tomoya Shimura may be reached at (760) 955-5368 or TShimura@VVDailyPress.com. Follow Tomoya on Facebook at facebook.com/ShimuraTomoya.