Sawmill subdivision lots in foreclosure

Sedgwick County filed suit this week to foreclose on part of the Sawmill Creek subdivision at the northeast corner of 45th North and Rock Road. The tax foreclosures cover 65 lots on which no property taxes have been paid since 2006.

Earlier this month, a judge approved the Bank of Kansas' foreclosure on more than 129 lots in the development in lieu of repayment of $644,000 in mortgage principle, plus interest.

Homes are still going up in the existing phases of Sawmill Creek. With one exception, the foreclosures affect only the vacant lots. The developed lots have been sold to builders and homeowners.

Sawmill Creek is the latest of a handful of Wichita area subdivisions to fall into foreclosure, with developers citing a combination of financial and market woes.

The developers are listed in the Bank of Kansas suit as V. Douglas and Angela Long, Evertt and Sharon Long, and Leon and Sandra Breedlove.

Evertt Long, owner of Hartwood Homes, said this week that the developers' biggest problem was that their development loan was from the Bank of Anthony.

Bank of Anthony ran into serious financial problems and was closed by regulators in June. Bank officials had said that too many of its loans, especially in the Kansas City area, went bad.

The Federal Deposit Insurance Corp. sold the bank's assets to Bank of Kansas.

Long said the developers had approached Bank of Kansas and numerous other banks for new loans to resume work but have gotten little interest.

The banks, he said, got too conservative. And that killed this development.

"It leaves me holding the bag with something I can't do anything with," he said, "and that's depressing."

Long said the developers couldn't obtain the financing to install roads and utilities to develop the northern half of the 160-acre property. So, Long said, what was a viable development went into foreclosure because they ran out of cash.

He estimated they are sustaining $400,000 to $500,000 in actual losses in losing the land and as much as a potential $3 million if the project had been built out.

Despite the settlement of the bank foreclosure, Long is still fighting with Bank of Kansas to regain a home in the subdivision that he built and still owns.

An attorney representing the Bank of Kansas declined comment.

The Bank of Kansas, or whomever buys the land from it, must pay off the unpaid taxes, interest and fees amounting to between $600 and $800 per lot.

The county forecloses on vacant property after two years and built-upon property after three years.

Developers often don't pay taxes on vacant lots when a subdivision is selling slowly as a way to conserve cash, said Sedgwick County Treasurer Ron Estes.

Recent lists of tax delinquents contained hundreds of undeveloped subdivision lots in multiple subdivisions.

But rarely, Estes said, do developers remain in arrears so long that large parts of a subdivision go into foreclosure.