Bank moves to foreclose on Sandler development in Beach

VIRGINIA BEACH

Ashville Park, the beleaguered 452-acre upscale housing development by L.M. Sandler & Sons Inc., is on the auction block.

Wells Fargo & Co., which holds the loan on the property, is planning to foreclose on about 92 home lots and 331 acres of raw land, according to a legal advertisement published in The Virginian-Pilot. The auction is scheduled for 3 p.m. May 12 in Virginia Beach.

The firm, owned by Virginia Beach developers and philanthropists Steve and Art Sandler, purchased the property near

Pungo for about $10 million and had planned to build nearly 500 homes there with parks, ponds and equestrian and walking trails. Wells Fargo had loaned Sandler about $45 million for the development, according to court records.

Since 2007, Sandler had sold builders about 28 lots at Ashville Park for about $7.25 million, according to Residential Data Bank, a Suffolk-based housing market research company.

On the lots sold, builders constructed about 20 homes. Seven of those were sold, according to Residential Data Bank, not counting two builders who moved into their own homes. An attorney for Wells Fargo declined to comment, and calls to Sandler attorneys were not returned.

In 2008, Ashville Park hosted the Tidewater Builders Association's annual Homearama showcase, featuring homes with asking prices starting at $1.2 million. Ashville Park highlighted the development boom in this southern area of Virginia Beach, where sidewalks and large, upscale homes replaced open fields and farmland.

But the collapse of the housing market ensnared Sandler, which since has seen several developments fall into foreclosure.

The company had multiple housing and mixed-use projects up and down the East Coast. In 2008, Sandler and its subsidiaries owed at least $1 billion in bank loans.

For Ashville Park, it is unclear how much of the loan has been repaid, but on Dec. 31, Wells Fargo and the Sandlers signed a settlement agreement on some of the loans, court documents show. The details of that settlement, however, have not been made public.

Contractors who did the street work, seeded the property and repaired irrigation lines, have filed more than $832,000 of liens against the Sandler entity that owns Ashville Park, claiming they haven't been paid for their work.

Sam Cohen, a Chesapeake-based builder who constructed a home for the 2008 Homearama, said he had been expecting the bank to foreclose on the development. He said he's optimistic that a new developer could turn the community around.

"I think when it finishes, it's going to be a nice community," Cohen said. "Hopefully, it'll work out for the best for the people who are already out there, and the builders who have lots out there."

Last summer, Cohen sold the home he built for Homearama, but he still owns another lot at the community.

For Janice Rhoades, one of Ashville Park's few residents, the bank's potential takeover is an improvement over the months of limbo. "We have hope," she said.

Perhaps the grass will be mowed more frequently, some improvements will be made to the grounds, and lot prices will come down so the properties sell, Rhoades said.

She doesn't regret buying in Ashville Park, she said. She knows most of the people who live in the neighborhood, and there's plenty of room to walk her dogs.

"It's quiet out here," she said. "When things get better, it's going to take off."