Arizona-based developer SunCor worked out an unusual deal with the state of Utah: SunCor could lease the land from the Utah School and Institutional Trust Lands Administration (SITLA), develop a far-flung suburban paradise two hours from Las Vegas and four from Salt Lake City, then give the state a portion of the profits when the homes were sold -- 2,000 of them on more than 2,500 acres. The funds would directly benefit schools in the state.
You can guess at least part of the story: The market collapsed and very few homes were built. According to Stateline.org, "The half-completed Coral Canyon development went up for sale last year along with other SunCor projects in Arizona and New Mexico. Rather than waiting for a hedge fund to scoop up Coral Canyon and flip it for a quick buck, state officials decided to step in." They paid $3.4 million for 172 finished lots.
The big question is why.
The website for Coral Canyon, Utah, promises golfing and a beautiful hotel (which turns out to be a rather lonely-looking Holiday Inn Express); and extols the virtues of single-family homes in a master-planned community. Alas, none of it panned out.
When banks are desperate to unload foreclosed properties and President Obama has declared the age of suburban sprawl officially over, why invest in a ghost town so far from densely populated areas, where "wide roads built on the edges of the development anticipating future growth now dead-end into brush"?
The answer: Apparently government officials in Utah don't believe we're in the midst of a housing double dip. They're betting that the market will recover, and that they'll sell the lots for $50,000 a pop, which is more than twice what they paid. Luckily, it doesn't matter how long this phantom recovery will take. The state owns the land, and doesn't have to worry about grumbling shareholders or mounting taxes. But it's a gamble anyway, while they're waiting for their return on investment.
Meanwhile, Utahans are either prescient, patient, or kidding themselves.
Want to learn more about home buying and home finance? If so, you won't want to miss
our online discussion with industry experts,
"What Works Now: Smart Moves When Buying a Home,"
created by AOL Real Estate in participation with Bank of America Home Loans.