The controversial Las Vegas developer who is master-planning the State Land Department's most prized property in Pinal County filed for bankruptcy protection for 32 of his companies last week. However, the move will not affect the development in Apache Junction, state and company officials say.
Developer Jim Rhodes filed a bankruptcy petition for the corporations under Chapter 11, which allows the companies to continue operating while they are financially restructured. Desert Communities Inc., the Rhodes Homes subsidiary that bought more than 1,000 acres of state land in Apache Junction and the right to master-plan roughly 6,700 more, is not among the Rhodes entities listed in the bankruptcy filing.
Bill Marion, a spokesman for Rhodes, said the Apache Junction property would not be affected by the bankruptcy filing. The companies that were included in the petition were all linked to a $500 million credit line from one lender that was not used for the Pinal County property, he said.
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Jamie Hogue, deputy director of the State Land Department, also said she does not anticipate any impact on the Pinal County property because of the bankruptcy filing.
As to the roughly 1,000 acres that Rhodes' company bought outright, Hogue said that deal is financed by regular payments. While deadlines for payments have been stretched, Desert Communities is not in default, Hogue said.
"Like many of our other recent purchasers, he has been granted extensions on payments," Hogue said when asked if Rhodes has been making his payments on time. "Depending on what happens, if payments aren't made in the future, that land could come back to the state."
If that happens, the state land trust would get the property back and would keep all payments that have been made, Hogue said.
Rhodes was a largely unknown figure in Arizona when he showed up with little notice at a December 2006 state land auction for the property known as Lost Dutchman Heights. He bought the 1,011 acres south of Baseline Road, and with it the right to master-plan the balance of the property, for $58.6 million. The land is the first sale from Superstition Vistas, a 275-square mile chunk of state land that extends from Apache Junction to Florence, making it the key property in what was described as the "crown jewel" of the more than 9 million acres of state land holdings.
However, what state officials did not know at the time of the sale was that Rhodes had admitted to making illegal campaign contributions to powerful politicians in Nevada, and that he had been repeatedly and successfully sued there over allegations of fraud, theft and self-dealing by investment partners and other business associates.
Subsequent disclosures in Las Vegas criminal courts showed that Rhodes had paid Erin Kenny, a corrupt Clark County, Nev., commissioner, as a "consultant," even after she was convicted of accepting bribes from a strip club owner.
Rhodes ended those payments shortly after they were disclosed by Kenny in court testimony in June 2007.
He has not been charged with any crime.