Several lots in the Stone Canyon development in Oro Valley have gone into foreclosure, under pressure from slow sales and a tight credit market still resistant to financing real estate.
The 32 lots are in Tuscan Village Estates - the parcel dubbed Stone Canyon III - on the western end of the gated luxury development.
The original principal balance on the lots was roughly $6.8 million, records filed in the Pima County Recorder's Office show.
They are scheduled for auction March 31.
The beneficiary is Phoenix-based Biltmore Bank of Arizona.
"It's another byproduct of the economic times we're in - where sales have slowed dramatically and financing is no longer available because of the freeze in the credit markets," said Lee Johnson, who provides legal representation for Stone Canyon LLC.
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Johnson said negotiations with the bank are ongoing.
Stone Canyon is a part of Vistoso Partners LLC, which is managed by Ashton Wolfswinkel and Brandon Wolfswinkel, according to Arizona Corporation Commission records.
The Wolfswinkels' father is Conley Wolfswinkel, who developed much of Rancho Vistoso in Oro Valley.
The lots sit near completed homes perched on the edge of the rocky Tortolita Mountains. Some of the lots - which have views of the Catalina and Tucson mountains in the distance - are studded with saguaros, prickly pear and palo verde trees, while others are partially leveled and piled with boulders.
Luxury properties in Arizona have taken a hit since the peak of the housing market, because of stiff competition between developments as well as the seasonal nature of the industry, said Jay Butler, an associate real estate professor at Arizona State University.
"The general belief has always been that somehow the luxury market is immune from downturns," but that's not necessarily the case, Butler said.
As property values drop, the foreclosure process could provide some benefit to a developer, Butler said. "Failure lowers prices, which may make them more sellable," he said.
For example, if a developer has too much money invested in each lot, he can buy them back at auction at a more reasonable price point for the properties.
Stone Canyon III isn't the only piece of the high-end development in financial trouble. The Golf Club at Vistoso, 955 W. Highlands Drive in Stone Canyon, is in receivership. A receiver is a court-appointed third party used in foreclosures or bankruptcies to manage properties.
According to the Pima County Recorder's Office, another Wolfswinkel holding, Vistoso Golf Partners LLC, is the borrower on a loan with a default balance of $3.5 million. The lender, Textron Financial Corp., opted to use a receiver to ensure operations at The Golf Club at Vistoso run smoothly during the foreclosure process.
The property is scheduled for auction March 11.
"I can't speculate if there will be active bidding," Johnson said. "Golf properties are a difficult sell these days."
Contact reporter Dale Quinn at 573-4197 or dquinn@azstarnet.com