A Google magnate has poured cash into The Residences at The Ritz-Carlton, Dove Mountain, making the luxury Tucson-area development one of few able to recapitalize in a struggling housing market.
The investment from Ray Sidney - Google's third employee - has cleared the development's debt and lowered the price point for the properties tucked into the foothills of the Tortolita Mountains.
Sidney, a software engineer, cashed in his Google stock options when the company went public, yielding him "more money than he could ever burn through in his lifetime," The Associated Press has reported, adding, "Billions? He won't say."
Sidney's support was crucial to the Dove Mountain project's ability to move forward, said local developer David Mehl.
"Like every other project in the United States, the economics did not work based on how it was originally conceived," Mehl said Tuesday.
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The luxury market has not been immune from the severe downturn in the housing market. Earlier this year, several lots in the Stone Canyon development in Oro Valley received foreclosure notices. So did lots in Butterfly Mountain, a high-end project near North Thornydale and West Moore roads.
Without Sidney's investment, The Residences at The Ritz-Carlton could have faced a similar situation.
To cover the debt, finished homes were previously priced about $600 to $800 per square foot, Mehl said. But given current housing conditions, that's a higher price than buyers were willing to pay.
The homes are now priced about $400 per square foot.
"It definitely allows us to reprice our homes to reflect where the market has settled," said Mehl, who's the president of Cottonwood Properties.
The Residences at The Ritz-Carlton are in Marana northwest of Tucson, along a 27-hole golf course designed by Jack Nicklaus. The Ritz-Carlton Dove Mountain resort, which opened last December, is nestled nearby among the rocky, saguaro-laden slopes.
Right now, construction is under way at one home in The Residences. Several others should start going up in coming months, Mehl said. Sidney's investment is helping that construction move forward.
Sidney joined Google in 1999 and left the company about four years later. After his exit, he became involved in philanthropic enterprises focusing on the environment and education.
He also started putting money into real estate.
He's invested in properties in California and Nevada.
The Residences at The Ritz-Carlton is his first foray into real estate in Arizona, he said in a phone interview Tuesday.
Sidney, who lives near Lake Tahoe, first visited Mehl's development this spring and found it to be a unique opportunity, he said. With an eye for sustainable real estate projects, Sidney said he plans to incorporate more environmentally friendly components into the homes.
He learned of the project through another of Mehl's investors he'd worked with in the past.
Sidney said he's aware of challenges facing Tucson's housing market. In fact, he said the decline is what allowed him to make an effective investment.
"That situation is what allowed me to get involved with the Ritz-Carlton development with what I viewed as a very valuable price point," he said.
He would not say how much cash he put in.
Seeing the completed Ritz-Carlton resort - a separate Cottonwood Properties development - added to Sidney's confidence in financially backing Mehl.
Also, the Ritz-Carlton brand carries a worldwide reputation for quality, he said.
"Now I and David Mehl will be able to make some money while making a really amazing development," Sidney said.
AT A GLANCE
The initial residential phase of The Residences at The Ritz-Carlton plans for 126 homes, with 16 of those custom sites in the Rockpoint Ridge neighborhood. Those sites start at $605,000.
Homes in the development's Amolillo neighborhood start at $1.1 million, while homes in the Seven Saguaros neighborhood start at $1.5 million.
For more information go to www.theresidencesdove mountain.com or call 572-2700.
Contact reporter Dale Quinn at dquinn@azstarnet.com or 573-4197.