Homebuilder closes shop

The national housing crisis is claiming one of Spokane’s largest homebuilders.

Sullivan Homes Inc. owes local banks about $16.2 million and has filed a petition in state court to liquidate its assets and pay off those debts. At least $900,000 is owed to other vendors and contractors.

“This is absolutely a sign of the times,” said attorney Nancy Isserlis, who will be appointed as the receiver of Sullivan Homes’ assets, which include 32 homes and 72 building lots. The properties have a combined list price of $20.7 million.

How much the homes and property fetch at sale, however, may be far different. They will be professionally marketed and sold as the market allows, Isserlis said, and the final prices may depend on the patience of lenders.

James Sullivan founded the company 12 years ago to build midrange and higher-end homes that cost $300,000 to $650,000.

Sullivan had announced retirement plans earlier this year amid the credit crunch and other problems afflicting Spokane home sales.

Sales of new homes in Spokane during the first half of the year were down by a third compared with the first six months of 2007.

“They were starting new homes in the fall of last year believing there would be a market this spring,” said Sullivan attorney David Eash. “It did not materialize the way they expected as the whole mortgage and home sales market has just fallen off dramatically.

“The Sullivans, frankly, are the victims of national problems.”

Eash said other builders and housing companies are in financial trouble as homes languish on the market. Banks have tightened credit standards and are calling in loans at early signs of trouble.

Lawsuits, liens and other legal actions by banks and other creditors led Sullivan to seek court protection.

All legal actions against Sullivan Homes will be suspended under the receivership.

“I really think the banks are, to some extent, limited to what they can do,” Eash said. “They have their own problems.”

Banks owed money include AmericanWest Bank, Banner Bank, U.S. Bank, Washington Trust Bank, Inland Northwest Bank, and River Bank.

While Sullivan Homes in Spokane is virtually out of business, Sullivan Homes Idaho, based in Sandpoint and owned independently by Sullivan’s son, Todd Sullivan, remains in business.

The Idaho company has $29 million in housing under construction, Todd Sullivan said. The homes are in the $800,000 to $1.9 million range in such places as the Idaho Club, which is built around a Jack Nicklaus-designed golf course. “It’s tough in that higher-end range in that Spokane market,” Todd Sullivan said. “It’s tough here, too. People are hanging on. It’s sad what’s happening.”