Coeur d’Alene businessman Marshall Chesrown has turned the Legacy Ridge development in Liberty Lake over to AmericanWest Bank.

New deeds on the properties were filed last week in lieu of foreclosure on $17.8 million in debt Chesrown took out to buy and improve two parcels: 120 acres intended for luxury homes and 906 acres that was to be left largely undeveloped.

Only a few homes have been built in Legacy Ridge, which was designed to accommodate more than 100 with views of the Spokane Valley and Liberty Lake.

AmericanWest President Patrick Rusnak said finished lots like those at Legacy Ridge have been most affected by the plunge in real estate values. Builders and would-be owners cannot get the financing to erect homes, starving developers of the funds needed to repay loans.

“It’s a quality project,” he said. “We have been involved in it for several years.”

Developers and their banks have been trapped by the sudden reversal of real estate fortunes, Rusnak said.

“You roll the clock back three years, and that project looks a lot different than it does today,” he said.

Rusnak said AmericanWest, which has already allowed for the loan loss, is working with consultants to determine how best to dispose of the properties. Selling them intact, and quickly, is unlikely, he said.

Chesrown, who could not be reached for comment, made his mark in the area with his Black Rock development above Lake Coeur d’Alene. But more recent ventures like Legacy Ridge have suffered in the economic downturn, and a Montana bank has filed a $14.6 million foreclosure against Black Rock North.

His proposed Kendall Yards project on the north bank of the Spokane River near downtown is reportedly for sale.