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Housing meltdown claims at least one homebuilder

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Year In Review

Two more local homebuilders fell victim in 2009 to the prolonged meltdown of the housing market.

Carmel-based C.P. Morgan Communities LP closed in February, and Indianapolis-based Hansen & Horn Group Inc. is teetering on the edge of bankruptcy.

In December, Hansen & Horn turned over control of the company to a court-appointed receiver, which will attempt to pay off debts.

C.P. Morgan built thousands of homes but couldn’t survive the downturn. (IBJ File Photo)

A judge’s order directed Rick Lux of R.P. Lux Co., an Indianapolis-based real estate services firm, to determine whether Hansen & Horn should remain in business, be partially liquidated, or completely liquidated. Lux is set to make his recommendation to the court Feb. 22.

A lawsuit brought by one of its suppliers, Indianapolis-based C&R Concrete Inc., prompted the receivership. C&R is seeking to recover $268,749 in concrete work done during the past three years.

In all, Hansen & Horn is facing at least 20 lawsuits brought mostly by subcontractors hoping to recover more than $1 million.

Hansen & Horn is building in more than 20 subdivisions in central Indiana, including Duke Realty Corp.’s mixed-use Anson development in Boone County near Whitestown.

The company has regularly ranked among the top residential construction companies in the Indianapolis area over the past decade, building more than 200 homes during several of those years.

That pales in comparison to C.P. Morgan’s output. It typically had ranked as the top builder in the city, constructing more than 2,000 tract-style homes during the housing boom earlier in the decade. By 2007, its production had been cut in half.

The residential market may be improving, however. Pending home sales in November rose 3.3 percent, compared with the same month a year ago. The increase was much smaller than it had been in the previous two months. Pending sales climbed 20.1 percent in October and 12 percent in September compared with the same periods in 2008.

Experts attribute the uptick to the new homebuyers’ law that extends an $8,000 tax credit for first-time buyers that was to have expired in November. It now covers homes purchased or under contract through April 30 of next year. It also created a $6,500 tax break for homebuyers who lived in their previous residence at least five years.•

 

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  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

  2. $3B would hurt Lilly's bottom line if there were no insurance or Indemnity Agreement, but there is no way that large an award will be upheld on appeal. What's surprising is that the trial judge refused to reduce it. She must have thought there was evidence of a flagrant, unconscionable coverup and wanted to send a message.

  3. As a self-employed individual, I always saw outrageous price increases every year in a health insurance plan with preexisting condition costs -- something most employed groups never had to worry about. With spouse, I saw ALL Indiana "free market answer" plans' premiums raise 25%-45% each year.

  4. It's not who you chose to build it's how they build it. Architects and engineers decide how and what to use to build. builders just do the work. Architects & engineers still think the tarp over the escalators out at airport will hold for third time when it snows, ice storms.

  5. http://www.abcactionnews.com/news/duke-energy-customers-angry-about-money-for-nothing

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