FORT WAYNE – The western Allen County subdivision where Becky Chantelois’ family built a home was supposed to include a swimming pool and tennis courts.

Those big ideas never came to fruition, Chantelois said.

Instead, home construction in Hamilton Meadows slowed to a crawl three years ago as the declining housing market took hold. Southwest Development Group, the subdivision’s former developer, never broke ground on more than 100 lots – because of declining demand – and was unable to renegotiate a payment plan with its bank, said Gregg Walbridge, Southwest Development’s president. Cincinnati-based First Financial Bank decided to take possession of the property, off Noyer Road near Illinois Road, and sell it to another developer, he said.

Cases where a financially strapped developer cannot complete a subdivision are rarer in northeast Indiana than other regions, real estate experts say.

When it does happen, other builders and developers often step in and finish the project. The company that completes the work can negotiate to acquire an incomplete development at a bargain price – similar to the way a person buying a foreclosed home might obtain a deal.

The private firm that tracks individual foreclosures, RealtyTrac Inc., does not track subdivision foreclosures. But foreclosures are rising among properties without assigned addresses – a category that includes unfinished subdivision lots, said Rick Sharga, senior vice president for RealtyTrac, based in Irvine, Calif.

Foreclosures have increased since local home construction demand started to fall in 2006. Allen County issued almost 65 percent fewer home construction permits last year than in 2005, according to The Journal Gazette archives. Builders received 621 permits last year, down from 1,751 in 2005.

Granite Ridge Builders by Tony Reincke saw a business opportunity in Hamilton Meadows’ unfinished streets, said Lonnie Norris, the local builder’s vice president of sales.

The company bought the subdivision for an undisclosed price this year and has sold about 50 homes there. Granite Ridge is paving streets and digging ponds to complete the project, which will eventually contain about 170 houses.

Hamilton Meadows had about 14 homes when ownership reverted to the bank two years ago, Walbridge said.

Now two sections are nearly completed. Neighbors welcomed the beeping backhoes and other equipment, Chantelois said. As more homes were built, she stopped worrying about the community’s garbage pickup and snow removal being discontinued.

“Every single day there’s mobs of people out here working,” she said. “There’s been a lot of progress.”

Some subdivisions stalled when builders failed to recognize the housing market was slowing, Sharga said. When demand for new homes fell, some builders could not afford to complete projects.

Southwest Development started creating Hamilton Meadows in 2005 – around the same time housing demand began to drop, Walbridge said.

The project also suffered when the subdivision’s builder, Delagrange Homes, stopped building locally, he said.

Owner Denny Yoder moved to Florida and sold the Delagrange Homes name to another local builder, which is still operating.

Hamilton Meadows did not go through a foreclosure, but the bank did decide to take ownership of the property and find another developer, Walbridge said. Southwest Development tried unsuccessfully to renegotiate payment terms.

Sharga said developments are going into foreclosure in the same places where individual homeowners are struggling, particularly California and Florida.

After one California subdivision went through a foreclosure, he said, the bank opted to demolish the homes that were started and sell the vacant land. The problem is less severe in the Midwest, he said.

Granite Ridge isn’t the only local company to acquire a distressed subdivision. North Eastern Group, a Fort Wayne-based developer, bought the Courtyards of Dawson’s Creek after it went through a foreclosure two years ago.

Seventeen more homes have been built in the development, said Ric Zehr of North Eastern Group. The development contained eight buildings – including a duplex-style villaminium and a model home – when North Eastern Group bought it.

North Eastern Group put its own stamp on the project, Zehr said. The developer changed the design from duplex-style villaminiums to detached villas, which many buyers viewed as more desirable. The developer also changed the Courtyards to a 55-plus community targeting baby boomers, he said.

Builders and developers sometimes can buy an unfinished subdivision at a bargain price, said David Findlay, Lake City Bank executive vice president and chief financial officer.

If banks cannot work with a struggling developer to restructure a project’s financing, he said financial institutions will foreclose on the subdivision as a last resort. Banks try to resell such properties quickly to a new developer.

Zehr said Lake City Bank sold the Courtyards of Dawson’s Creek to his firm. Findlay said he was not familiar with that deal, and Zehr said he did not know the name of the subdivision’s original developer.

Granite Ridge bought Hamilton Meadows because it recognized untapped demand for affordable Aboite Township homes, Norris said. The development’s ranch and two-story houses cost between $125,000 and $230,000.

Some homes that were completed before Granite Ridge bought the subdivision exceeded that price range, Chantlelois said. But having a responsive builder completing the lots is helping to support property values, she said. Granite Ridge representatives met with residents to share plans for Hamilton Meadows.

The finished development will have more than a mile of walking trails and six ponds, Norris said.

A past subdivision foreclosure usually doesn’t deter homebuyers from moving to a development, Sharga said. Potential buyers focus on a home’s size, layout and price.

“If you make buyers an attractive enough offer,” he said, “that tends to trump almost any other consideration.”

jglenn@jg.net