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LAS VEGAS-The developer of City Crossing–a planned $2-billion mixed-use development in Henderson, NV–has filed for protection from creditors under Chapter 11 of the US Bankruptcy Code, according to court documents. The developer is essentially William Plise, owner of Plise Development & Construction, who was not immediately available Thursday afternoon for comment.

Site work for the 126-acre 6-million-sf development got underway last year at St. Rose Parkway and Executive Airport Drive. Some $30 million of infrastructure work has been completed. The first phase of vertical development, which was supposed to get underway this summer, calls for an eight-story, 215,000-sf office building, 184 apartments, a 160-room boutique hotel and 175,000 sf of retail space. The general contractor is Chaparral Contracting, a Plise subsidiary.

City Crossing LLC filed for bankruptcy earlier this month after it was unable to come to terms with one of the lenders, Community Bank of Nevada, a subsidiary of publicly held Community Bancorp, which threatened to initiate foreclosure proceedings. The bankruptcy filing is meant to prevent the foreclosure while City Crossing refinances its debt, which matured on April 1 and totals approximately $168 million, including $26 million from Community Bank, according to court documents.

The debt was obtained for the land associated with the project, according to court documents. In seeking approval to enter Ch. 11 bankruptcy, City Crossing LLC says that given the financial wherewithal of William Plise, who personally guaranteed the debt, and the existing equity in the land–it was valued at $240 million in April–the successful reorganization of the LLC, and the completion of the project is highly likely.

The entity behind City Crossing is Aquila Management, which is controlled by William Plise. In order to commence development of City Crossing, Aquila in March 2007 formed 15 LLCs–City Crossing 1, City Crossing 2, etc.–one for each of the 15 parcels that are part of the City Crossing development. In order to fund the acquisition of the parcels, the development of the project and to buyout certain partners, Aquila Management entered into a series of 16 short-term loan agreements.

Last month, all of the entities were merged into one–City Crossing 1 LLC–as Plise attempted to secure an equity partner that could help refinance the debt. The merger also minimized administrative costs such as franchise taxes and the cost of maintaining corporate formalities, and better reflected the fact that City Crossing is an integrated, master-planned development. The move did not affect any of the lenders’ rights, according to court documents.

In explaining the predicament, the City Crossing bankruptcy filing states that short-term loans were a reliable way to finance development projects prior to the onset of the mortgage crisis. In essence, short-term loans could be refinanced on a yearly basis, which permitted the developer to tap into the equity in the underlying real estate and obtain favorable interest rates, according to the filing. In the current environment, the developer needs to replace its short-term financing with longer-term loans that will permit it to complete the project without seeking further financing.

“Mr. Plise has the financial wherewithal to make a substantial contribution to the Debtors reorganization, which will be essential to a successful reorganization,” states the filing. “The Debtor will use the breathing space afforded it by the Bankruptcy Code to negotiate with the lenders to obtain [longer term financing] on a go forward basis.”

In addition to Community Bank, creditors include First National Bank ($48.5 million), Alpers LP and the Eloit A. Alper Revocable Trust ($37.4 million), Aspen Financial ($20.2 million), Silver State Bank ($13.6 million), First National Capital ($11.8 million) and Clayton Mortgage ($10.2 million).

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