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Tony subdivisions to hit auction block

By Judith Pannebaker BCC Editor

Local signs indicate that the remnants of the deep recession that hit the United States in 2008 have finally trickled down to Bandera County. Due to a bank foreclosure, two tony subdivisions are scheduled for the auction block.

On Tuesday, Sept. 4, Cielo Rio and the Hills of Bandera will be sold on the front steps of the Bandera County Courthouse - in theory at least. The public auction is scheduled for 1 pm at the earliest or within three hours of that time.

The last property to go up for grabs in this manner was the Old Texas Square complex in September 2010. And, while it eventually sold to a developer who will hopefully do just that, the complex didn't change hands on the courthouse steps.

The San Angelo Banking Center - First National Bank of Sonora, the entity that holds the deed of trust - the subdivision equivalent of a mortgage - initiated foreclosure procedure.
Additionally, in a deed of trust, legal title to a piece of real estate is transferred to a trustee, who holds it as security for a loan between a borrower and lender. For legal purposes Robert E. Pfluger has been named substitute trustee.

According to real estate attorney Cynthia Payne of Bandera, who is not involved in the case, during a foreclosure, a lending institution that holds a property's deed of trust usually attempts to sell the property as quickly as possible because of regulatory issues.

In legalese, the bank enacted the foreclosure procedure on the Hills of Bandera - aka Cielo Trace LP - "because of default in performance of obligations of the deed of trust." Additionally, the auction of the property to the highest bidder on Sept. 4 will be "to satisfy the debt secured by the Deed of Trust, including the grantor's real estate lien note, dated Feb. 6, 2009, in the original principal amount of $2,347,750 as renewed under the grantor's real estate lien dated July 1, 2009 in the original principal amount of $1,858,750."

The Hills of Bandera subdivision is located off FM 1077 near the Hill Country State Natural Area. The entire subdivision, with the exception of lots already sold, will go on the auction block. According to court filings, the gated subdivision is located in both Bandera and Medina counties.

In 2007, the late Don L. Apostolo of Cielo Trace, LP, submitted a final plat to Bandera County Commissioners Court for the first phase of development for Hills of Bandera Ranch. He said at build-out, the 646-acre subdivision would include 77 lots and 3.1 miles of private roads.

Apostolo died unexpectedly on Jan. 8, 2010, in Bandera. On the subdivision website, Jerry Thames is listed as contact person for the Hills of Bandera subdivision.

In addition, four parcels of the much larger subdivision of Cielo Rio will be sold on Sept. 4. As of July 1, 2009, the bank note on the subdivision was $2,349,394.

The first parcel of 170.84 acres was included in Phase II of the development; the second parcel of 12.380 acres made up the development's Phase III; the third parcel includes 184.77 acres in Phase I of the development; and the fourth parcel is 485.76 acres. Some of the parcels were comprised of tracts from multiple original abstracts. Apostolo conveyed the acreage to Cielo Rio Ranch by warranty deed on June 21, 2005. With a warranty deed, the seller guarantees he holds clear title to a piece of real estate and has a right to sell it to the buyer.

All property will be sold except for tracts that had been purchased previously.

It was never smooth going for the upscale subdivision located in Precinct 4, off Highway 16 South. In December 2009, Apostolo asked Bandera County Commissioners Court for an unprecedented fourth extension on a letter of credit to complete roads in Cielo Rio.

According to Apostolo, extension of the $438,376 letter of credit would enable him to complete roads in Phase II of the subdivision. At that time, County Engineer Ray Rendon said that since the San Angelo Banking Center had issued the original letter of credit in 2006, commissioners had given Apostolo an extension in December 2007 and two in 2008.

Precinct 4 Commissioner Doug King asked about the cause of the extensive delays. Blaming a declining economy, Apostolo said, "Developments are based on sales. In the last year and a half, we've had reduced home sales so we were unable to do what we wanted."

According to Apostolo, a business restructuring had enabled him to complete Phase II of Cielo Rio. He planned to use borrowed money, rather than revenue generated from lot sales, to complete the project. At that time, Apostolo told commissioners he did not plan to develop Phase III of Cielo Rio.

When apprised of the foreclosure, County Judge Richard Evans observed, "Developers roll the dice and depend on sales to cover payments. This is a sign of the times."