The Arizona Republic - April 2007
A Las Vegas development company insists it will build a "world class" master-planned community in Lost Dutchman's Heights south of Apache Junction, despite a history of workmanship complaints and a fine for violating campaign finance laws.
Rhodes Homes was the surprise winner, bidding $58.6 million in December for the State Trust land in Pinal County. It placed $6 million in escrow to begin planning the entire 7,000-acre Lost Dutchman's area, a step that must be completed within two years before construction can begin on the 1,010-acre chunk purchased by the company.
"I'm extremely confident of our ability to plan and develop a world class master-planned community," said Christopher C. Stephens, executive vice president of Rhodes Homes. "I think most development companies have things in their past as well."
A major developer, Rhodes has built 7,000 homes since owner James M. Rhodes, a former carpenter, founded it in 1985.
But the company also has endured a series of setbacks, including a $148,000 civil settlement for violating federal campaign finance laws in June 2005 and being part of a $16.2 million judgment to settle a construction defect suit stemming from soils shifting at the Casa Linda development, leading to cracks in houses, according to Arizona Corporation Commission records.
In the past five years, Rhodes has been investigated 43 times, with 23 workmanship complaints sustained and one complaint sustained for owing money to contractors, subcontractors or suppliers, according to Nevada State Contractors Board records.
A J.D Power and Associates customer satisfaction survey in September 2006 gave Rhodes a below-average score in the Las Vegas housing market, with the company finishing 18th out of 20 builders. Rhodes received a score of 76, with the average score 112.
Stephens downplayed the company's role in the Casa Linda case, saying Rhodes bought the lots from another company. The Corporation Commission records said Rhodes built 10 to 15 percent of the homes and was held responsible for $200,000 in the judgment.
"I think it's something that comes with the business," Stephens said. "We are absolutely in this business for the long haul. It wouldn't do us any good not to do a good job with our development.
"He said the quality of the company's work at Lost Dutchman's Heights "will speak for itself.
"Deputy Arizona Land Commissioner Jamie Hogue said Rhodes' performance is being watched by several government agencies, including the Land Department, Apache Junction and Pinal County.
"This is a huge piece of land and it is determining the future of what that area will look like," she said. "So far, the relationship has been great. They've been very responsive.
"Rhodes has come under intensive scrutiny from the Arizona Corporation Commission, which investigated the company's background as part of its application to form the Perkins Mountain Water Co. to serve two large master-planned communities in Mohave County.
The commission is also studying whether there is adequate water supply for the Rhodes subdivisions, Golden Valley South with 33,000 units and the Villages at White Hills, with 20,000 units. They would form a Las Vegas suburb.
The commission's staff found that Perkins is "a fit and proper entity" to operate the water company, but required Rhodes to put up an unprecedented $5 million performance bond.
A decision from an administrative law judge is pending and the commission has final authority to accept, amend or reject the ruling.
"We were willing to post that bond as evidence of our commitment to future residents," Stephens said.
