Maronda, area's third-largest builder, files for bankruptcy
Maronda Homes Inc., the region's third-largest home builder, filed for bankruptcy protection from creditors yesterday amid a national and local housing market that continues to stagnate.
The Findlay-based company owes creditors as much as $100 million and hasn't been able to renegotiate credit terms, according to documents filed in U.S. Bankruptcy Court in Pittsburgh. The company that builds houses in Florida, Georgia, Kentucky and Ohio, as well as Pennsylvania, said it wants to restructure under Chapter 11 of the bankruptcy code.
For Maronda customers, homes will be built, and closings will be held on time "with no issues whatsoever," according to attorney Joseph F. McDonough, representing Maronda.
U.S. Bankruptcy Judge Judith Fitzgerald approved an order that closings continue, he said.
"Maronda Homes made the difficult decision to seek Chapter 11 bankruptcy protection because certain banks failed to perform their credit obligations," a statement from the company said, noting that only three out of more than 30 Maronda companies filed for reorganization. Those filings relate only to Pennsylvania and Ohio operations, the statement said.
Family-owned Maronda has been building homes since 1972 and listed assets worth as much as $500 million in court documents. Maronda Homes lists 46 housing developments in Allegheny, Beaver, Butler, Washington and Westmoreland counties, as well as developments in 12 cities in Florida, including Daytona Beach, Jacksonville and Orlando.
CEO Ronald W. Wolf couldn't be reached for comment.
Real estate professionals in Western Pennsylvania were surprised.
"I thought they were doing well in this area, but home builders here, like the rest of the nation, have had bad times," said Howard W. "Hoddy" Hanna III, CEO of Howard Hanna Real Estate Services. "Apparently, the company had problems in other areas where they build, such as Florida, where they were building 1,000 homes a year. Florida has had a bad housing market the past few years."
Bill Dietrich, vice president of construction for Coldwell Banker Real Estate Services, said, "The key is, the market is not good. We just went through the worst year of construction starts in this area, and the U.S., and we're hoping the (housing) inventory out there gets used up and the banks start to lend some money."
Housing starts in the Pittsburgh region fell to the lowest level in more than 16 years in 2010. There were 2,778 housing units started, down 1 percent from the year before, according to Tall Timber Group in Ross. Sales of new homes in the region were down by 9 percent in March from a year ago. There were 141 sold last month, down 9 percent from 155, according to South Side-based RealStats.
Maronda said in court documents that it was left with no option but to file for bankruptcy because it could not reach a revised financing agreement with its 14 lenders, led by Bank of America and Wells Fargo.
Maronda blamed "the recalcitrance of Huntington Bank and the refusal of the lenders to solve the stalemate and proceed with revised terms" for pushing it into bankruptcy. Maronda said all but Huntington National Bank agreed to the revised loan agreement reached in December, and the other banks would not sign the deal without all banks on board.
Huntington spokesman Bill Eiler said the bank has a policy of not commenting on litigation.
Maronda said it ran into financial problems with its lenders in March 2010 when a new financing deal raised interest rates and required substantial collateral on Maronda's development projects. Beginning in October, Maronda said its lenders took all of the proceeds from the sale of properties. Maronda said it could not continue to operate under those terms.
Maronda asked the court to give it the right to use $7 million from sales proceeds of property financed by 13 lenders, including three in the Pittsburgh area -- PNC Bank, Huntington National Bank and Fifth Third Bank.
Maronda is known in the industry as a production builder, a company that pulls home designs from a standard portfolio to offer to buyers. While some upgrades are available, designs remain standard so the homes can sell at competitive prices, said Jim Eichenlaub, executive director of the Builders Association of Metropolitan Pittsburgh.
Production builders count on large volumes of homes sold, rather than a big profit margin on each house.
"A lot of our members build 20 houses in a year. These guys," he said, referring to Maronda and similar companies, "in a good year, they'll build 400 houses."
Maronda typically runs third among Western Pennsylvania's biggest builders, behind NVR Inc., the parent of Ryan Homes, and Heartland Homes, Eichenlaub said. Last year, Maronda built 123 single-family homes and 79 multifamily units in the region, according to figures compiled by the Tribune-Review.
In March, Maronda ran third in sales. NVR sold 38 new homes, followed by Heartland with 34. Maronda sold 18 in Allegheny, Beaver, Butler, Washington and Westmoreland counties.
"A number of companies across the country have had to look to reorganize debt and look for protection under the federal bankruptcy laws," Eichenlaub said.
Other multistate homebuilding companies have filed for protection. Pasquinelli Homebuilding LLC in Chicago filed a Chapter 7 liquidation earlier this month. Comstock Homebuilding Companies of Reston, Va., filed for Chapter 7 bankruptcy in November 2009, liquidating its Parker Chandler Homes subsidiary in Atlanta.
Maronda didn't list how much of its debt is owed to secured creditors. Among Maronda's unsecured creditors, DR Grading & Excavation of Grove City, Ohio, is owed the most — $128,896 — according to court documents.
The homebuilding company also has been known for its charitable arm, the Maronda Foundation, which gave more than $15 million to Catholic schools in the Pittsburgh area from 2003-07.
Maronda's founder, William J. Wolf, was a conservative Catholic who supported Catholic schools. He died in 2008 at age 78, and the foundation's donations to Catholic grade and high schools declined.
In the Valley
Here's a look at Maronda Homes housing plans in the Alle-Kiski Valley:
• Ridgeview Estates, Buffalo Township
• Oakridge Estates, Harrison
• Hawk Valley, Allegheny Township
• Pleasant View, Allegheny Township
• Shawnee Ridge Estates, Indiana Township
• Whispering Pines, West Deer
• Whispering Springs, Murrysville
Source: Marona Homes Pittsburgh website
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Steelers notebook: Opportunity awaits Boykin
- Pirates showing interest in starting pitcher Masterson
- Boros: Alvarez’s power too valuable for Pirates to let him leave as free agent
- NFL notebook: Jeannette’s Pryor reportedly will sign with Browns
- Coal industry’s decline chokes Central Appalachian towns
- Despite cross-check, Pens’ Crosby expects contact in front of net
- Founder of Z&M Cycle Sales in Hempfield killed in Florida motorcycle crash
- CPR helps revive Heinz Field worker with cardiac arrest
- Steelers’ Roethlisberger remains in concussion protocol
- 2016 county budget contains no tax hike
- Monessen lawyer disbarred by state disciplinary board