Utah: State Scoops Up Unsold New Homes

Lots of banks are saddled with extra properties these days, thanks to risky loans and faulty practices. But in Utah, it was the state that did the risky lending, and has found itself the proud owner of what seems to be a suburban ghost town.

Arizona-based developer SunCor worked out an unusual deal with the state of Utah: SunCor could lease the land from the Utah School and Institutional Trust Lands Administration (SITLA), develop a far-flung suburban paradise two hours from Las Vegas and four from Salt Lake City, then give the state a portion of the profits when the homes were sold -- 2,000 of them on more than 2,500 acres. The funds would directly benefit schools in the state.

You can guess at least part of the story: The market collapsed and very few homes were built. According to Stateline.org, "The half-completed Coral Canyon development went up for sale last year along with other SunCor projects in Arizona and New Mexico. Rather than waiting for a hedge fund to scoop up Coral Canyon and flip it for a quick buck, state officials decided to step in." They paid $3.4 million for 172 finished lots.

The big question is why.