FTC Okays Redress Plan To Cover Up to $2,500 for Electricity Installation on Valle Vista Subdivision Lots in Kingman, Arizona

Owners who build homes on their undeveloped lots in the Valle Vista subdivision in Kingman, Arizona, in the next three years will be able to apply for up to $2,500 each to cover costs associated with installation of electric utilities, the Federal Trade Commission announced today. The money will come from a redress fund of approximately $580,000 resulting from the liquidation of Sunbelt Construction Company, and the redress payments will be made directly to a local utility company. The FTC also said approximately $54,000 from the fund will be distributed to eight lot owners who were in the process of building homes in 1994 when the FTC moved to shut down Sunbelt for allegedly failing to provide electricity, water and telephone connections for lots in Valle Vista and two other west-central Arizona subdivisions.

The redress plan is the culmination of an FTC case that began in 1977, when the agency issued an order settling charges that Flagg Industries, Inc. and its wholly-owned subsidiary, Queen Creek Land and Cattle Corporation, misrepresented the value and availability of lots in the three subdivisions -- Valle Vista in Kingman; Cordes Lake in Cordes; and Verde Village, near Cottonwood -- in the course of selling them to consumers. Although Flagg later was acquired by another company and Queen Creek was spun off, Flagg (which eventually became Sunbelt) remained liable for completing the utility infrastructures in the subdivisions.

In February 1994, the FTC alleged that Sunbelt had mismanaged the account set up to provide the utilities connections such that it did not have sufficient assets to provide utilities for the Valle Vista lot owners. At that time, the FTC announced a settlement agreement with the firm under which Sunbelt agreed to be liquidated and to allow its assets to be deposited into a redress fund. The assets now have been liquidated and the FTC has entered into an agreement with the Mohave County Attorney to distribute the funds.

Each Valle Vista lot owner who meets eligibility criteria may apply to Mohave Electric Cooperative for a payment from the fund of up to $2,500 per lot, for a maximum of two lots, to cover the cost of electric utilities installation. Eligible owners must have applied for and received a building permit for a single family residence on his or her lot, completed the foundation, and received a "pass" from the County Building Inspector on the foundation. Valle Vista lot owners will be receiving a notification letter from the Commission explaining the redress program shortly. The redress program is scheduled to last three years unless the funds are depleted more quickly.

The Commission vote to approve this distribution plan was 5-0.

Copies of the memorandum of understanding between FTC and the Mohave County Attorney, as well as other documents associated with this case, are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. X940051)