A large site south of Spokane Valley where an investor group had begun developing a 253-home subdivision that was to include residences priced mostly upwards of $500,000 has reverted back to Spokane lender Sterling Savings Bank after falling into foreclosure, public records show.

The wooded, 100-acre parcel, which investors in ElkRidge Development Group Inc. bought from Spokane entrepreneur Bernard Daines several years ago, is located on a hillside on the west side of state Route 27 between about where 41st and 47th avenues would extend.

Investors already have put a substantial amount of money into the gated development, named ElkRidge Heights. A large landscaped entryway and water feature mark the northern entrance to the subdivision, first-phase streets have been installed, and at least a handful of large homes visible from the entrance have been constructed, although the bulk of the residential lots remain vacant.

Sterling took over ownership of the property after it apparently failed to attract any acceptable bids at an April 2 trustee's auction to cover a $5.7 million past-due debt, records show.

A published legal notice says the trustee's sale was scheduled, originally for March 19, after SV 261 LLC, of Bellevue, Wash., which had entered into a deed of trust in August 2006 to acquire the property, fell into default on a principal loan amount of $4.8 million, plus accumulated interest, fees, and costs of another about $879,000. County records identify ElkRidge Development Group as the managing member of SV 261, which owned the property.

A spokeswoman for Sterling Savings Bank, which has been having its own well-publicized financial difficulties stemming heavily from real estate transactions, says, "We do intend to market the property and sell it."

SV 261 remains an active corporation, but the ElkRidge Homeowners' Association, which was named along with SV 261 as one of the property owners in the foreclosure action, and the ElkRidge Development Group were dissolved in February and May of last year, respectively, state records show. Jim Maki, a Spokane-based investor involved in the project, declined to discuss the matter, saying he was respecting the wishes of the other investors not to comment on it.

Spokane County officials say the project got preliminary approval in February 2006, and the platting of the 136 lots in its first phase was recorded in April 2007, clearing the way for the developers to sell lots in that phase to consumers.

Maki had told the Journal in January 2006 that the subdivision would include lots ranging in size from about a quarter of an acre to three-fourths of an acre, with the development also having a small amount of common space. Maki said home prices in the development would start at $375,000, but that the majority of the homes would be priced at between $500,000 and $600,000. Five Spokane-area contractors were lined up to build homes in the development, he said.

Maki said partners involved in ElkRidge, who included one other Spokane-area man and two Northern Californian developers, had developed similar projects together in North Carolina and Northern California and would use what they called a builder-management system to develop the Spokane Valley project. With that system, the builders would form their own group to determine the logistics of developing the site and to decide who would market the property.

A Boston architect was creating the home designs, which would include some features found in historic Spokane homes, such as those designed in the late 1800s and early 1900s by Kirtland Cutter, Maki said at the time. Elkridge Heights was to be the first Spokane-area project for the developers, but they planned to pursue additional projects here, he said.

Daines founded Packet Engines, a maker of high-speed computer technology that was sold to French electronics conglomerate Alcatel in 1998, and World Wide Packets, a maker of high-speed networking equipment that was sold to Ciena Corp., of Linthicum, Md., in 2008.