Note 5 - Investments in Unconsolidated Land Development and Homebuilding Joint Ventures

12 Months Ended

Dec. 31, 2011

Equity Method Investments Disclosure [Text Block]

5. Investments in Unconsolidated Land Development and Homebuilding Joint Ventures

The table set forth below summarizes the combined statements of operations for our unconsolidated land development and homebuilding joint ventures that we accounted for under the equity method:

	Year December 31,
	2011			2010			2009
	(Dollars in thousands)
Revenues	$	69,941		$	66,667		$	69,900
Cost of sales and expenses		(55,447	)		(56,125	)		(344,270	)
Income (loss) of unconsolidated joint ventures	$	14,494		$	10,542		$	(274,370	)
Income (loss) from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations	$	207		$	1,166		$	(4,717	)

Income (loss) from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations represents our share of the income (loss) of our unconsolidated land development and homebuilding joint ventures, which is allocated based on the provisions of the underlying joint venture operating agreements plus any additional impairments recorded against our investments in joint ventures which we do not deem recoverable.  In addition, we defer recognition of our share of income that relates to lots purchased by us from land development joint ventures until we ultimately sell the homes to third parties, at which time we account for these earnings as a reduction of the cost basis of the lots purchased from these joint ventures.  During the years ended December 31, 2011 and 2010, we deferred approximately $2.7 million and $2.3 million, respectively, of income related to lots purchased by us from land development joint ventures.  The difference between the loss of our unconsolidated joint ventures and the loss from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations for the year ended December 31, 2009 related primarily to the investment in our North Las Vegas joint venture.  During 2009, the loss of our unconsolidated joint ventures reflected in the summary combined statements of operations included an impairment charge of approximately $300 million recorded by our North Las Vegas joint venture.  However, loss from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations for 2009 only included an $8.1 million pretax charge related to our remaining investment in this joint venture.  We did not record the full amount of our proportionate share of losses for the North Las Vegas joint venture as this joint venture had non-recourse debt and we had no further obligation to fund such joint venture or record losses in excess of our total amount invested.  During the 2010 fourth quarter, we sold our interest in the North Las Vegas joint venture.

During the years ended December 31, 2011, 2010 and 2009, the total number of projects included in investments in unconsolidated joint ventures and reviewed for impairment were 6, 7 and 13, respectively, with certain unconsolidated joint ventures having multiple real estate projects.  Based on the impairment review, we recorded impairment charges of $0.5 million and $8.1 million in 2010 and 2009, respectively.  No joint venture projects were determined to be impaired for the year ended December 31, 2011.

The table set forth below summarizes the combined balance sheets for our unconsolidated land development and homebuilding joint ventures that we accounted for under the equity method:

	December 31,
	2011		2010
	(Dollars in thousands)
Assets:
Cash	$	24,155	$	19,202
Inventories		230,571		240,492
Other assets		11,190		7,964
Total assets	$	265,916	$	267,658
Liabilities and Equity:
Accounts payable and accrued liabilities	$	21,190	$	37,124
Recourse debt		―		3,865
Standard Pacific equity		77,259		74,793
Other Members' equity		167,467		151,876
Total liabilities and equity	$	265,916	$	267,658
Investment in unconsolidated joint ventures reflected in the accompanying consolidated balance sheets	$	81,807	$	73,861

In some cases our net investment in these unconsolidated joint ventures is not equal to our proportionate share of equity reflected in the table above primarily because of differences between asset impairments that we recorded against our joint venture investments and the impairments recorded by the applicable joint venture.  Our investments in unconsolidated joint ventures also included approximately $9.1 million and $4.5 million of homebuilding interest capitalized to investments in unconsolidated joint ventures as of December 30, 2011 and 2010, respectively, which capitalized interest is not included in the combined balance sheets above.

Our investments in these unconsolidated joint ventures may represent a variable interest in a VIE depending on, among other things, the economic interests of the members of the entity and the contractual terms of the arrangement.  We analyze all of our unconsolidated joint ventures under the provisions of ASC 810 to determine whether these entities are deemed to be VIEs, and if so, whether we are the primary beneficiary.  As of December 31, 2011, with the exception of one homebuilding joint venture, all of our homebuilding and land development joint ventures with unrelated parties were determined under the provisions of ASC 810 to be unconsolidated joint ventures because they were not deemed to be VIEs.  As of December 31, 2011, we held an interest in one homebuilding joint venture in Northern California that was deemed to be a VIE.  Our investment in this joint venture was approximately $6.6 million, which represents our maximum exposure to loss if we elect to forfeit our membership interest in this entity.  As of December 31, 2011, this joint venture owns approximately $8.9 million of assets, primarily representing real estate inventories, and has no recourse debt outstanding.  We have determined that based on the voting rights with respect to major decisions, as defined in the underlying joint venture operating agreement, both members of this joint venture share equally in the power to direct the activities that most significantly impact the entity’s economic performance.  As a result, we are not required to consolidate this joint venture as neither member is deemed to be the primary beneficiary.