A luxury waterfront residential development that was to be a “Shangri-La” on the south shore of Lake Travis is listed for foreclosure, the second major land foreclosure in Central Texas in just over a month.

San Francisco-based Haas & Haynie planned to build their $120 million development, Vizcaya (Spanish for an elevated plain), on 1,050 acres of the former Covert family ranch off Bee Creek Road near Pace Bend Park. But the Coverts have posted the property for foreclosure at the upcoming Sept. 1 auction, according to a posting Monday at the Travis County Clerk’s Office.

The developer had defaulted on a $20.4 million loan for the project, according to the posting. The posting did not say how far behind the developer was on the payments.

Situated on one of the last large undeveloped tracts with water access, the project was to include an 18-hole Reese Jones-designed golf course along with a marina and trails.

When Haas & Haynie announced the project in April 2007, executives said they would preserve the character of the sloping, wooded terrain, creating a “Shangri-La” with a Hill Country feel. The development called for 450 to 500 custom homes to be built over 10 years. Lots were to range in size from about half an acre to up to 2 1/2 acres.

In January 2008, a Haas & Haynie vice president said he expected the project to break ground sometime that year. Company executives could not be reached immediately. Haas & Haynie has developed golf-course communities in Scottsdale, Ariz., Whitefish, Mont., and Jackson Hole, Wyo.

David Armbrust, an Austin lawyer who obtained the required approvals for the Vizcaya project, including those for the golf course and a water contract through the Lower Colorado River Authority, said he was disappointed to learn of the foreclosure posting.

“I hate to see it fail, because it was a great project and well-received by the local community and the Travis County commissioners,” Armbrust said.

He said the developer was moving forward with the project until a few months ago, when he said he was told “they were going to slow things down” and have discussions with their partners regarding financial matters.

The Vizcaya foreclosure posting follows Legacy Texas Bank’s takeover last month of a large future subdivision Kerby Development planned for the 468-acre Rocky Creek Ranch on Hamilton Pool Road in western Travis County.

Kerby Development had borrowed $19.5 million, and the bank reclaimed it for $17 million, according to Real Estate Foreclosures Inc. Kerby planned to develop 396 high-end home sites.

Like some of the other large residential projects planned or being built in the area, Rocky Creek Ranch drew fierce opposition from some area residents and environmentalists.

Armbrust said that, following a wave of residential foreclosures, “we’re now at the tip of the iceberg for the commercial foreclosures.”

“This is the other shoe that’s about to hit the floor,” he said.

He said banks have been reluctant to foreclose in the past several months, because they were in such turmoil themselves. “Now they’re getting stabilized, trying to figure out what the true value of their loans are,” and are taking back projects in default.

“My crystal ball tells me that we’re just at the beginning of an ugly few months in our market,” Armbrust said.

He said there’s still demand for homes and other uses, “but we’re going through this very difficult process of resetting the market and the prices, and it’s going to be painful for a few months.”

However, he noted that the next 12 to 18 months will present “an incredible opportunity to buy land here, either for development or conservation, said Armbrust, a former president of the Hill Country Conservancy, which makes such acquisitions. “There’s going to be some incredible bargains on raw land.”

Armbrust thinks that the market will “start looking normal again” by early next year, with commercial transactions and investor interest picking up as with each month that goes by, as banks reset prices more realistically in today’s market for properties they’ve taken back that aren’t worth what the bank loan was for.

“Hopefully the commercial market will be stabilized and prices will get to where they should be and we’ll be cleaned up. “By the first of the year, things will be looking much brighter. Austin has a long history of making quick recoveries from economic downturns.”