Hayden Hayden officials are tired of waiting for action on road problems at the Lake Village subdivision south of town.
At its May 1 meeting, the Hayden Town Board directed Town Manager Russ Martin to move toward calling a letter of credit, which would give the town funds to take over infrastructure work from the development group, Mountain Adventure Property Investments LLC.
At least one manhole has dropped and is surrounded by broken pavement, and the roads require a second lift to make them level with the curb, Martin said.
"Once we go out there and take the letter of credit, we basically take it over," Martin told the board, referring only to the public infrastructure. "If they go wrong, we start to take some of the liability with us."
That letter of credit, through Vectra Bank, would allow the town to complete the work at the developer's expense. The letter is worth about $500,000, Martin said.
Martin said the town's lawyer, Mike Holloran, would handle the paperwork for calling the letter and possibly bonds for the project. The bonds are worth almost $2 million. The town would not necessarily need all the cash.
"Those were issued to guarantee money for the town to make sure infrastructure was in place," Martin said.
Before the May 1 meeting, Martin had been unable to contact developers to find out whether they planned to fix the roads. He said he later met with Mountain Adventure Property Investments President Ron Sills.
"Ron submitted a request for an extension through the end of November, which I explained to him was unacceptable and couldn't be done," Martin said Wednesday.
Sills should have made that request 30 days before a June 1 deadline set last fall, Martin said.
Five empty model homes and a silent playground sit on the Lake Village site.
Developers are planning 86 single-family residences and six townhomes on the 40 acres off Routt County Road 53. It is the first filing of a larger project known as Villages at Hayden, said Roger Johnson, a manager for Mountain Adventure Property Investments.
Mountain Adventure is handling only the Lake Village section of the 1,040-acre Villages at Hayden project, Johnson said. That group is a partnership of Grassy Creek Holding,
4-S Development, Oregon-based Robinson Construction and an Oklahoma subsidiary of FSB Bank.
Lake Village's problems began in August. Contractor and partner Robinson Construction filed $2.3 million in liens against 4-S Development for work on the subdivision and Hidden Springs Ranch, another Mountain Adventure project.
As a result of those liens, Johnson said, Mountain Adventure Property Investments filed for Chapter 11 bankruptcy Jan. 23.
"We've been tied up in litigation with partners essentially since last August," Johnson said. He called the liens "inappropriate." Mountain Adventure filed for Chapter 11, which allows it to reorganize its finances to speed up the resolution of the lien issue, Johnson said. Filing for bankruptcy will allow the company to get the issue in front of a judge faster, he said.
The project manager at Robinson Construction in Hillsboro, Ore., did not return a call seeking comment Friday.
Johnson said Robinson Construction was responsible for the infrastructure problems that worry Hayden officials.
"We've got additional complications because some of the work was not properly done, and we'll very likely have to redo some of the site work that Robinson had done," Johnson said. He said engineers were assessing the situation at Lake Village last week.
The liens also resulted in the cancellation of several contracts for residences, Johnson said. Because of the legal issues, the developer cannot transfer the merchantable title to a new owner. A merchantable, or marketable, title is the title to a piece of real estate that is reasonably free from risk of litigation for possible defects.
"We still have a few" contracts, Johnson said. "But most people can't wait indefinitely for their home to be built. Some of those contracts have just gone away by attrition."
Despite the obstacles, Mountain Adventure plans to go forward with the project, Johnson said. He does not know when that will be possible but said he hopes to resume building this summer. There is a need for the homes, he said, which are expected to cost from about $260,000 to $500,000.
Robinson Construction will no longer be the contractor, Johnson said.
Time running out
Ideally, the developers would jump in, fix the sunken manholes and paving and work on sidewalks and a sprinkler system, Martin said.
"Since the lawsuit and bankruptcies, these sorts of things are still churning," he said. "We don't want to go to fall with the same scenario."
The Town Board pushed for action May 1.
"My comment would be the longer you wait, the more it's going to cost you," Trustee Trace Musgrave said. "My comment is to take it head-on."
Martin said Wednesday that the town wasn't hurrying.
"I don't think we're in a rush," he said. "We're trying to do due diligence for the town and move forward in a timely manner so people can occupy those homes."
The town's takeover of infrastructure repairs would have no impact on the liens or the bankruptcy issues, Martin said.
Again, he said, the developer's would foot the bill.
"There are concerns that the town is going to be out-of-pocket to finish this project," Martin said. "No way are we going to be out-of-pocket."
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