Southern Hills project on hold
Jeff SchmuckerBROOKSVILLE - Construction improvements to part of Southern Hills Plantation and other properties could be put on hold indefinitely as council members consider no longer trusting surety performance bonds to pay for projects.
Published: November 4, 2012
Published: November 4, 2012
In light of a lost court case involving the collection of millions of dollars from surety bonds, council members will consider Monday a resolution stating the city would no longer accept using them to pay for improvement projects, according to the agenda for the Nov. 5 meeting.
The cost of the resolution, if approved, will be $95 to put it in the official records.
A surety bond is supposed to act as a form of insurance to help guarantee that a contract is completed.
However, with the loss of a court case and appeal for the city to collect $5.3 million from surety bonds to complete improvements to Southern Hills, city staff members conclude that surety bonds are unreliable
"The proposed resolution will put affected persons on notice of its inability to complete infrastructure platted improvements unless a private entity constructs such improvements or provides funding for the construction of such improvements," according to a staff report. "The city of Brooksville desires to put its citizens and all affected persons forever on notice of its inability to complete road, water, sewer, infrastructure or other improvements."
The issue stems from a lost court case and a lost appeal to the U.S. 11th District Circuit Court where the city attempted to collect $5.3 million from Westchester Fire Insurance while claiming the group failed to complete infrastructure improvements to the Cascades of Southern Hills Plantation.
The Cascades is a single family residential subdivision that was slated to be completed in five phases — one of which is complete.
However, attorneys for Westchester argued that developer, Levitt and Sons of Hernando County, filed for bankruptcy and had never begun construction for the second phase of construction — therefore the city wasn't entitled to collect monies on a project that was never started.
According to court documents, it was argued that if the city didn't recover the bonds, "there is no chance that the improvements will even be started in the foreseeable future," and, "If the city does recover on the bonds, there is maybe, a 50-50 chance that development will begin on a rolling basis between 2013 and 2017."
However, in both court cases, judges agreed with Westchester that because construction was never started, the city was not obligated to be paid from the bonds.
Attorneys for the city have appealed the latest decision to the U.S. Supreme Court, where the issue is pending.
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