City pursues developer performance bond

The city attorney recommended that the city council authorize him to file a lawsuit by Nov. 3, in order to protect the city's interest in a $500,000 Subdivision Performance Bond.

The bond was provided by Mark, Inc., the developer of the Lake Regency Woods subdivision that Assistant City Administrator Bob Hoffman said Wednesday, has not yet installed required roads and water.

"It's out of an abundance of caution that I've recommended we do this," said City Attorney Bob Swaine on Wednesday.

"The question is whether the city has until the expiration of the statute of limitations to bring an action to compel the surety to perform or pay, or whether the city has only until Nov. 3, 2009, the date on the continuation certificate.

"There is ample legal authority for the argument that the city can bring the action after Nov. 3, but the safest course of action is to either bring the action before then or reach an agreement with the surety that clearly provides for a longer time within which to file suit."

The city council unanimously agreed at its Tuesday night council meeting that Swaine should pursue the lawsuit to protect the city's ability to claim the bond and the parties have been notified of the impending suit.

That is, unless Swaine can convince the surety company, American Southern Insurance Company, to extend its allowable time to file a lawsuit, which it already did once on Jan. 21 when a continuation certificate was issued to the city on behalf of Mark, Inc.

"The whole thing came up when the developer came before council about platting the subdivision," said Hoffman, referring to a November 2000 council meeting. "When it was first built it was built in three phases and Phase I is where all the homes are.

"The developer never proceeded with the needed 12-inch waterlines and roads in phase II and III as had been agreed to."

The council agreed to allow the platting of the development, which after it was annexed into the city became part of the city of Sebring's southernmost border. However, it would not do so without an assurance that the platted lots would receive the proper infrastructure of water and roads.

It was estimated at the time that this infrastructure would cost $400,000 to put in, so the bond was drawn up plus 25 percent.

"It's a way local governments protect themselves," said Hoffman. "We require the infrastructure be put in or we require a bond to put it in ourselves."

Hoffman believes the infrastructure can still be installed within the $500,000 bond amount.

The attorney and staff are also tracking a second as-yet incomplete subdivision at StoneRidge, off of Ben Eastman Road, just north of Summit Drive, where the developer furnished an irrevocable letter of credit to complete sidewalks in front of home sites, create vegetative buffers and install irrigation by early April 2010, said Hoffman.

The StoneRidge subdivision was advertised as Central Florida's first solar community.