Troubles pile high at Lakota subdivision
October 13, 2009
A Winter Park development plagued by financial troubles is drawing the attention of the Denver Water Board, the U.S. Forest Service and local government officials over unstable, eroding slopes, water seepage and several large dirt piles that have been washing into nearby waterways. The TownWinter Park Town Council Tuesday, Oct. 6, sent a firm message to developers, bankers and lawyers quarreling over the Lakota Park Subdivision that the parties involved have two weeks to finalize an agreement to complete the infrastructure at the site or the town may decline to release any of its warranty money. The town originally held more than $5 million in infrastructure surety funds for the development. Since 2007, a little more than half of the holdings have been released to pay for roads, water and utilities, said town manager Drew Nelson.With problems building up at the site and roads and grading incomplete, “The town is currently contemplating whether [the developer] is in default of the Subdivision Improvements Agreement, and if the town determines that they are, one remedy is to draw the sum of the letter of credit the town holds to complete improvements within the project,” Nelson said.Rick Hermes of HFM Holdings, who has been responsible for the most recent development in the subdivision, recently applied for a $2 million revolving loan from Colorado Capital Bank to pay off debts and remediate some of the infrastructure problems at the site. As part of the deal, the bank asked the town to release up to half of its warranty holdings, $400,000, to help resolve the outstanding issues.That warranty funds, according to the agreement on the table, will only be used after a $2 million line of credit has been depleted. If the town signs the deal, it will have $400,000 remaining to deal with any further infrastructure difficulties. This agreement would give the developer until August 2010 to complete the infrastructure, although that could be extended until October 2010, Nelson said. The LawsuitComplicating the issue, Lakota Land Group, owner of the original development, has filed a lawsuit against more than a dozen parties involved in the development. Hermes purchased the upper portion of the property from Lakota in 2007, paying cash for the Central Village and financing North Village and South Village from Lakota Land Group. Lakota foreclosed on Hermes’s companies in August 2009 and took back ownership of the north and south villages.Among its complaints, Lakota is accusing JVA, also the town’s engineer, of conspiring with Hermes and his companies over the placement of some 78,000 cubic yards of dirt. One pile, located in the south village, originally towered more than 100 feet above the bottom of Buck Creek. The other is allegedly located outside the approved disturbance area, on U.S. Forest Service land, according to lawyer Mike Repucci of Johnson & Repucci, who represents Lakota Land Group. Repucci said the piles were also not permitted, properly graded, seeded or fenced.The stockpiled dirt was excavated from the Central Village area as it was developed and moved to the north and south villages beginning in the spring of 2008, according to Repucci.Some silt fencing has since been installed at the base of the piles and some of the dirt has been removed, but runoff was washing into Buck Creek as well as the Fraser River for more than a year, according to Winter Park Water and Sanitation District manager Mike Wageck, who has been keeping a close eye on the situation.”Last spring, when snow on the piles was melting, it was running off into the forest and inundating the area below the piles with mud. We actually saw cloudy, dirty water running off into the river below,” he said.Wageck added that while some of these issues have been addressed, there’s still a lot of work to be done on the site. With time running out to move the piles before winter sets in, disputes between Hermes and Lakota Land Group is delaying progress. Hermes told town council last week that the ski area has expressed interest in using the dirt to fill a pond, but the access agreement being put forth by Lakota contains several unreasonable demands, in his opinion. He could not be reached for further comment. Repucci said that Lakota’s access agreement is standard.A court date on the civil suit has been set for April 2010.Bigger IssuesDenver Water also has thrown its hat in the ring, voicing its concern over the piles and soil stabilization around the site. Lawyer Mary Rastall hand-delivered a letter to the town last week, enumerating the water board’s issues. Denver Water’s primary concerns include the stockpiling of the dirt on U.S. Forest Service Road 149G and the destabilization of the slopes buttressing its canal. The spot where the South Village pile is located has historically been used to store snow removed from the forest service roads providing access to Denver’s canal during the winter, the letter states. Denver Water is requesting that this pile of dirt be removed by November 1. Denver Water also is concerned about “the magnitude of the development’s earth cuts and excavations near and at the toe of the hill supporting our Ranch Creek Canal,” the letter states. “All canals leak to some extent, and Colorado law protects canal owners from property owners’ claims for seepage damage. Seepage from the canal, groundwater and other sources must be incorporated in the development’s design and construction.”The letter also notes that cuts along the bank supporting the canal have been compromised. “If the development’s excavation results in damage to or failure of the canal, which could be carrying up to 250 cubic feet per second of water, the development is responsible for all damages to adjacent property and Denver’s Water canal,” the letter states.What’s Next?”The Town of Winter Park has long been in the business of trying to protect itself and its citizens where new developments are concerned,” Nelson said. Council tabled the proposed agreement with Hermes and HFM Holdings last week for further revisions, stating that the parties involved must also agree to pay the town’s attorney fees, totaling more than $5,200 at this point.”To drag our taxpayers into a dispute between private parties, to spend taxpayer dollars to remedy Mr. Hermes problems, that’s a showstopper for me,” said council member Vince Turner.The town will revisit the topic when it meets at 8 a.m. Oct. 20.- Reid Armstrong can be reached at 970-887-3334 ext. 19610 or e-mail email@example.com.