Winter Park signs Lakota deal
October 25, 2009
Following a firm recommendation from Town Attorney John Hayes, Winter Park Town Council approved an agreement Oct. 20 to release warranty funds for the Lakota Subdivision.
The town held more than $800,000 as security during the initial phase of infrastructure development, but financial difficulties have since plagued the project, sending Rick Hermes of HFM Holdings into foreclosure on two large portions of the subdivision.
To help Hermes dig his way out of his difficulties, Colorado Capital Bank requested that the town release $400,000 early. The bank already gave him a $2 million line of credit to pay contractors and take care of some issues at the site, but it wasn’t enough to cover all his immediate obligations, according to e-mail communications between the town and the bank.
Council member Chris Seemann was the only of seven members to vote against the motion, stating that he thought the agreement was too vague and needed to contain detailed plans for how developers intended to address environmental and safety concerns at the site.
In his legal recommendation to council, Hayes acknowledged the risk in agreeing to the provisions but said that the town has the right to withhold any future building permits, certificates of occupancy or inspections if the developer fails to repair or replace deficient construction at the site.
This would be the town’s primary recourse in lieu of the warranty funds.
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“This is a substantial enforcement tool,” Hayes said.
Hayes added that while the settlement solution is far from perfect, none of the alternatives solve every problem either.
“If the town was to declare a default and call the existing letter of credit, there are not sufficient funds available . . . to remedy every problem claimed by every participant,” he said, adding:
“In my judgment, after surveying the list of problems and potential solutions, it is my belief that this proposal is the only way the overall Lakota project, with its multiple owners can continue to develop successfully.”
– Reid Armstrong can be reached at 970-887-3334 ext. 19610 or email@example.com.