Metro hopes it won't have to foot bill if developers walk away
By Brad Schrade • THE TENNESSEAN • March 29, 2009
The street names of Keeneland Downs seem like cruel misnomers in light of what's become of the southeast Davidson County subdivisions.
Secretariat Drive, Buckpasser Avenue and Seabiscuit Drive — all named for champion racehorses — sit half-paved, mud-choked and forgotten. Work stopped as the developers fell on hard times.
Graffiti mars unfinished houses. A car was recently abandoned in the development and set on fire. And a vandal threw a brick through the lone homeowner's truck window.
"It's pitiful to see this," says Bobby Akin, a Metro public works road and infrastructure inspector, as he drives through the Antioch development.
The financial slump has made these unfinished developments a growing problem in Davidson County and across Middle Tennessee. They pose potential public safety and health issues, as areas become dumping grounds and roads sit incomplete. Residents are frustrated. And in Metro, the city in some cases has lost one of its key tools for remedy.
Metro auditors said last fall that a bonding program, managed out of the city's Planning Department, was lax and let certain securities expire that protected residents and taxpayers.
Developers are required to provide performance bonds or letters of credit issued by insurance companies or banks so that if they fail to complete roads, storm drains, sidewalks and other infrastructure in a new subdivision, Metro can get it finished at no expense to taxpayers.
By letting letters of credit expire, the city is unable to force money to be spent to finish such infrastructure in some stalled projects. That could mean even more waiting for residents.
At Keeneland Downs, for example, Metro allowed a $1.1 million letter of credit to expire last May.
Overall the city has about $11 million in surety bonds and letters of credit involving more than 60 projects that are incomplete or unresolved. About half the money involved relates to letters of credit that the city let expire through lack of oversight. Some, like Keeneland's, have already been turned over to Metro attorneys for possible legal action.
"When the economy is going well it really doesn't pose much of a problem," said Planning Department Director Rick Bernhardt. "The problem came, if there is one, obviously when people started going belly up. Then you start collecting. Then everybody wants to be a little hard to get."
Auditors in a draft of a report yet to be finalized found that the Planning Department had a backlog of 248 performance agreements that had been breached by developers. The Planning Department has cleaned up more than half of those, a later draft said. Still, auditors said, properly managing the program is vital to protect Metro and its residents.
The report said the Planning Department didn't have the proper computer programs to track the bonds and it didn't have enough people dedicated to administer the program. And communication was lacking among the various departments that Planning depends on to help monitor the projects.
The department is reviewing its bond agreements — 500 to 600 — to verify their status. A week and a half ago, the department launched an online database to help track the status of the agreements. The department says it can enforce the performance agreements as a last resort, and it doesn't believe Metro will lose money on any of these projects.
"We don't believe there's any of those situations that have defaulted where Metro's going to have to go out, that I'm aware of ...," Bernhardt said. "I'm not aware of any circumstance where Metro is going to go in and put in infrastructure that would force the taxpayers to pay it. I'm not aware of it. You'd have to talk to other departments."
Street has no lights
When Jack Thomas and his wife, Cindy, first walked into their two-story home in the Hamilton View subdivision in Antioch they fell in love. It was the exact design they were looking for, and their tidy front yard shows the pride they take in the home they've lived in since 2006.
Metro records show the developers, Homes by Design, are in breach of the agreement and a letter of credit is set to expire next month, which Metro says it will call unless the work is completed.
Road paving is incomplete, with curbs jutting up and a dip in the pavement in front of the Thomas home collects a large pool whenever it rains. The road remains a private street until the work is completed and meets basic standards for Metro acceptance.
Sidewalks remain patchy in spots, and at night the lack of street lamps in the unfinished development makes the place pitch black. Thomas stopped calling the developer because the number was disconnected.
Brush grows high on the empty lots, and a cluster of half-finished homes up the hill from Thomas' home are splashed with graffiti, windows are broken and empty beer cans sit out front.
Part of the street empty of homes had turned into a trash dump.
"We're one of those screwy neighborhoods that's gotten screwed," Thomas said. "Nobody wants to spend the money to fix it up."
Metro Councilman Robert Duvall, whose district includes Hamilton View, said some relief has been offered, but several Metro departments are still involved in trying to fix the problems. He said Metro has bypassed the developer and is now talking to the bank to get problems fixed.
"We basically told them everything they had to do to get everything completed that was required," Duvall said. "A punch list had been given to them, and there's no reason to believe it wasn't going to be handled."
Keeneland Downs also is in Duvall's district, and he said he was surprised when informed last Thursday that the letter of credit related to the development had expired. No one with Metro or the development company had told him about that issue, he said.
Duvall said he'd spoken to one of the Keeneland developers, Jim Fischer, in recent months and he'd been assured the plan was to continue developing the subdivision. Fischer did not return phone messages before deadline last week.
Duvall said residents in the neighboring subdivisions in the area have expressed concern that the two unfinished projects get completed.
"They are worried about property values," Duvall said. "They are worried about who's going to cut the grass on vacant lots. Is the subdivision ever going to get completed? … What I'm going to do is continue to put the word out that we've got some situations here."
Developers catching up
Some developers with projects on the breached list say they have every intention of completing the work. Summerfield Village, a development in southeast Davidson County, has about $1.3 million of incomplete work associated with bonds — one of the highest totals on the list, according to Metro records.
Records indicate the performance agreement was breached and that Metro has contacted the insurance company to make a claim on the bond so that work can be finished.
Rick Cantrell, the chief operating officer with ParkTrust Development, which is managing the infrastructure for the development, said the company has the money to complete the work. He thought the remaining work was much less than the $1.3 million figure and didn't seem to agree with the assertion that the company was behind on the work.
"I don't have any intentions of sticking Metro." He said he plans to meet with Metro this week.
Affordable Housing Resources has about $800,000 of unresolved work across four developments. Three had letters of credit that expired more than a year ago, with two of them having expired in 2006, according to Metro records.
The nonprofit company's CEO, Eddie Latimer, said it has contracts to complete asphalt topping on roads in a couple of developments, and there are sidewalks and storm detention ponds that are planned for completion. On one development, the company will have to get another bond, but the bonding markets have tightened, he said.
He said the slowdown in the economy has affected the completion of projects. Most roads are not completed until most or all of the development is built out.
"Everything has been slow since early 2007, things started slowing down," Latimer said. "We were hoping to get everything completed out and finish it up like we've been doing for 20 years.
"It just didn't happen because of the economy. (Metro) gave us the notice. … We chose just to complete the paving even though the subdivisions have a few lots on them."
Monday, March 30, 2009
Unfinished streets upset Nashville residents
Metro hopes it won't have to foot bill if developers walk away
By Brad Schrade • THE TENNESSEAN • March 29, 2009
The street names of Keeneland Downs seem like cruel misnomers in light of what's become of the southeast Davidson County subdivisions.
Secretariat Drive, Buckpasser Avenue and Seabiscuit Drive — all named for champion racehorses — sit half-paved, mud-choked and forgotten. Work stopped as the developers fell on hard times.
Graffiti mars unfinished houses. A car was recently abandoned in the development and set on fire. And a vandal threw a brick through the lone homeowner's truck window.
"It's pitiful to see this," says Bobby Akin, a Metro public works road and infrastructure inspector, as he drives through the Antioch development.
The financial slump has made these unfinished developments a growing problem in Davidson County and across Middle Tennessee. They pose potential public safety and health issues, as areas become dumping grounds and roads sit incomplete. Residents are frustrated. And in Metro, the city in some cases has lost one of its key tools for remedy.
Metro auditors said last fall that a bonding program, managed out of the city's Planning Department, was lax and let certain securities expire that protected residents and taxpayers.
Developers are required to provide performance bonds or letters of credit issued by insurance companies or banks so that if they fail to complete roads, storm drains, sidewalks and other infrastructure in a new subdivision, Metro can get it finished at no expense to taxpayers.
By letting letters of credit expire, the city is unable to force money to be spent to finish such infrastructure in some stalled projects. That could mean even more waiting for residents.
At Keeneland Downs, for example, Metro allowed a $1.1 million letter of credit to expire last May.
Overall the city has about $11 million in surety bonds and letters of credit involving more than 60 projects that are incomplete or unresolved. About half the money involved relates to letters of credit that the city let expire through lack of oversight. Some, like Keeneland's, have already been turned over to Metro attorneys for possible legal action.
"When the economy is going well it really doesn't pose much of a problem," said Planning Department Director Rick Bernhardt. "The problem came, if there is one, obviously when people started going belly up. Then you start collecting. Then everybody wants to be a little hard to get."
Auditors in a draft of a report yet to be finalized found that the Planning Department had a backlog of 248 performance agreements that had been breached by developers. The Planning Department has cleaned up more than half of those, a later draft said. Still, auditors said, properly managing the program is vital to protect Metro and its residents.
The report said the Planning Department didn't have the proper computer programs to track the bonds and it didn't have enough people dedicated to administer the program. And communication was lacking among the various departments that Planning depends on to help monitor the projects.
The department is reviewing its bond agreements — 500 to 600 — to verify their status. A week and a half ago, the department launched an online database to help track the status of the agreements. The department says it can enforce the performance agreements as a last resort, and it doesn't believe Metro will lose money on any of these projects.
"We don't believe there's any of those situations that have defaulted where Metro's going to have to go out, that I'm aware of ...," Bernhardt said. "I'm not aware of any circumstance where Metro is going to go in and put in infrastructure that would force the taxpayers to pay it. I'm not aware of it. You'd have to talk to other departments."
Street has no lights
When Jack Thomas and his wife, Cindy, first walked into their two-story home in the Hamilton View subdivision in Antioch they fell in love. It was the exact design they were looking for, and their tidy front yard shows the pride they take in the home they've lived in since 2006.
Metro records show the developers, Homes by Design, are in breach of the agreement and a letter of credit is set to expire next month, which Metro says it will call unless the work is completed.
Road paving is incomplete, with curbs jutting up and a dip in the pavement in front of the Thomas home collects a large pool whenever it rains. The road remains a private street until the work is completed and meets basic standards for Metro acceptance.
Sidewalks remain patchy in spots, and at night the lack of street lamps in the unfinished development makes the place pitch black. Thomas stopped calling the developer because the number was disconnected.
Brush grows high on the empty lots, and a cluster of half-finished homes up the hill from Thomas' home are splashed with graffiti, windows are broken and empty beer cans sit out front.
Part of the street empty of homes had turned into a trash dump.
"We're one of those screwy neighborhoods that's gotten screwed," Thomas said. "Nobody wants to spend the money to fix it up."
Metro Councilman Robert Duvall, whose district includes Hamilton View, said some relief has been offered, but several Metro departments are still involved in trying to fix the problems. He said Metro has bypassed the developer and is now talking to the bank to get problems fixed.
"We basically told them everything they had to do to get everything completed that was required," Duvall said. "A punch list had been given to them, and there's no reason to believe it wasn't going to be handled."
Keeneland Downs also is in Duvall's district, and he said he was surprised when informed last Thursday that the letter of credit related to the development had expired. No one with Metro or the development company had told him about that issue, he said.
Duvall said he'd spoken to one of the Keeneland developers, Jim Fischer, in recent months and he'd been assured the plan was to continue developing the subdivision. Fischer did not return phone messages before deadline last week.
Duvall said residents in the neighboring subdivisions in the area have expressed concern that the two unfinished projects get completed.
"They are worried about property values," Duvall said. "They are worried about who's going to cut the grass on vacant lots. Is the subdivision ever going to get completed? … What I'm going to do is continue to put the word out that we've got some situations here."
Developers catching up
Some developers with projects on the breached list say they have every intention of completing the work. Summerfield Village, a development in southeast Davidson County, has about $1.3 million of incomplete work associated with bonds — one of the highest totals on the list, according to Metro records.
Records indicate the performance agreement was breached and that Metro has contacted the insurance company to make a claim on the bond so that work can be finished.
Rick Cantrell, the chief operating officer with ParkTrust Development, which is managing the infrastructure for the development, said the company has the money to complete the work. He thought the remaining work was much less than the $1.3 million figure and didn't seem to agree with the assertion that the company was behind on the work.
"I don't have any intentions of sticking Metro." He said he plans to meet with Metro this week.
Affordable Housing Resources has about $800,000 of unresolved work across four developments. Three had letters of credit that expired more than a year ago, with two of them having expired in 2006, according to Metro records.
The nonprofit company's CEO, Eddie Latimer, said it has contracts to complete asphalt topping on roads in a couple of developments, and there are sidewalks and storm detention ponds that are planned for completion. On one development, the company will have to get another bond, but the bonding markets have tightened, he said.
He said the slowdown in the economy has affected the completion of projects. Most roads are not completed until most or all of the development is built out.
"Everything has been slow since early 2007, things started slowing down," Latimer said. "We were hoping to get everything completed out and finish it up like we've been doing for 20 years.
"It just didn't happen because of the economy. (Metro) gave us the notice. … We chose just to complete the paving even though the subdivisions have a few lots on them."
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