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Jan 21st, 2009 | 0


In this time of economic uncertainty, dealing with expired letters of credit for stalled-out subdivisions is keeping not only county planning but the Walton County Code Enforcement Board busy.
At their Jan. 15 meeting, board members found violations and imposed fines in connection with several developments whose letters of credit had expired.
In many areas and at other times in Walton County, there has been a requirement for infrastructure such as roads and stormwater drainage structures to be completed before lots can be platted in a subdivision. Following county approval and a development order, platting of a subdivision is the final step in order for lots to be sold.
In recent years, Walton County allowed for platting in the absence of infrastructure completion, as long as the developer provided a letter of credit, issued by a bank, usually for a term of one year. The purpose of letters of credit was to provide a surety that money would be available for infrastructure to be completed even if a developer failed to construct it.  Prior to the expiration of a letter of credit, the county has the ability to “pull” the letter of credit and collect the funds to build or complete the infrastructure.
This has happened in the case of a number of failed developments, and a county staff person is now responsible for tracking letters of credit due to expire soon and contacting developers, who are directed to have the letters of credit renewed or provide a similar surety for infrastructure. However, some letters of credit have expired, presenting a problem that is harder to remedy. This is particularly true since banks are now reluctant to issue letters of credit.
Walton County has taken the position that it is not the county but the developer who bears the liability with regard to individuals who have purchased lots for which infrastructure is lacking. However, with the stated purpose of protecting potential lot buyers from this situation, Walton County Code Enforcement is seeking to either to get letters of credit or another form of surety in place, or to impose liens on unsold subdivision lots for which infrastructure is missing or incomplete. Unless satisfied, these liens prevent the lots from being sold.
Code enforcement board fines are the mechanism being used to impose these liens.
On Jan. 15, Chandler Huff was present before the board to face an alleged violation in connection with an expired letter of credit on the Carson Oaks subdivision. Donna Shank, code enforcement officer, stated that surety for infrastructure completion is required in connection with 40 unsold parcels within the subdivision.
Shank said the letter of credit for the subdivision had expired in November 2005.
Huff testified that infrastructure for the parts of the subdivision that had gotten to the development stage had been substantially completed, that water and sewer for the subdivision had been accepted, and that there had been no complaints from lot owners. He estimated that completing the infrastructure according to the development order would cost approximately $30,000 and take about a month to accomplish.
Huff argued that, as the beneficiary, it had been the county’s responsibility to make sure that the letter of credit was renewed. He complained that no one had notified him of the 2005 expiration until 2008, and that the bank is now saying that they no longer issue letters of credit, nor will other banks do so.
Board member David Kramer responded that possibly the county did “drop the ball,” but that the Walton County Land Development Code states that it is the developer’s responsibility to maintain surety for the infrastructure.
Kramer noted that a number of other methods for providing surety exist for addressing the situtation, along with completion of the infrastructure by the developer.
Other surety options listed in the code include a cashier’s check, a certified check, a developer/lender/county agreement, an interest-bearing CD, or a surety bond.
A majority of board members voted to find the developer in violation, imposing $250-per-day fines until the violation was corrected, through a surety, completion of the infrastructure, or other means of coming into compliance. The decision was with the understanding that the fines would be “abated” or forgiven if the developer brought the subdivision into compliance within four months.
Charged with the same violation were Spicy Noodle Holding Company, in connection with the Seaview Trace subdivision, and MDR, L.L.C., in connection with lots in the Beach Nest subdivision. Violations were found in both instances, and, in both cases, $250-per-day fines were imposed until compliance was achieved, with abatement of fines to take place if compliance occurred within 120 days.



IN THE CURRENT down economy, uncompleted infrastructure in connection with stalled-out subdivisions has surfaced as a issue to be dealt with in Walton County. The Walton County Code Enforcement Board recently imposed fines on the developers of several subdivisions in which infrastructure had not been completed and for which bank letters of credit had expired. (Photo by Dotty Nist)

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