Thursday, August 29, 2013
County discusses bonding issues
By SUE WATSON
Chancery clerk Chuck Thomas suggested to the board of supervisors in August that the county may need to consider relaxing performance bonds.
“Developers are having trouble with (getting) bonds,” he said. “A letter of credit may work for them better – a performance letter of credit.”
Supervisor George Zinn III asked what makes it harder for a developer to buy a bond as compared to five years ago.
Thomas said the failed economy is causing bonding companies to be very strict.
Board attorney Kent Smith weighed in on the topic.
“Some things we ran into in bonds and letters of credit – some very strong people went under.”
He said if it takes a developer six to eight years to finish a subdivision, a bond may go bad (lapse).
He said developers under the umbrella of a Limited Liability Company (LLC) can walk away from a promise to finish paving a subdivision road because of the way the business is set up to protect itself by limiting lawsuits.
“They say, just take the land,” he said. “The land is not worth anything.”
Supervisor Ronnie Joe Bennett said he understands a developer can still get a bond, even with the current market climate.
“A letter of credit is not worth 15 cents,” he said. “With a bond, you do not have to go through court like you would with a letter of credit from a bank. I do believe to protect the county, there needs to be a bond on it.”
Smith clarified that if a letter of credit specified it was unconditional and the time limit for the security was specified, it would serve the same purpose as a bond.
“You need a set amount and a set time for performance,” he said. “That would be like a bond where they are guaranteeing performance.”
Smith agreed that a letter of credit from a bank that is irrevocable could be as good as a bond.
Thomas said a developer offered to put up a cash bond because obtaining performance bonds is so hard to do, now.
“That’s a bond,” said Smith. “You would put it in the chancery court register.
Supervisor Charles Terry asked if the developer had abandoned the subdivision.
Thomas said the developer has a buyer in an existing subdivision and will offer a cash bond.
Supervisors had looked at one offer, then had the county engineer look at the cost to repair two bad potholes and add the cost to the second lift. It would raise the cash bond by about $8,000.
“They had somebody from Memphis, Tenn., (wanting to build) and they want it approved,” explained zoning director Conway Moore.
Zinn worried about making an exception for one developer.
Bennett explained that the first lift is in place and only the second lift is needed.
Kevin McLeod, with the county engineer’s office, explained that the discrepancy in a prior offer to post a cash bond of about $46,000 was found to be insufficient to cover dig-out and repair of two soft spots on the subdivision road.
Supervisor Eddie Dixon asked to table the matter until the next meeting to give Thomas time to check over some minutes on several subdivision concerns at Moore Plantation and at Cypress Gates off Farley Road in Barton.
The board moved to other business – receipt of the final homestead rolls (real and personal property, mobile homes, etc.) from the tax assessor’s office.
Several properties had been sold for taxes in error in the 2011 tax sale. The board voted to pay the tax sale buyer.
The board discussed problems with people operating a business out of their homes without a permit. One involves a heavy truck that is tearing up a road as it comes in and out.
Moore said the trucks are coming in loaded.
Zinn said it broke down to two concerns – the person is operating a business without a license in a residential zone and is bringing in trucks (loaded) to the subdivision.
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