Agenda - Council Work Session - 09/29/2009

Home

foreclosure will not affect title to the public common areas. The existing Homeowner's Association or a new association, if necessary, can adopt new declarations if it is deemed that the Bank's foreclosure wipes out the prior recorded declarations in order to provide for the common areas enhanced maintenance if that is desired by the development residents. It is, however, difficult to understand why the Bank, as the future owner of significant lots in the developments, would want to discharge the Declarations as their intended purpose is to ". . . create. . . a community of compatible and complimentary single family residential homes of the highest architectural quality for the benefit of the residents of the community", and to ". . . preserve the natural beauty of the (developments' real estate) and to compliment that beauty with distinguished residences of compatible architectural design". Presumably, the Declarations staying in place will only enhance the value and marketability of the Bank's lots and its other developable property. The liner is defective. The Development Agreements do not require construction or maintenance of the pond liner. Its repair will need to be accomplished by perhaps the Homeowner's Association or a separate group of people who benefit from the pond liner. Or, in the alternative, the pond may need to be redesigned and regraded in order to allow for infiltration and including regrading of the bench for the pond's maintenance and safe access and lower its inlets for erosion control. D. Cash Escrow The City is holding about $90,000 in cash escrow that was put up by Oakwood to guarantee payment of City "Inspection Fees" under the three Development Agreements. The Agreements are all very clear that these deposits were limited to City inspections, and when the improvements are completed, the balance is to be refunded. The right to this escrow is the property of the Bank, not Oakwood, and these funds may not be diverted to purposes other than payment for inspections. The City has incurred about $26,000.00 in repair work to a subcontractor to remedy erosion, and while the City staff has indicated that Oakwood gave verbal permission to use the $90,000 fund to pay these bills, Oakwood has denied having done so. The Bank has certainly not consented. Absent any agreement, and assuming that City inspections are no longer covered by this provision once the punch list items have been completed, it would appear that the balance of this $90,000.00 must be refunded. The $26,000.00 in outstanding invoices would appear to be the responsibility of the party that incurred the expense, which would be the City. CITY RESPONSE: Paragraph 7. Inspection Fees of the Development Agreements provides in part that "Upon completion of the Improvements to the satisfaction of the City, any surplus remaining in the City's escrow account shall be refunded to the Developer." This sentence is not confined to inspection fees and therefore the City will not release any funds from the inspection escrow until all improvements have been completed and paid for. See above reference to lien waiver requirements of the Development Agreements. See also paragraph 24 of the Development Agreements which provides in part that "The Developer agrees to pay the entire cost of said improvements including engineering and legal charges." See also 4