County to collect on DarkHorse bonds
With infrastructure work for the luxury DarkHorse subdivision incomplete, the Nevada County supervisors acted unanimously Tuesday to call in construction bonds to finish roads, water and sewer facilities.
Board members said they hoped the $17.1 million in bonds they hold from developers Ed and Chad Fralick would pay to finish the project attached to a first-rate golf course without affecting taxpayers.
According to county figures, the developers owe $2.7 million for labor, materials and utility hook-up fees. In addition, officials estimate that completing the project will cost $692,000.
But Treasurer-Tax Collector Christina Dabis worried whether the bonds get taxpayers off the hook. Bond language allots 5 percent of the bond money – or $860,000 – for straightening out the mess, she said.
“We’ll have to hire attorneys and workers and use staff time to get it done,” Dabis said. “We’ll go through that quickly.”
Supervisor Nate Beason said he was “amazed” the county routinely lets developers open their projects without needed utilities and other facilities in place.
“We let ‘er rip before the infrastructure is finished,” Beason said. “I think we can do better.”
But board Chairman John Spencer and Steve DeCamp, director of the county’s Community Development Agency, said the county commonly allows construction firms to post bonds to ensure they will eventually install roads, sewer plants and utilities.
The Union left telephone messages Monday and Tuesday for the Fralicks, which have not been returned.
Homeowners left hanging
The keeper of the county’s money urged home and lot owners at the upscale subdivision in southern Nevada County to get lawyers.
“It will be a very protracted process,” Dabis told board members. “You are not the end-all to all (the homeowners’) problems.”
Holly Striker-Katz owns three lots at DarkHorse and is waiting to move into her home.
“We’re caught in the middle with no utilities whatsoever,” Striker-Katz said. “This is very discouraging.”
“We could lose our home in a foreclosure with the bank,” said homeowner Jerry Waren. “It’s totally disrupted our lives. PG&E said they may not be part of the bond, so how do we get their service?”
Wayne Armstrong owns six lots and said he hopes someone will buy the subdivision and finish the job.
“This is 90 percent done,” Armstrong said.
“It’s in the bond companies best interest to come in” and complete the job themselves, he said.
DeCamp called the bond default situation “a major issue for Nevada County.”
The county has wrestled with two similar contractor defaults where officials had to cash in bonds the developers had put down to assure they would complete the job, Dabis said.
One case involved the Wolf Estates subdivision at Donner Lake in the 1980s, Dabis said, though she added she did not remember how much taxpayers eventually paid.
The county has paid about $1 million since 1982 to sort out the Wildwood Estates subdivision near Lake Wildwood, which went into bankruptcy, Dabis said. The county issued new bonds on the project last year.
The DarkHorse developers also owe $550,000 in fees to the Nevada Irrigation District, DeCamp said.
In addition, they owe another $202,000 to Pacific Gas and Electric Co. for electrical service, DeCamp said.
County staff members are pouring over five volumes of bond information to figure out whether the bond money could also cover those fees, DeCamp said.
He expects the bond money to pay for a 1,100-foot pipeline NID needs to provide water service to the subdivision, DeCamp said.
Earlier bond votes
The board voted Tuesday to call in four bonds that covered the last two housing phases of the DarkHorse project. The first phase was the golf course, which is not enmeshed in the current problem.
County supervisors approved the first subdivision construction bond 4-0 on Oct. 1, 2002, with Supervisors Barbara Green, Bruce Conklin, Sue Horne and Peter Van Zant voting. Supervisor Elizabeth “Izzy” Martin was absent.
Supervisors Horne, Van Zant and Robin Sutherland approved the second construction bond on May 4, 2004. Supervisor Drew Bedwell was absent due to illness and Green was on vacation.
To contact Senior Staff Writer Dave Moller, e-mail firstname.lastname@example.org or call 477-4237.
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