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Brunswick coffers feel pain from stalled development
Subdivision pioneers who bought early are not the only ones feeling the sting of Zombie developments. Brunswick County's government is also taking a hit from stalled residential developments. As of this month, tax collections were nearly $3 million short for the current fiscal year, Tax Collector Ken Perry said. And the majority of the delinquent taxpayers are businesses in the real estate and development markets. Nearly half of the total $1.3 million is owed by Mark Saunders, a builder who owns several companies, Perry said. The other half is other development companies, such as Goose Marsh LLC, which went bankrupt and owes $28,000. Saunders is the chief executive officer of the Coastal Companies, a parent company of several developments in Brunswick. Perry has served bank attachments totaling $125,000 on three of Saunders companies: MAS Properties, Seawatch and Ocean Ridge. That means the banks have 10 days from Tuesday, when Perry served the attachments, to cut Brunswick County a check if the money exists in the accounts. Perry said he has several options for recouping the taxes including foreclosing on the property or garnishing wages, but he felt this measure was the most appropriate. A spokeswoman for Coastal Companies said the unpaid taxes are not a reflection on the company's health but an issue with the county. I feel confident that the tax issue will be resolved to the satisfaction of the county, Deborah Boodro said. In a new release Friday, Saunders said the taxes were being withheld because a county waterline crossing company property was blocking development. He claims the county could wind up owing the developer more than the outstanding tax bill. Though the county plans no property tax increase for the fiscal year that starts July 1, it is facing a thin budget that calls for transferring money from the fund balance and eliminating 25 vacant positions. The tax shortfall is just one aspect of the countywide impact of stalled developments. County wades in It's hard to calculate in dollars and cents, but the county is also suffering from missed opportunity, said Assistant County Attorney Jana Berg. And the longer these developments sit idle weeds growing knee high and sidewalks turning orange the closer the county gets to stepping in. Berg and county Engineering Services Director Jeffrey Phillips and Planning Director Leslie Bell have formed a committee to get a better handle on these projects. For the past couple of weeks, Phillips has directed his staff to drive the countryside and check the status of 48 projects. Some of those are different phases of a single development. Each has a deadline for completing sewer, water, roads and other basic infrastructure. If they miss that deadline and don't have a good reason, such as waiting on permits from the state, the county then can call in performance bonds that developers posted as insurance for completing the project. The bonds are required when developers want to start selling lots before the infrastructure is complete. In the case of the Villages at Goose Marsh and RiverSea Plantation, the county had no problem getting the money to put in roads and sewers so lot owners could start building. But in Avalon, a development off N.C. 211 in Supply that was supposed to hold more than 400 homes, the insurance company is dragging its feet, Berg said. After determining Avalon was not going to pay the more than $6 million needed to put in the infrastructure, the county filed a lawsuit in U.S. District Court against its insurance company, Lexon Insurance. Collecting on Insurance At their last meeting, the board of commissioners agreed to pay $1,900 to get the engineering certificate needed to do the work at Avalon. This is an advance by the county to be paid back when it recoups the developer's bond money, Berg said. The board also declared performance bonds on four other developments in default, including several phases in Seawatch near Sunset Harbor, one of the largest developments in the county, originally planned for almost 3,000 lots. The developers haven't made satisfactory progress, Berg said. The other developments involved, all under the umbrella of Coastal Companies, are Ocean Isle Palms, Ocean Ridge Plantation and Ibis Bay. The outstanding obligations for the projects total more than $11 million. Boodro said the company intends to meet with Brunswick County officials and does not believe the bond company will need to be involved. She said the company has already established infrastructure and has the money to finish it. Brunswick has no cap on how much the performance bonds can be, Berg said, although the county has the option of not accepting them. In October 2007, the New Hanover County Commissioners agreed to increase its maximum amount for a performance bond or other financial guarantee from $100,000 to $8 million. One of the projects that prompted the move was the large Newland project, now known as RiverLights, on River Road south of the state port. It is proposing thousands of units, which meant a requirement for millions of dollars in infrastructure. County officials said it's been years since New Hanover has had to step in to finish infrastructure left unfinished by a developer. But recently banks, looking to cut their exposure in the construction industry, have begun rejecting letters of credit previously issued to developers. That's raised the concerns of county planners, with officials warning developers that they won't issue new building permits for their projects if they can't find a new institution willing to financially back them. Builders have new deadline In Brunswick, Phillips decided it would be wise to change the deadlines for developments to complete their infrastructure. Rather than a case-by-case basis, now each development must complete infrastructure in one year. At the end of that year, the developer must give a new cost estimate for the job, and the county can then decide whether to extend the life of the project. Getting sewer and water to locations where people have paid for land they intend to build on is not the only challenge that comes with unfinished developments. Security in these communities of one or two families is also an issue. At Cambridge Crossing, a stalled condo project near Oak Island's entrance, thieves stole anything that wasn't nailed to the ground, Berg said. After work stopped there, the weeds grew so tall they were attracting rats, and leftover construction debris became missiles during storms, Berg said. So the county stepped in and spent $19,000 to clean up the site. The money was eventually paid back by the bank that owns the property. Perry said despite the economic hard times, the majority of property owners, unlike some builders and developers in Brunswick, are still paying their taxes. The homeowners in spite of their struggles have stepped up, he said. Staff writer Gareth McGrath contributed to this report. Shelby Sebens: 343-2076 On Twitter.com: @Shelbsnc26 All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Date Posted: May 23, 2009