SEQUIM — The board president and attorney for the foreclosed-upon Fair Weather subdivision said he believes residents are going to be happy with the Sequim City Council’s decision to settle on bond proceeds.
The council Monday voted 6-0 with one member absent to cover part of a $138,000 performance bond.
That will allow for completion of street paving, underground utilities, the widening of West Sequim Bay Road and the extension of future utilities for the duplex development.
“I am glad to hear the city has made an attempt to settle this with us,” said Robin K. Auld, a Fair Weather resident and Port Angeles attorney.
“I am optimistic that the board of directors will accept the offer.”
The settlement comes after a lawsuit was recently filed in Clallam County Superior Court by the bond insurance company INSCO Insurance Services Inc. as underwriting manager for Developers Surety and Indemnity Co. of Irvine, Calif.
“This is a bond being paid to us,” City Attorney Craig Ritchie explained after the council’s action following an executive session Monday night.
“This will be in the form of a settlement of a lawsuit.”
Ritchie said the proposed settlement was “good for everybody.”
Auld had contended, when he first approached the City Council in July, that the city illegally allowed the developer’s bond cover to be reduced.
In June 2008 just prior to the expiration of the surety bond, the subdivision’s developer, Gerald Engler, requested the city of Sequim reduce the amount of bond coverage based on the fact that he completed some of the required improvements to the development, but not all.
On June 10, 2008, Engler received a letter from former city Public Works Director Bill Bullock stating that Engler’s request to reduce the bond was approved.
Bullock estimated the remaining improvements would cost $110,678 and reduced the bond amount to 125 percent of his estimate, or $138,347.
In effect, the bond amount was reduced from $840,336 to $138,347.
Bullock left the position that same year, and it was last year filled for the first time in two years by Paul Haines, now working with Auld to come up with a solution acceptable to both parties.
Auld said under the proposed agreement, Anchor Bank will pay about $16,000, Columbia Bank $4,000 and the residents of Fair Weather about $9,000 or $10,000.
The city will release the bond balance paid to it by the bond company.
“It is less than the full cost of paving our roads but a substantial amount, so we can afford to pay for it,”Auld said.
The city will release bond payment for all costs but the streets under the proposal, Auld said.
The city will be responsible for completing the widening of West Sequim Bay Road, a portion of a trail running through the subdivision’s frontage and bury overhead power lines.
Auld said he expects the matter will be settled within the next three weeks with a Superior Court judge signing off on the lawsuit.
City officials claimed that the bond remaining — $138,347 — was insufficient to cover all the costs to finish improvements, including the final asphalt overlay of the 45-lot subdivision’s private streets, which are beginning to erode.
Auld contended that the city should take interest in finishing the subdivision’s improvements because every lot is an impact fee for the city.
Subdivision lender Anchor Bank of Aberdeen, which took over the development after Engler defaulted on his loan, now owns 24 lots remaining in the property and seeks a buyer that could finish Fair Weather.
In other action Monday night, the council:
■ Named a new road, South 14th Avenue, which was acquired to connect Grant Street with the portion of West Washington Street west of the River Road roundabout.
■ Asked the city manager to reject a lone bid of $106,120 from Lakeside Industries of Port Angeles to surface a North Rhodefer Road, which is now a dirt road and major accessway to the east side of Carrie Blake Park and the adjoining water reclamation demonstration park.
City Planning Director David Garlington said the city first committed to surfacing the road in 2001.
Instead, he recommended that the city use tax revenue to grade and gravel the road for the winter, then in the spring put out bids for one of many contractors to chip-seal it at a cheaper price.
■ Approved expansion of the city’s free public music program to include performances at the Sequim Open Aire Market on West Cedar Street.
■ Approved closeout of the city’s $11 million water treatment plant expansion project and a $51,400 change order in additional compensation from Seattle-based Gray & Osborne Inc.
The compensation request will increase the company’s total construction management services fee to $700,613, or 8.1 percent of the final construction cost.
The council convened as the Sequim Transportation Benefit District Board and approved a Priest Road sidewalk project that will connect with Clallam County sidewalk improvements on the county’s portion of Priest Road.
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Sequim-Dungeness Valley Editor Jeff Chew can be reached at 360-681-2391 or at jeff.chew@peninsuladailynews.com.
