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Development: In suit over lots, county says blame lies with contractors
By Charles Swenson
Before the developer of the Harmony tract outside Georgetown filed for bankruptcy in 2008, he asked the county to call in his letter of credit to finish the infrastructure in the 800-acre project. There was about $700,000 available.
“It was opined that more was needed,” said Wesley Bryant, the Georgetown County attorney.
But the county took the money and over about two years reimbursed contractors for work done on behalf of a new developer. There is now about $150,000 left, Bryant said.
Owners on two lots in the development filed suit last month against Georgetown County claiming the funds for infrastructure were improperly released and asking that the county pay them for the money they spent on lots that are unbuildable because they lack infrastructure.
Stephen Goldfinch, attorney for the lot owners, says he has been told there may be 100 owners with similar claims, which could total as much as $10 million if they prevail in court. Goldfinch is also a member of the state House of Representatives and his district includes the Harmony tract.
Peter and Elizabeth Jackson of Litchfield brought a similar suit in 2011. They bought a lot for $160,250 and saw its value drop to $15,000, according to the suit. The Jacksons claimed the county released the money in a letter of credit posted by the developer before the infrastructure was installed.
That case was settled last year and the terms were subject to a confidentiality agreement, according to David Mills, who represented the county, and Nate Fata, attorney for the Jacksons.
The settlement came after the county filed a claim of its own against four firms that did work on the Harmony project. If there was any harm done to the Jacksons, it was the fault of the engineering firm that designed the infrastructure and the contractors who did the work, the county said.
Bryant said he could not comment on the settlement, but said “there were some distinct differences” between the Jackson case and the two recent suits.
Bryant said it’s “purely false” that the county released money from the letter of credit without checking to see the infrastructure work was done, as Goldfinch’s clients claim.
In order for a developer to sell property before infrastructure is complete, the county requires a letter of credit for 125 percent of the infrastructure cost. “We obtain that value from the developer’s engineer,” Bryant said. “The developer’s engineer stamps it. It’s on him.”
That was the argument the county made in the Jackson suit.
During the course of the project, the developer can submit requests for the county to reduce the amount of the letter of credit as the infrastructure is completed.
Harmony had a history of problems after work began in 1999. The project was intended to build a “new urban” development of 1,700 homes on the banks of the Sampit River. One of the principals was Tim Casey, who had been part of the DeBordieu and Prince George projects on Waccamaw Neck.
“In late 2007, Tim Casey came to the county and said ‘I can’t do this anymore. I’m asking you to call the letter of credit,’” Bryant said.
When a new developer started work, his contractors were paid using funds for Casey’s letter of credit. “It was rocking and rolling for a while,” Bryant said. “To say the county released money without checking…. I have signed affidavits. I’ve climbed into catch basins myself.”
Before Goldfinch filed the recent suits he asked the county about filing an insurance claim. “The Insurance Reserve Fund said no,” Bryant said. “He’s going to be into a nice little ride with this.”