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Development: Judges say county can’t avoid liability for missing infrastructure

By Charles Swenson
Coastal Observer

Georgetown County has an obligation to property owners when it takes money from developers to guarantee completion of infrastructure, according to the state Court of Appeals. In a ruling handed down this week, the court overturned a lower court decision in a suit filed by a property owner in the Harmony development outside Georgetown.

“The people in Harmony have been vindicated. It shows pretty clearly there was some mishandling of funds,” said Stephen Goldfinch, attorney for the property owner and a state representative whose district includes the Harmony tract.

David Repko, owner of two lots at Harmony, sued the county for negligence saying his property was worthless because Georgetown County didn’t enforce its development regulations that require developers to post a letter of credit to cover infrastructure costs. Instead, Repko showed at a jury trial that county planning officials allowed the developer to reduce the letter of credit even though no infrastructure was built. After four payments to the developer between July 2006 and March 2007, the letter of credit was reduced to $156,704 even as an engineer’s report showed it would cost $1.15 million to complete the infrastructure.

The developer then went bankrupt.

Repko paid $155,000 for his two lots in 2003. The last lot sold in that portion of the development went for $500. He sought damages in his 2012 suit, but didn’t ask to have the county complete the infrastructure.

In 2013, Judge Ben Culbertson issued a directed verdict for the county after its attorneys argued that the county development regulation specifically waived any liability. The appeals court said that was an error.

The county ordinance can’t override the state Tort Claims Act “by enacting an ordinance that waives liability for its negligent conduct, Appeals Court Judge James Lockemy wrote in the decision for a three-judge panel that included Chief Judge John Few and Judge Aphrodite Konduros. “We disagree with the trial court’s finding that the county could waive its tort liability by including disclaimer language in a county ordinance.”

The Appeals Court found that accepting a financial guarantee from the developer in order to allow him to sell lots created a “special duty” to the buyers. And it said Culbertson was wrong in finding that there was an exception to that duty.

And the panel said a jury could have found that the county was guilty of “gross negligence” in reducing the letter of credit because it amounted to a “renewal of a permit to sell lots even though the letter of credit had been improperly reduced. In remanding Repko’s suit to Circuit Court, the panel said it should re-examine sections of the gross negligence standard.

It’s unclear whether the case will go to trial. Georgetown County has settled claims from other Harmony property owners. “It’s probably best for the taxpayer for them to settle rather than spending money on another appeal,” Goldfinch said.

Because Repko was the last case filed under the statute of limitations – which both courts upheld – it is unlikely there will be similar claims. However, the ruling should prompt Georgetown County to review the language of the development regulations. “To have it on the books is ludicrous,” he said.

And while he is a member of the county legislative delegation he said “I truly love Georgetown County,” he added that “this is truly an example of government run amuck.”

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