Persistence saves public money

Apr. 16, 2014 @ 05:25 PM

The city’s persistence is paying off in cleaning up a host of problems with unfinished infrastructure work in nascent subdivisions upended by the 2008 housing crash.

That crash brought to an abrupt halt work in about 50 subdivisions around the city. In many, homes had been bought and occupied by owners who fully expected drainage work and streets would be completed as the subdivisions built out.

But as developers ran out of money or went bankrupt, construction stopped, leaving streets, storm sewers and drainage ponds unfinished.

Developers had been required to post bonds that would ensure money to complete that work should a project go belly-up, but the money was generally inadequate to cover the costs.

For the past several years, the city has been cajoling and negotiating to get the repairs done without dipping into the city’s general fund or assessing homeowners who reasonably expected that their purchase cost covered the improvements developers promised.

So far, public works officials told the City Council this week, they’ve secured about $8.5 million in private-sector spending to complete work in 30 or so “failed and struggling developments,” as the city refers to the problem neighborhoods.

The city has only put up some $35,000-$40,000 of public money.

What Councilman Steve Schewel aptly called “nice progress” has not come without a good bit of effort and creativity on the part of city officials. “We’ve worked very hard to be outside the box on a lot of these,” Robert Joyner, Public Works’ manager of development review, told the council.

As he did in a progress report last September, Joyner talked of working with banks who often were allies in finishing projects.  Sometimes the city has been able to link banks with solvent developers willing to take over finishing a subdivision.

“We’ve been very proactive in this,” Joyner said in September, adding that Durham has done more to tackle this problem than many cities.

The task is far from finished. An estimated $5 million in work remains in 23 neighborhoods. They include two, Ravenstone and Stone Hill Estates, where the city and insurers are in a protracted court battle over liability for unfinished work. The city wants $781,114; the insurers have abandoned an early offer of $357,000, but there have been no new talks in months. The case awaits a ruling from a federal magistrate who has been mulling it since late 2012.

To minimize the chance of a similar debacle down the road, city officials have increased the performance bonds developers must pay, resisting pushback from the homebuilding sector.

The city’s taxpayers and residents of the struggling subdivisions should be grateful for the city’s tough stance and diligent work. The fallout from the housing crash has hammered the economy here and elsewhere, but the city’s work has greatly minimized at least one significant part of it.