Two residential developments in trouble with Garfield County
October 6, 2009
GLENWOOD SPRINGS – Two residential projects in Garfield County, one of which is embroiled in what has been called the biggest bankruptcy ever in U.S. history, have run into trouble recently and fallen short of meeting the conditions of their development approvals, according to county staff.
This week, county commissioners moved to ensure that the developers’ troubles would not leave residents, or the county, in the lurch.
Concerning the Iron Bridge subdivision south of Glenwood Springs, the Board of County Commissioners is poised to ask a bankruptcy judge for permission to go after cash deposited in escrow accounts and other remedies as a way of making sure certain improvements are finished.
On the same day, the commissioners froze development of any more lots at the Sun Meadows subdivision, located between Silt and Rifle, until the developer completes promised improvements to the intersection of Miller Lane and Colorado Highway 6.
The Iron Bridge project, a golf subdivision approved in 2004, has been mired in the bankruptcy of Lehman Brothers, which in turn was part of the Wall Street meltdown that began in 2008 and helped plunge the nation and the world into a deep economic recession.
The developers, L.B. Rose Ranch, a subsidiary of Lehman Brothers, filed for bankruptcy in February 2009, according to Deputy County Attorney Debbie Quinn.
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Since then, she reported to the county commissioners at a public hearing on Monday, the developer failed to install sidewalks as required under the subdivision approvals agreement, and instead built “bike paths”; failed to transfer to the county the deeds for the paths and other public improvements, also as required by the approvals; not sold all of its affordable housing units; and failed to keep the required amount of money, amounting to roughly $150,000 according to county documents, in an escrow account as security against such failures.
Glenwood attorney Tim Thulson, representing L.B. Rose, said that attorneys working on what he called “the largest bankruptcy in the world” had promised him that the failures would be remedied.
For example, he said, the New York attorneys have been trying to get signatures on the deed documents involved, but have been unable to accomplish the task.
“Everything I’m hearing from New York is good,” he told the county commissioners. “Overall, I believe … this will get done.”
Thulson said that, as far as he knows, the golf course at Iron Bridge will remain in operations, and the problems associated with the bankruptcy will be dealt with.
“It’s been a very long waiting game,” noted Commissioner Tresi Houpt, “and we’re still waiting.”
Quinn suggested that contacting the bankruptcy judge in the case, and asking to issue an order permitting Garfield County to pursue all its legal remedies, might spur the attorneys involved to do more to meet the project obligations.
The commissioners directed their staff to set those legal wheels in motion.
Sun Meadows is a 33-unit subdivision approved in 2004, in which about 10 lots now contain homes.
In 2004, developer Fred Cooke handed the county a $1.6 million letter of credit as a guarantee that he would make certain improvements, including a redesign and reconstruction of the intersection of Miller Lane and Highway 6.
In the intervening years, the commissioners have allowed the letter of credit to be reduced as some improvements were completed, but the highway intersection remains undone, and the letter of credit is set to expire next month. This would leave the county without a guaranteed account to pay for the road work, should the developer be unable to complete the work himself.
In the end the commissioners agreed to not immediately seek forfeiture of what remains of the letter of credit, less than $250,000, as well as halting development in the subdivision.
Instead, the county has given Cooke time to obtain a new letter of credit for $445,000, mostly to cover to cost of the work on the intersection. But the county will not issue any further building permits or certificates of occupancy until Cooke has satisfied the requirements.
If the new letter of credit is not in the county’s hands by Oct. 26, along with a new subdivision improvements agreement laying out his plans to finish up the required work, the county will begin forfeiture proceedings.