Village Looks at Taking On Repairs From Bankrupt Builders

Last week, village trustees agreed to fix a broken street light in an east side subdivision. And in so doing, they may have changed the way deals with an important issue, one involving bankrupt developers and performance bonds.

The request for help was made by Cheryl Ayers, president of the Fieldstone Place Homeowners Association. Fieldstone is a mixed development (townhomes and single-family houses) near Briarcliff and Montgomery roads, and it was developed by Fieldstone Place LLC, a subsidiary of Grand Pointe Homes of West Dundee.

But Grand Pointe is insolvent, according to village documents, and has not completed improvements to the property. The company is also not fixing its property when it breaks—as was the case with the street lights in the alley off of Manning Avenue, which Ayers said have been out for a year.

“It’s a safety issue,” she said, noting that the alleyway gets very dark at night.

The village has not yet accepted the responsibility of maintaining that property, something that is usually done after developments are completed and turned over. And Village Attorney Steve Andersson explained why village workers have not simply fixed that light – to do so may weaken the village’s legal position against Grand Pointe Homes.

The village holds a performance bond for Fieldstone Place, and it currently stands at $792,985.70, according to Senior Planner Michael Brown. Performance bonds are essentially the village’s guarantee that construction on developments will be completed, but with Grand Pointe unable to pay its bills, calling that bond in has proven difficult.

“We do go after these bonds, but it’s going to take a long time before we see any money,” Andersson said.

The village’s legal case for obtaining that money is tied to the unfinished work at the subdivision, Andersson said. If the village simply performs the work, it lessens their need for the money in the eyes of the law. The developer’s defense, Andersson said, would be, “You did it, so we’re off the hook.”

Andersson and the Village Board agreed that safety concerns should trump financial ones. However, when it comes to unfinished work that does not pose a safety threat, trustees said they would consider each instance on a case by case basis.

“We can’t make a policy decision,” said Trustee Bill Keck. “But I have no qualms about taking care of the safety issues.”

“We need to get the safety stuff fixed as soon as possible,” agreed Trustee Matt Brolley.

Andersson said the village would work with Ayers and the Fieldstone Place Homeowners Association to get the private street lights under village control, and fix them.

Andersson is also trying to call in a performance bond for the Huntington Chase subdivision on the west side. That was built by Kimball Hill Homes, which filed for bankruptcy in 2009. According to Brown, the village’s bond for that development currently totals $998,040.05.

Full disclosure: Montgomery Patch editor Andre Salles is a resident of Fieldstone Place.