SEQUIM — Residents of the gone-bust Fair Weather subdivision off West Sequim Bay Road are challenging city of Sequim officials over what the lot owners association president and Port Angeles attorney Robin K. Auld said was the illegal release of more than $700,000 in surety bond by the city to the developer.
That money was released by former Sequim City Engineer Bill Bullock in June 2008, city officials and Auld said.
Developer Gerald R. Engler said Thursday that no money was released to him in 2008. It went to Anchor Bank, he said.
The Anchor Bank lending officer involved in the Fair Weather subdivision, Randy Ross, was unavailable for comment.
In his letter to the city, Auld said, “The city’s decision to disperse the majority of the bonded funds back to the developer and not retain an amount sufficient to cover all remaining costs is not the responsibility of the individual lot owners and should not result in their harm.
“In fact, such reduction of the bond was illegal under the prevailing Sequim city ordinance at the time,” he said.
Bullock left the position in 2008, and it was last year filled for the first time in two years by Paul Haines, now working with Auld to come up with a solution acceptable to both parties.
City officials said the bond remaining — $138,347 — is insufficient to cover all costs to finish improvements, including the final asphalt overlay of the 45-lot subdivision’s private streets, which are beginning to erode, as Auld pointed out this week in front of his Stratus Loop home at Fair Weather.
The city also owes the subdivision the widening of West Sequim Bay Road and the extension of future utilities for future project phases, Fair Weather resident Auld contends.
“The city really should take an interest in getting Fair Weather built out,” Auld told the Sequim City Council on Monday.
“Every lot is an impact fee to the city.”
While City Manager Steve Burkett argued it is not the city’s responsibility to pave private streets, he said the matter is further complicated by the former developer.
That developer, Engler, ran out of money for lack of sales to finish the half-developed project, leaving bare foundations on several lots in parts of the subdivision. About 20 duplex units have been completed.
Subdivision lender Anchor Bank of Aberdeen, which took over the development after Engler defaulted, now owns 24 lots remaining in the subdivision and seeks a buyer that could finish Fair Weather, according to Auld and Burkett.
“We’re trying to find a solution,” Burkett said.
“It is complicated by the homeowners, the former developer, the bank, the bonding company and perhaps the future owners of the subdivision,” Burkett said.
“That’s what makes it so complex. And it’s further complicated by the fact that those are private streets.”
City Council members Bill Huizinga and Erik Erichsen both said the city is responsible for finishing the work promised.
“We need to address that right now and not wait to a later date,” Huizinga adamantly told Haines during the council meeting Monday night.
Huizinga argued that the city signed an agreement to complete the plat if the developer defaulted, regardless of whether the roads were private or public.
Haines said he agreed the subdivision’s roads were falling apart but that much of the issue was they were private roads.
Auld on Thursday said, “I guess the bottom line is there is no developer right now.
“For now, we’re getting screwed.”
He said he hoped the city would work out a deal with about 20 lot and duplex owners who are mostly retired and in their 70s and 80s.
Burkett said Thursday that he still held the position that the city was not responsible for the Fair Weather improvements.
“We definitely don’t believe it is the city and the taxpayers’ responsibility to pay for the improvements,” Burkett said, adding that the city may be willing to delay public improvements to widen West Sequim Bay Road fronting the subdivision to make the remaining improvements possible.
Former Sequim developer Engler, who still owns a home in Sequim but moved his business, GLC Homes, to Portland, Ore., said he loves Sequim and hopes to move back when the economy recovers and he can find work again.
He started building in Port Angeles and Sequim in 2003 and left in 2008.
“We built 20 houses in Sequim and 10 houses in Port Angeles,” Engler said Thursday at his office.
“Then we got this sucker [Fair Weather] going just in time for the recession.
“The whole thing revolves around the fact that if you have no sales, you have no income,” Engler said, who added that he invested and lost $800,000 of his own money on the Fair Weather development.
Engler said he is aware that he is being held “personally liable” for the bond, which he said the bank was holding, not him.
“And I’m fighting that,” he said. “The bank is going to be able to develop the property, not me. We’re going to fight the bond claim.
“As far as I am concerned the bank’s going to finish the subdivision.”
He said what happened to him has “happened to every other subdivision in Sequim.”
Engler contends he did the work on the Fair Weather subdivision.
“I got $700,000 of the work done, so I want the city to acknowledge that and renew the bond for two years,” he said.
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Sequim-Dungeness Valley Editor Jeff Chew can be reached at 360-681-2391 or at jeff.chew@peninsuladailynews.com.
