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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, April 25, 2011 7:00 o'clock p.m. _____________________________________________________________________________________ Page 22 of 25 (11. APPEAL OF ASSESSMENT FOR UNPAID BLLS - CREEKSIDE IN ORONO, Continued) Johnson indicated they purchased the lot and then looked at what it was going to take to complete the development. Johnson noted they did have a meeting with Tom and Mike shortly after the purchase. McMillan asked when the property was purchased. Johnson indicated it was either April or May of 2009. Gaffron stated the entities that they purchased it from should have disclosed the contents of the letter from the City. Rahn asked whether this could still occur under the City's current escrow policies. Gaffron stated letters of credits used to expire and now the City writes them so they are automatically renewing. Escrows were not in place at this time and the City did not require escrows on a regular basis until approximately three years ago. Gaffron stated in his view the City has procedures in place currently that would prevent this from happening. Mattick stated currently, in addition to the cash escrow, the City also has a letter of credit that they can draw on to satisfy any outstanding consulting bills. Bremer asked whether there are any other developments like this that have outstanding bills. Gaffron indicated they closed out this development in May 2010 and that there should be no other bills relating to the development. Currently, as the houses get built, they will have an escrow account for that particular site. Johnson noted they have paid all the bills they have incurred since purchase. Bremer asked if there are any other similar developments in the City that might have this same problem in the future. Gaffron indicated there is the Stone Bay development and the office condominium project that have not been finished but that the City does have a letter of credit on file. It is the City's expectation that someday a developer will come in and complete the development. Mattick stated the letter of credit spells out what can be drawn on the letter of credit. That letter of credit is then presented to the bank for payment on certain items. There was nothing in the letter of credit for this development regarding consultant fees. Mattick noted the City was sending out bills periodically to the developer for these costs but they were not paying them. Franchot stated it sounds like legally the City can charge the money to the new property owners but that he is struggling with whether it is right to charge people who made a good faith effort to find out what they owed prior to purchase. Franchot stated in his view the charges are fair and real but that he is not sure whether the new purchasers should pay them. Item #02 - CC Agenda - 05/09/2011 Approval of Council Minutes 04/25/2011 [Page 22 of 25]