Town of Purcellville Failed to Secure Performance Bond –
By Kelli Grim
The Hirst Farm subdivision has a wet pond that is a dedicated storm water management area. It was supposed to be drained and converted to a “dry pond” when the last home was constructed in 2010. Imagine the surprise to residents when they learned that the Town of Purcellville had failed to obtain a performance bond from the developer of Hirst Farm to ensure that the pond would be converted as expected.
The pond does not have sufficient capacity to retain water during major storms, nor does it provide adequate dissipation of the water collected. The County of Loudoun holds a separate Erosion and Sediment Control Surety Bond (E&S) for the Hirst Farm project. County staff was recently asked by the Town of Purcellville to release this bond to the Town. But the staff charged with enforcing soil and erosion control regulations feel they have no legal basis to call the bond, because the work covered by the bond was done correctly.
There are a number of different kinds of bonds municipalities require when a residential or commercial development is being built. These bonds are critical insurance for communities to insure projects are built as shown in final plans. But the most important bond of all is a Performance Bond, which covers the end product and insures it is completed correctly.
Purcellville Town staff updated the Infrastructure Committee in May, indicating that they had been working with the Hirst Farm Homeowners Association (HOA) and the County to find solutions to the existing storm water management pond. The developer is now in default, and the Town hired an outside law firm to begin the process of calling bonds to get unfinished public and private improvements completed – such as asphalt paths, sidewalks, grading issues, and final topping of road pavement. Town staff said they analyzed state regulations and County ordinances and provided County staff with their “interpretation” of these regulations that might allow the Town to use the bond being held by the County.
Hirst Farm board members spoke on behalf of the HOA at the meeting and shared concerns regarding liabilities on the current condition of the pond. It is a safety hazard, which is only magnified during the summer with children out of school. The HOA is also very concerned that the expense of converting the pond might have to be absorbed by the residents of Hirst Farm. One harsh reality is that, legally, the Town can step in at any time if the HOA is not maintaining the storm water facility, and bill the HOA for repairs. Since the pond was never built to standard, an HOA board member said it is likely the HOA would litigate the issue before anything was done to the pond.
Town staff was instructed by Mayor Lazaro to arrange for a meeting with Loudoun County Chairman Scott York, members of the HOA and Town representatives to discuss the issue. A June letter sent by the Hirst Farm HOA president to all residents indicated that a Town employee had been directed to obtain this specific bond a couple of years earlier, but failed to do so. (a FOIA request for this correspondence also said that no bond records existed). The letter went on to inform residents that there was a possibility that an assessment of $500 to $1000 per home might be enacted to pay for the storm water pond, or the Town might create a Hirst Farm Tax District to spread the cost over an undesignated time period for the Town’s oversight. The letter also indicated that the HOA had requested a meeting with Blue Ridge Supervisor Jim Burton and Chairman Scott York to discuss the legal basis for “taking” the County E&S bond. When a FOIA request was submitted to the County for copies of this correspondence to the Blue Ridge Supervisor, the answer came back that no documents existed. Supervisor Burton was asked if he had been contacted by the Hirst Farm HOA. He stated, “I never received any correspondence from the Hirst Farm HOA requesting a meeting, nor did they alert me to the nature of the problem. Had I actually been contacted, I would have been more than willing to meet with the HOA officials and discuss the issue.”
The County is still holding the Erosion and Sediment Bond of $348,000, and has been asked by the Town staff not to release the funds without notification. In a July meeting between Loudoun County and the Town of Purcellville, the County advised the Town that a full review of the issue determined it did not have a legal basis to call the E&S Bond and use the money for a purpose other than that for which it was intended. County representatives told Town representatives that if the Town of Purcellville thinks they can legally call the bond that is designated for one thing, and use the funds for another purpose, the County is willing to transfer the bond to the Town. The Town would then have to make the decision on whether or not to call the bond. This would likely result in a lawsuit with the bond company. The Town said they would take the offer under advisement and get back to the County.