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Developer VS CDD issues - advice needed

Discussion in 'Other Off Topic Forum' started by JAM1, Aug 10, 2008.

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  1. JAM1

    JAM1 F1 Veteran
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    Oct 22, 2004
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    Joe
    #1 JAM1, Aug 10, 2008
    I am hoping there are a few people familiar with property law that can help me out with a bit of advice.

    Background:
    I live in a master-planned community in Florida. The developer of the neighborhood used bonds to put in the infrastructure such as the roads, community center, gym, parks, tennis courts, basketball courts, etc... as well as the seawalls for our canals. There are now some major structural issues with the seawall and a lawsuit is starting on behalf of our neighborhood CDD (Community Development District) against the installer and a host of other parties including the manufacturer and engineer.


    Questions:
    I strongly feel the neighborhood is getting an unfair shake, as they are bringing the lawsuit through the CDD with the same law firm our developer put in place to act as district council, as they control the seats on the CDD 4/1 against the residents. This law firm has other ties with the developer, so I don't feel they are acting with the CDD's best interests in the handling of this issue. The CDD voted to go forward with the suit before the resident was clear on the relationship between the developer and the law firm, and only understood the importance of taking legal action to address the issue. It seems like an issue of conflict of interest to me for the members of the CDD that work for the developer by failing to clarify their relationship with the lawyer at minimum, and then to have abstained from voting. Opinions?

    When questioned about legal ownership of the seawalls, the developer is saying the CDD owns it because they were the ones who contracted the work... even though it was paid for with developer and bond funds. It is common for our developer to run all expenditures through the CDD as those projects are not subject to tax, then they reimburse the CDD (I question the legality of this as it sounds like tax evasion to me). I fail to see how that shows ownership by the CDD since the property in all our canals is still listed as being owned by the developer on property tax records, yet all other common areas that the CDD built including the afore mentioned amenities are listed on tax records as being owned by the CDD. Input?
     
  2. GatorFL

    GatorFL Moderator
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    Nov 18, 2005
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    Wellington, FL
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    Duane
    #2 GatorFL, Aug 10, 2008
    Went thru a similar circumstance a few years ago in an old neighborhood. First piece of advice I would offer--make sure your engineering firm reviewing the defects is solid. I won't bore you with the details but it was very similar to your situation. Many of the residents felt there was a conflict of interest, but we were swayed by our board to stick with the developer. Basically, the argument presented was that the developer "hired" the subcontractor to lay the infrastructure of the neighborhood and could hire the sub for future work and so we, as a community, were better off in allegiance with the developer. Plus our community docs laid out the voting structure, as it sounds like it does in yours, and we were generally beholden to them anyway. Long story short, subcontractor settled with us, made the necessary repairs and paid the attorneys. I would be far more nervous about the financial wherewithal of the subcontractors getting served with the suit than the selection of the attorney at this point.

    I am pretty sure that the CDD owns the seawalls. Likely when the developer pitched the community to the state/county these types of construction engineering were spelled out in their master plan which in effect became the CDD. In many of these neighborhoods in FL the community is responsible for everything--even the roads.

    You might want to post this in the FL section, there are a few developers and attorneys who might chime in.
     
  3. DIGMAN52

    DIGMAN52 F1 Rookie
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    #3 DIGMAN52, Aug 11, 2008
    I am a utility contractor in Texas who puts in Sewer, Water and Storm Drainage pipiing. I am familiar with municipalities and MUD Districts such as your CDD, and the responsibilities they take on when they have accepted the project from the developer. Since you are not dealing with a city, the CDD would have used an engineering firm to design the project, and had either their people or a third party act as Inspectors during all the construction process. You need to see who inspected the seawall, and if it was constructed to the original engineers specifications. If you can find some gaps in this inspection process, and any proof that the construction and or materials were defective, then you have a chance to get some damages. One big question is when was the seawall constructed, and what was the date of acceptance of the project by the CDD. Most contruction contracts require a maintenence bond from an insurer, which will give a 1-2 year period where the contractor is liable for any problems caused by defective workmanship or materials. Beyond that time period, it is up to the CDD to put money aside from their dues, to keep up all the infrastructure of the project, not just the seawall.
     
  4. JAM1

    JAM1 F1 Veteran
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    #4 JAM1, Aug 23, 2008
    I appreciate the input! I know this is a bit longwinded, but please bear with me, as I've found out quite a bit more since posting my initial questions. Funny enough, the person our CDD is currently employing as our district engineer is one of the people that was involved with the seawall project when it was built from 2000-2003. The lawsuit lists the contractor, surety bond issuer, and a separate engineer... but not the one we now employ (even though part of the credentials our developer controlled CDD hired him on was his engineering evolvement on our seawalls).






    Harbor Bay CDD contracted the seawalls (phase 2) in 2001, but Terrabrook Apollo Beach LLP (Newland) contracted the boat lift and surrounding immediate connecting seawalls (phase 1). This should provide some proof of the fact the job was bid through the CDD doesn't necessarily show intended ownership by Harbor Bay. Both jobs were contracted with Woodruff and are referenced through the Hillsborough County Clerk here:

    Boat Lift construction: http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=8956296&direct=1
    Terrabrook listed as the owner.

    Seawalls construction: http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=8706638&direct=1
    Harbor Bay CDD listed as the owner.







    Biff Craine [employed by a Newland controlled CDD board as both district counsel, and later as legal representation for our seawall litigation] initially stated that the seawalls were owned by Harbor Bay CDD because they were responsible for contracting the project. Our developer makes a habit of running projects through the CDD to avoid paying taxes, then reimburses the CDD for those projects with bond funds if available, or as capital expenditures with developer funds. For that reason, it seems a weak argument to shift the burden of a lawsuit from the developer to our CDD.

    Upon being questioned as to why Terrabrook Apollo Beach LLP (Newland) shows as the owner of the property the seawalls are constructed on, which would imply they also own the structures built on said land, Mr. Craine states ownership of the seawalls was transferred in plat from the developer to Harbor Bay CDD. This certainly raises questions to the validity of the initial argument that the CDD owns the seawalls because they contracted the project. Keeping in mind the seawalls were completed in the summer of 2003, the plat records do show that 'ownership' of the seawalls was transferred from Terrabrook Apollo Beach LLP (Newland) to the Harbor Bay CDD over a time period spanning from 06/02 - 1/06... from near the completion, to considerably after the seawalls were constructed. The issue with this timeline is twofold for me:

    1.) The seawalls officially went on record as being defective in mid/late 2005. Terrabrook Apollo Beach LLP (Newland) chose to continue transferring segmented ownership of the seawalls to the Harbor Bay CDD after it had become apparent there were issues with erosion, and concerns surrounding the quality of the seawalls. This shows a clear lack of good faith in the part of the developer to grant easement or ownership of these known defective seawalls to Harbor Bay CDD.

    2.) The Dedication portion of the plats shows Terrabrook Apollo Beach LLP (Newland) is listed as the "owner" of the lands described in the plat. In the Drainage Access and Seawall Easements section, the developer grants (among other things) "perpetual easements for installation, ownership, maintenance, and operation by the CDD". Consider the verbiage of this entry. It states that the developer is granting easement to install, own, and maintain a seawall... not to take ownership of an existing seawall. In four of the six plats, an existing seawall was in place when the plat was issued. Further, it states that Terrabrook Apollo Beach LLP (Newland) was the "owner" of these seawalls, as noted in the dedication portion.



    Hillsborough County Clerk of the Circuit Court (plat transfer documents)

    01/06 - http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=11309450&direct=1

    08/05 - http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=11074874&direct=1

    12/03 - http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=9944426&direct=1

    12/03 - http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=9944431&direct=1

    11/02 - http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=9297592&direct=1

    06/02 - http://pubrec3.hillsclerk.com/oncore/ShowDetails.aspx?id=9109949&direct=1




    Questions:

    - Wouldn't it be a conflict of interest for our CDD to employ (and consult on the lawsuit) one of the engineers that assisted in the design/construction of the failing seawall? Should we not be including him as a litigant?

    - Am I right in believing the developer was in fact the owner of the seawalls originally (as noted in the dedication portion of the plat)?

    - In the portion of the plats listed above, am I correct to believe that it shows transfer of an easement to install, own, and maintain a seawall... not to take ownership of an existing seawall?

    - Would granting easement or ownership of these known defective seawalls to Harbor Bay CDD show a clear lack of good faith in the part of the developer, and therefore be something we could bring suit against them for?
     

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