Monday, July 13, 2020

Paradise Park developer gets another chance at securing bond

Hail Mary caught on the five and goal line in sight

By Mark Reaman

The second phase of the Paradise Park housing project might be on the verge of the needed miracle to keep going. Bywater Development LLC principal Joel Wissian came to the Crested Butte Town Council Tuesday with a letter indicating he might have found a firm to provide the needed $2.4 million performance bond for Phase II of the affordable housing project.

This is as if Wissian caught the last-second Hail Mary pass at the five-yard line but hasn’t crossed the goal line. He has until August 30 to do so.

At the July 15 meeting the council had given him until August 6 to come back with a completed bond, which was difficult to secure given contractual circumstances. Town community development director Michael Yerman told the council that Wissian had been able to secure an “overage bond” for Phase II of the project but not the required performance bond. So he and the town attorneys recommended the plug be pulled on the 10-unit Phase II development that would be sold to local businesses. Seven of the ten units are spoken for with earnest money.

“The plan is to rebid the project using the approved architectural plans and break ground in the spring,” explained Yerman. “But for now, given the risk to town, we recommend not going forward at this time.”

Wissian told the council he had been working diligently to find a solution and had been approached by a person in the bond industry after reading about his dilemma in the newspaper. He then handed the council a letter from the BM&B Insurance agency stating they could provide a completion bond but it would take approximately two weeks. Wissian had received the letter the day of the council meeting.

By providing the bond for Phase II, the town would then feel comfortable enough to transfer the property to Bywater and allow the company to use it for collateral to pay for the construction that will result in the 10 additional deed-restricted units to be sold to local businesses for employees.

“There is a solution on the table,” said Wissian. “You are going to have this same problem for the next person but it’s there. You have a tough decision.”

“This is obviously a last-minute magic pill,” noted mayor Jim Schmidt.

At the urging of council members, town manager Dara MacDonald said that because there were no immediate plans to put out a request for proposals, there probably would be no harm and little risk to the town in extending the timeline a couple of weeks for Wissian. “He cannot get the land transferred without the updated contract that requires the bond,” MacDonald said. “The bond would have to be provided prior to the transfer of the land.”

“So it could be a conditional approval by the council with that stipulation,” added Wissian.

Town attorney John Sullivan responded to council inquiries, saying he was still opposed to the idea since he had not seen the new letter.

MacDonald said Bywater had been great to work with and very productive with Phase I. It was estimated that project was about 35 percent complete and ahead of schedule. The town had waived the requirement for a bond with Phase I because of the solid progress. However, Bywater will need to compensate the Town $87,000 for the cost of the Phase 1 bonding.

Representatives of Bonez and PR Property Management spoke in favor of granting the additional time. Both said they didn’t want their earnest money back and instead wanted the units to house valuable management-level employees.

Wissian said from a logistics perspective he needed a final decision for his subcontractors by the end of August.

The council gave him until August 30. He caught the Hail Mary but the clock is ticking.

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