PROSPECT — The Planning and Zoning Commission will continue to accept bonds for subdivisions and site plans despite new state legislation that could potentially open up the town to more risk if a project goes belly-up half way through.
New state legislation that goes into effect Oct. 1 forces towns to make a decision–either accept any form of bond a developer wants to use or don’t accept bonds at all.
Previously, when a developer went before town land boards to get approval for a project, a town could ask for whatever form of guarantee it saw fit to ensure it wasn’t left with a half-finished road or faulty storm drains if the developer failed to finish a project.
Public Act 11-79 specifies that towns must accept all bonds including surety bonds, a type of bond that acts like an insurance company for the developer and is notoriously hard to collect on.
Attorney Jennifer Yoxall of the firm Carmody & Torrance previously advised the board that it could face years of litigation if tried to collect on a surety bond.
However, the board felt that the other option–waiting until a project is complete before granting approval to sell lots–would kill any potential development in Prospect.
Without the ability to sell lots as development progresses, developers would have to shoulder the burden of the total capital expenses for public amenities for a project up front, a cost few developers can afford.
“(Public Act 11-79’s) intent is good, I think, to make it possible for more people to do subdivisions,” Planning and Zoning Chair Donald Pomeroy said.
At a public hearing last month, Anthony D’Onofrio, a Southington-based developer currently working on a subdivision in town, assured the commission that, although surety bonds are now an option, developers are unlikely to use them because they are more expensive.
Even though the commission decided to accept surety bonds, it is not left totally helpless in the hands of surety companies.
The new law includes a condition that bonds must be in a form acceptable to the commission.
“It’s not nearly as disruptive as we were originally led to believe,” Pomeroy said.
In Prospect, the Planning and Zoning Commission plans to work with a planning consultant to come up with new regulations to make stricter requirements to protect the town, according to Land Use Inspector William Donovan.
In addition to the bond issue, the new legislation allows developers to post a bond at any time in the first 270 days after a project is approved. This will allow developers to get at least some of the work done and reduce the cost of the bond.
Also, towns can’t hold bonds after accepting a road. Previously, towns often held on to 10 percent of the bond for a year or so to make sure there weren’t any issues with the work. Now, towns must release the bond within 65 days of a request, provided the work is completed to the satisfaction of the town.
To address these concerns, the commission will likely have to install a more rigid inspection outline for projects to make sure work is progressing properly.
“We will probably need to make more inspections in the future than we currently do now,” Donovan said.
The additional inspections may mean additional cost to developers, but the commission still has to hash out the details with the consultant.
“It could change dramatically from this week until the final version is presented for approval,” Donovan said.
Donovan said the commission will do its best to protect the town so tax money doesn’t need to be used to try to complete a project.
With the legislation going into effect Oct. 1, the town doesn’t have much time to enact new regulations.
“We want to move on this as quickly as we can, for sure,” Donovan said.
Pomeroy said it will be at least several months before the commission makes it through the process of creating a draft proposal, holding a public hearing, and adopting new regulations. He said he hopes to get a first draft of proposed regulations at the commission’s next meeting Oct. 5.
While the legislation still has some flaws, which many expect the state legislature to address in its next session, Pomeroy said the new regulations will be good for development.
“It’s a good attempt at doing what’s economically better in a very slow economy,” Pomeroy said.