Fairfax County could spend $900,000 to $2.2 million completing roads, sewers and other work abandoned by developers who go bankrupt or, for other reasons, do not complete their projects, according to an analysis by the accounting firm of Price Waterhouse & Co.
"The county continues to have a problem" compared to Montgomery County and other jurisdictions studied, said Williard Brittain, who managed the study that was presented yesterday to the Fairfax County Board of Supervisors.
Supervisor Audrey Moore, an Annandale Democrat who has been critical of the county's growth policies, agreed that a problem exists and argued that it is more severe than the study indicates. She said that the county's own staff estimated in June that defaults by builders could cost taxpayers $9.1 million, in addition to the $2.4 million the county already has spent over the past 12 years to finish uncompleted projects.
Fairfax officials require a developer who wants to build a subdivision to post a bond to guarantee that such public improvements as roads and sewers will be completed along with the new homes, even if the builder runs into financial problems.
According to Moore, 420 of the 1,066 current bonding agreements developers have filed in Fairfax are in default and will require some construction work financed by county taxpayers. Some 313 defaults have been sent to the county attorney's office for default litigation, she said.
In contrast, Brittain said yesterday the number of defaults in Montgomery County are "minimal." He said county officials "had to really search their memories" and could only cite two projects in the last two years.
Moore questioned the method used by Price Waterhouse. Brittain, in turn, faulted those calculations made by Moore and the county staff. He argued that because the county had already tightened some of its restrictions, its future default record should not be as bad as its past one.
Price Waterhouse was hired by the county to determine if Fairfax is in danger of losing millions of dollars because of its land development bonding procedure, and, if so, to develop ways to minimize the county's risk in the future.
Brittain and Moore said the problem arises because the insurance company or banks often contest the county's right to the funds, and the county sometimes loses.
Even when the county wins, there are problems. Litigation to secure use of a builder's bond can take years, during which time inflation may push up construction expenses, so the insurance money can fail to cover the full costs of completing a project.