Until last fall, the 100 families living in Dale View Manor in eastern Prince William County had to walk or drive to the entrance of their subdivision on Minnieville Road just to pick up their mail.
But the letter carrier wasn't the only one who refused to ride the five streets that make up Dale View Manor.
School buses wouldn't go there either. Dale View children were picked up only if they waited at the subdivision entrance. And when winter storms blanketed the roads with snow, residents had to cross their fingers in hopes that state plows would see fit to pass through their streets.
The problem was that the subdivision's streets had never been completed by the developer so they could not be accepted into the state system--and that meant they were unacceptable for school buses, mail trucks and state snowplows.
After a year-and-a-half of waiting for the developer to come through, Prince William was forced to spend $376,000 in taxpayers' money to bring the roads up to state standards. Today, the county is embroiled in a suit with the developer, Sie-Gray, Inc., in an effort to recover the money.
At Woodland Meadows, a subdivision just south of Manassas, the problem still exists--residents get to their new colonial-style homes on unfinished dirt roads. And there are other examples as well. County attorneys in both Prince William and Fairfax, in fact, have their hands full these days with lawsuits against developers who promised to build roads acceptable to state standards but never finished the job. The result for both counties is untold millions in repair bills and legal fees.
In 1981, the most recent year figures are available, developers offered 1,502 bonds to Fairfax County as guarantees that promised road and sewer improvements would be completed. Developers defaulted on 551 of those bonds, leaving the county holding the bag for $64 million worth of improvements needed to bring the subdivisions up to state standards.
Most of those improvements were paid for by the bond holders, according to Larry R. Coons, the county's director of environmental management. Nonetheless, in fiscal 1982, Fairfax was still forced to make $990,000 in emergency road repairs on 16 defaulted projects. Eventually, he said, the county did collect $316,000 of that from the bond holders, but it still was left $674,000 in the hole.
Coons estimated the county is currently trying to collect on 300 defaulted bonds, although he said only a fraction of those will actually go to court. So concerned are county officials that they have commissioned a $150,000 study of the problem, hoping to change its current road bond procedure and curb the massive number of defaults it faces each year.
In Prince William County, officials are waiting to collect on over 100 defaulted bonds, a dozen of which are being contested in court, said Prince William County attorney John Foote. "It is one of the major legal problems in our two counties," he said last week. "And the tough part is, we don't really know a better system from the one we use now."
In all Northern Virginia jurisdictions, subdivision developers must post a bond or letter of credit that insures they will build roads to state standards. If they default and leave a road unfinished or in disrepair, the bank or insurance company that issued the bond is legally responsible for paying the costs of completing the road to the point where the state will accept it and maintain it.
The problem comes when the counties try to collect.
"No bank or insurance company is going to give in and pay unless they have a judgment against them," said Loudoun County attorney Daniel Travostino, who said the county had to sue three bond holders for money needed to complete defaulted projects this past year. "Local jurisdictions almost always have to go to court to get the bond money."
Bonds are usually issued for both roads and sewers. But since roads are the last part of a subdivision to be finished, developers often cut costs by quitting the project before they are done, area officials said.
Fairfax County has the greatest problem with defaults, Coons said, the county has a lot of first-time developers who build small subdivisions and are more likely to go bankrupt.
Other jurisdictions in Northern Virginia and Maryland are not having the same problem with bond defaults, their officials said, because they have less development than Fairfax and Prince William.
Fairfax and Prince William officials blamed a down-swing in the housing market for the record number of bond defaults that have been racked up in the last few years. They said small developers have been unable to sell the homes they built and have gone bankrupt, defaulting on their road improvement bonds in the process.
Area officials are not the only ones unhappy with the bond process. Home builders seem to be equally displeased. A road improvement bond from a commercial bonding or insurance company can cost up to 50 percent of the cost of the work being bonded, said Susan Matlick of the Suburban Maryland Homebuilders Association. An expensive bond can tie up a developer's capital funds, and if the developer is working on a shoestring budget to begin with, an expensive bond can all but ruin him from the start, she said.
Montgomery County has two statutes that allow some developers to bypass obtaining bonds from commercial institutions, said assistant county attorney Joseph M. Mott. As a result, he said, the county has not had to sue for money because of defaulted bonds in years to complete roads.
One of the statutes allows the developer to go ahead and build a subdivision without a bond. However, the developer is not allowed to sell any houses or lots until the roads are completed to county standards, ensuring the road work gets done, Mott said.
Many of the defaulted roads in Northern Virginia look fine, said Daniel L. Lycan, Prince William County director of public works. They simply are missing a top layer of asphalt or storm drains required by the state.
The state owns almost every road in Prince William and Fairfax and is responsible for maintaining them, a responsibility that includes plowing when it snows and fixing potholes, he said. But since the state has not accepted ownership of the unfinished roads, the two counties must dip into their public works funds and do their own plowing and maintenance. Lycan estimated Prince William spent $10,000 of its own money last year plowing and maintaining the 14 roads in the county not yet accepted by the state. "It is starting to add up from year to year," he said.
Both Fairfax and Prince William counties have modified their bond laws over the past two years in an effort to improve their collection efforts, but county officials are unsure how to overhaul the entire bonding procedure.
"We've gotten better but we're still losing money," Foote said.