LATHROP – The lawsuit brought against Richland Planned Communities by contracted construction companies that haven’t been paid for their work has been settled.
And it looks like the City of Lathrop, which was named as a party in the suit, could end up having $3.2 million in unreimbursed development fees flow into municipal coffers plus have long-stalled development near Lathrop High move forward.
While the initial lawsuit was filed in August of 2008, the city only stepped in back in January to try and serve as a mediator to get the matter resolved between the three main companies – Smith Denison Construction, Teichert Construction and Auburn Constructors – after more than two years had passed since original suit paperwork had been filed.
According to the settlement agreement, Richland Planned Communities will have to pay out $3 million to a mediator’s trust fund account to be distributed out to the settling parties – with $2.1 million going to Teichert, $660,000 to Auburn and $240,000 to Smith Denison.
The total payout to the parties in the suit will total just over $5.8 million.
Even though the City of Lathrop technically settled for $500,000 to be paid into the trust account to bring the matter to a close, not a single dime will come out of the city’s general fund. According to City Attorney Salvador Navarrete, the payout will be picked up by the New York-based bond companies that have invested $50 million into the project – combining payments of $256,000 and $244,000 to cover the total cost.
But that’s not the only good news for the City of Lathrop.
Because of a development agreement that was signed by Richland that allowed them to develop the land they had purchased and not fulfilled certain requirements of the agreement, the city has halted the rights to further development until the owed amount of roughly $3.2 million is paid to relieve outstanding debts.
If Richland pays the amount, or has another development company take over the project – something Navarrete said he has talked to them about doing – and they pay the fees the agreement will no longer be in default and work can continue within the parameters in the agreed upon schedule.
Both Oppenheimer California Municipal Fund and Capital Research and Management Company own more than $45 million worth of bonds that were issued to develop the area on the agreement that they would be compensated when the development began. Those agreements are still in place for whoever takes over the future project.
Oppenheimer owns almost $42 million worth of bonds while Capital has nearly $3.8 million issued for the project. The two will cover the cost of Lathrop’s $500,000, and paid for the lawyer fees that the city accrued coming to a settlement in the case – which was actually a combination of seven different lawsuits including one that was filed against the City of Lathrop by Smith Denison and one that was filed against Teichert by the City of Lathrop.
The Lathrop City Council approved a resolution that approved the findings of the settlement agreement and authorized the execution of a second supplemental bond indenture that will allow the two bond companies to cover Lathrop’s $500,000 payment.
And it looks like the City of Lathrop, which was named as a party in the suit, could end up having $3.2 million in unreimbursed development fees flow into municipal coffers plus have long-stalled development near Lathrop High move forward.
While the initial lawsuit was filed in August of 2008, the city only stepped in back in January to try and serve as a mediator to get the matter resolved between the three main companies – Smith Denison Construction, Teichert Construction and Auburn Constructors – after more than two years had passed since original suit paperwork had been filed.
According to the settlement agreement, Richland Planned Communities will have to pay out $3 million to a mediator’s trust fund account to be distributed out to the settling parties – with $2.1 million going to Teichert, $660,000 to Auburn and $240,000 to Smith Denison.
The total payout to the parties in the suit will total just over $5.8 million.
Even though the City of Lathrop technically settled for $500,000 to be paid into the trust account to bring the matter to a close, not a single dime will come out of the city’s general fund. According to City Attorney Salvador Navarrete, the payout will be picked up by the New York-based bond companies that have invested $50 million into the project – combining payments of $256,000 and $244,000 to cover the total cost.
But that’s not the only good news for the City of Lathrop.
Because of a development agreement that was signed by Richland that allowed them to develop the land they had purchased and not fulfilled certain requirements of the agreement, the city has halted the rights to further development until the owed amount of roughly $3.2 million is paid to relieve outstanding debts.
If Richland pays the amount, or has another development company take over the project – something Navarrete said he has talked to them about doing – and they pay the fees the agreement will no longer be in default and work can continue within the parameters in the agreed upon schedule.
Both Oppenheimer California Municipal Fund and Capital Research and Management Company own more than $45 million worth of bonds that were issued to develop the area on the agreement that they would be compensated when the development began. Those agreements are still in place for whoever takes over the future project.
Oppenheimer owns almost $42 million worth of bonds while Capital has nearly $3.8 million issued for the project. The two will cover the cost of Lathrop’s $500,000, and paid for the lawyer fees that the city accrued coming to a settlement in the case – which was actually a combination of seven different lawsuits including one that was filed against the City of Lathrop by Smith Denison and one that was filed against Teichert by the City of Lathrop.
The Lathrop City Council approved a resolution that approved the findings of the settlement agreement and authorized the execution of a second supplemental bond indenture that will allow the two bond companies to cover Lathrop’s $500,000 payment.
