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HomeMy WebLinkAbout2012 04 09 Regular 600 Lexon Insurance Company Settlement Agreement and Release - Jesup's Landing COMMISSION AGENDA     Informational Consent ITEM600 Public Hearings Regular X       April 09, 2012KS Regular MeetingCity ManagerDepartment         REQUEST: The City Attorney is requesting that the City Commission consider approving a Settlement Agreement and Release of All Claims between the City and Lexon Insurance Company related to the Surety Bonds that were provided for the Jesup’s Landing project by the previous developer, Levitt & Sons of Seminole County, LLC.   SYNOPSIS: About 2005, the City Commission approved a development project proposed by Levitt & Sons of Seminole County, LLC to be located within the Town Center along Orange Avenue.  Levitt & Sons declared bankruptcy and abandoned the Jesup’s Landing project.  Site work was in progress at the time Levitt & Sons declared bankruptcy.  Upon abandonment, the City pursued claims against Lexon Insurance Company related to the surety bonds required for the Jesup’s Landing project, as well as bonds required for another companion Levitt & Sons’ project within the Town Center called Jesup’s Reserve. On or about September 7, 2010, the City and Lexon entered into a Settlement Agreement and Release of All Claims for bonds required for the Jesup’s Reserve project. The parties have fully complied with said Agreement regarding Jesup’s Reserve. However, with respect to the Jesup’s Landing project and the related bonds, the Agreement provided that the City would reserve its rights against Lexon under the bonds given the uncertainty about the future development of the Jesup’s Landing’s property.  Jesup’s Landing is now be permitted and under construction by a new developer, Mattamy Homes, in accordance with the terms and conditions of a new developer’s agreement.  Lexon has executed a proposed Settlement Agreement regarding the Jesup’s Landing bonds and has tendered $30,000 to the City if the City forever discharges and releases Lexon from any claims under the Jesup’s Landing bonds. Regular 600 PAGE 1 OF 3 - April 09, 2012 CONSIDERATIONS: 1.         Pursuant to a developer’s agreement and plans approved by the City, Levitt & Sons was to develop the Jesup’s Landing Townhome Project within the Town Center along Orange Avenue.   2.         Several performance bonds were required by the City for Jesup’s Landing to ensure performance based on the agreement and plans approved by the City.  The bonds were provided by Lexon Insurance Company and the City is the obligee (beneficiary).  The total amount of the original bonds was $4,230,000, but that amount was reduced to $3,100,000 after the City released a portion of the original bond amount.    3.         During the construction of the Project, Levitt & Sons filed for bankruptcy.  Prior to filing for bankruptcy, however, Levitt & Sons constructed water and sewer systems and an offsite road improvement on Orange Avenue.  Further, the site was cleared of trees and vegetation at that time.   4.         Levitt & Sons abandoned the Project in October of 2007.  The City then sent a timely notice of default to Lexon and Levitt & Sons and made demand for completion of the subdivision improvements under the performance bonds.  However, Lexon and Levitt & Sons failed to complete the work and perform under the agreement and bonds.   5.         As a result, the City filed suit against Lexon seeking specific performance and damages under the bonds.   6.         Thereafter, for the past several years, the City has been successfully pursuing claims against Lexon and another surety related to the bonds that were provided for the two Town Center projects being constructed by Levitt & Sons, Jesup’s Reserve and Jessup’s Landing.   7.         On or about September 7, 2010, the City and Lexon Insurance Co. entered into a Settlement Agreement and Release of All Claims for Jesup’s Reserve. The parties have fully complied with said agreement regarding Jesup’s Reserve. However, the agreement reserved the City's rights against Lexon regarding the Jesup’s Landing project given the uncertainty about the future development of the Jesup’s Landing’s property.   8.         Since the City reserved its rights against Lexon to pursue the Jesup’s Landing bonds, a new developer, Mattamy Homes, has acquired the Jesup’s Landing property and has pursued the re-permitting of the Jesup’s Landing project pursuant to a Stockpile Agreement and Developer’s Agreement by and between Mattamy Homes and the City and final engineering recently approved by the City Commission.   9.         Mattamy Homes is now in the process of re-platting the Jesup’s Landing property.   10.       Under the circumstances and in negotiations with the City Attorney’s office, Regular 600 PAGE 2 OF 3 - April 09, 2012 Lexon has tendered $30,000 (currently deposited in the City Attorney’s trust account) to the City and executed the attached Settlement Agreement.   11.       If the Settlement Agreement is approved, the City will accept the $30,000 and forever release and discharge any rights the City may have to pursue any claims that the City may have under the bonds provided to the City in conjunction with the Jesup’s Landing project previously proposed by Levitt & Sons.    12.       If the City Commission rejects the Settlement Agreement, the $30,000 will be returned to Lexon and the City will maintain any rights it may have to pursue any claims under the bonds provided by Levitt & Sons. FISCAL IMPACT: If the City Commission approves the Settlement Agreement, the City will receive settlement proceeds in the amount of $30,000.  On the other hand, if the City Commission rejects the settlement, the City may have to expend attorney’s fees and costs in the event the City decides to pursue future claims under the bonds. COMMUNICATION EFFORTS: This Agenda Item has been electronically forwarded to the Mayor and City Commission, City Manager, City Attorney/Staff, and is available on the City’s Website, LaserFiche, and the City’s Server. Additionally, portions of this Agenda Item are typed verbatim on the respective Meeting Agenda which has also been electronically forwarded to the individuals noted above, and which is also available on the City’s Website, LaserFiche, and the City’s Server; has been sent to applicable City Staff, Media/Press Representatives who have requested Agendas/Agenda Item information, Homeowner’s Associations/Representatives on file with the City, and all individuals who have requested such information. This information has also been posted outside City Hall, posted inside City Hall with additional copies available for the General Public, and posted at five (5) different locations around the City. Furthermore, this information is also available to any individual requestors. City Staff is always willing to discuss this Agenda Item or any Agenda Item with any interested individuals.   RECOMMENDATION: The City Attorney and City Manager recommend that the City Commission approve the Settlement Agreement and accept the $30,000. ATTACHMENTS: 1. Proposed Settlement Agreement, executed by Lexon Insurance Company (3 pages) Regular 600 PAGE 3 OF 3 - April 09, 2012