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There’s money left, but who will spend it, and on what?

Staff Writer

Sitting in the Archuleta County coffers is the Fairfield Settlement Fund — a fund with a balance of $494,108.

Another $460,737 is in a Pagosa Lakes Property Owners’ (PLPOA) fund.

Both amounts are from a 1997 settlement agreement with Fairfield Communities, Inc. in which over $8 million was given to the entities to satisfy defaulted road agreements and correct other failed promises by the developer.

PLPOA continues to fund projects with settlement money, with more on the horizon, while the county has spent nothing from the settlement since 2008.

Of the county’s portion, $300,000 is budgeted for possible expenditures in 2013, though no projects have been submitted and approved to date.

The settlement

The money originates from a 1997 order from an Arkansas bankruptcy judge approving an agreement between the Board of County Commissioners, PLPOA and Fairfield Communities, Inc., in which several claims concerning defaulted road improvement agreements, and electrical trenching and backfilling were settled, as well as for other failed promises of the developers of the area (Fairfield, and Eaton Pagosa prior to Fairfield).

Prior to the June 1997 agreement, several individual property owners filed claims against Fairfield, with those claims dismissed in light of the settlement with PLPOA and the BoCC.

The claims related to the Pagosa Lakes and Alpha areas and the settlement put over $8 million into the coffers of the two entities (with interest, the year-end balance for the settlement was over $7 million for Archuleta County).

According to the agreement, Archuleta County received $6.5 million for roadwork, and another $1.2 million (from the sale of stock in the company) went to PLPOA. Another $400,000 later went to the county via the settlement for trenching and backfilling associated with electrical work in the area.

According to the agreement: “The shares and funds held in the accounts described in Section 4 shall be used by the Board and the PLPOA solely to fund the construction of roads and other improvements at the Pagosa site generally in accordance with the tables (the ‘Construction Tables’) …”

Those construction tables mentioned in the settlement divide work to be done between the county and PLPOA.

On the county’s project table are specific dollar amounts to be allocated for road reconstruction, new construction and paving for areas within PLPOA boundaries, as well as for trenching and backfilling in areas.

PLPOA’s construction table similarly allots specific dollar amounts for roads and other projects in various parts of the Pagosa Lakes subdivisions, as well as funding to correct survey errors, build a recreational vehicle storage facility and an equestrian facility (failed promises made by the developers).

A couple of months after the settlement, in August of 1997, the county and PLPOA entered into an agreement to form a Road Advisory Committee to make recommendations of a plan or plans to the entities on how to best complete the construction and other improvements.

The committee, with members Bill Ralston, Ralph Goulds, Jim Boston, Jim Carson, Gene Cortright, Fred Ebeling and Charles Hubbard, sought to provide recommendations to efficiently improve roads in the area.

The report is based on the construction tables appearing in the settlement, but recommends modifications based on several criteria.

That report is dated April 1998, and county year-by-year expenditures indicate a large amount of the settlement money, over $5.3 million, going toward capital outlay in 1999.

Another $1.45 million is shown to have been spent in 2000, also for capital outlay.

County funds

Since 1997, a total of $7,408,957 has been spent from settlement funding by Archuleta County, according to the county’s account of the fund by year.

The last expense from the fund (save an interest-related error in 2010 in which interest was incorrectly put into the fund and later removed) was in 2008, when $19,669 worth of checks were issued to citizens and a local construction company for electrical work on several lots within the settlement area.

Accompanying the checks cut by the county are letters from La Plata Electric Association showing that the work was done to provide an electric system for the lots.

According to Todd Starr, interim county administrator, records indicate the roads portion of the funding has been expended, meaning the remaining $494,108 in the fund is presumably left for trenching and backfilling work related to electrical service.

For 2013, $300,000 has been budgeted for qualifying projects submitted by residents.

PLPOA funds

“The part that we’re holding was to build any new roads or to deal with other issues that the developer … didn’t provide that were promised to the homeowners when they were purchasing property,” said Chip Munday, PLPOA general manager.

Within PLPOA’s settlement account are four project categories — roads, the equestrian facility, the RV facility and survey errors in the area of Lake Forest.

The money, according to Munday, can be spent only with approval from Archuleta County. The PLPOA has received such approval in recent years for at least one project — using survey errors funding for bike paths.

For further projects, Munday said PLPOA is looking at communicating with some of the communities named in the settlement (such as North Village Lake) to see what is desired, but Munday spoke of a lake-front park at North Village Lake and trails.

Accounting for the funds

The Fairfield settlement took place over 15 years ago, with many employees having come and gone at both Archuleta County and PLPOA in that time.

That change in staffs, paired with changing accounting procedures, means that accounting for the use of the funds can be difficult.

For example, while expenditures are listed by year for the fund by Archuleta County, the financials for each year provide no further indication of what specific projects were completed.

With that vague accounting, it is potentially difficult for the county to determine which construction required by the settlement has been completed, though Starr indicated he believed all road construction was completed based on the county’s records.

Future of the funding

“Any funds remaining in either the Board’s or the PLPOA’s segregated account or accounts after completion of all construction shall belong to either the Board or the PLPOA, as applicable, and shall no longer be required to be segregated from other funds,” the settlement agreement states.

On the county side, however, Starr maintained that the funds must be accounted for separately, relating to all construction, not simply roads.

Sorensen suggested, however, that the fund could be moved into the General Fund, making it a separate department. That move, Sorensen said, would increase the county’s compliance with governmental accounting standards implemented in 2011 and keep the funding segregated and able to be tracked.

To remain a separate fund, Sorensen said there must be a unique revenue source — something the onetime settlement no longer has.

Sorensen indicated she would further look at moving the funds to the General Fund during the county’s audit.

An e-mail from Munday further discussed the future of the funding on the PLPOA side, stating, “We have had very informal discussions internally and with the County about how to deal with the remaining funds. According to both the Settlement Agreement and the Agreement between the County and the PLPOA, all of these funds must be spent within the Fairfield development (PLPOA) in ways that are consistent with the Settlement Agreement. We do not know if/when any more roads will be built in the PLPOA, and some of the issues have been resolved. Certainly some issues remain. The construction of an RV storage facility has been practically ignored — mostly because no one knows where we can build one. Perhaps the larger issue of road maintenance has played a role, but it would be my preference to see these funds used to best fulfill the purposes for which they were intended sooner rather than later. I think it is frustrating for all involved to see these funds still sitting idle after all these years.”

Accessing the funds

According to PLPOA documentation, “The Pagosa Lakes Property Owners Association for the funds for Unfinished Roads. Archuleta County is custodian of the funds for Electrical Power Installation ‘Trenching Funds’.”

Starr, on the other hand, informed SUN staff that potentially eligible projects first go through PLPOA before going through the Public Works Department at the county.

Starr was unaware of any time limitations for use of the funds, but believed projects have to be preapproved.

randi@pagosasun.com

This story was posted on December 27, 2012.