Sinking feeling remains in Ephrata Twp. development

By on December 5, 2012

By: GARY P. KLINGER Review Correspondent, Staff Writer

Sinkholes continue to give the residents of one Ephrata Township development a sinking feeling because it remains unclear who is responsible to deal with them as they arise.

Connell O’Brien, representing the Charity Gardens Homeowners Association at the most recent meeting of the Ephrata Township Supervisors, raised questions about what, if anything, the township might do to compel the developer to take financial responsibility for the problem. In the process, however, they found the township may be somewhat limited in what solutions it can offer.

During construction, Blue Lake Builders, the developer for the subdivision, put in a retention or storm water pond to handle run-off. In the midst of construction, the firm decided to put in a clay liner. The limestone foundation found in many of the tracts has been a contributing factor to the sinkholes, which have since developed. Developer Gene Martin contends the liner has kept the problem in the storm water retention pond from being much worse than it could have otherwise been.

Neither Martin nor any representatives of his family-run Blue Lake Builders firm were present for comment at the meeting.

"When we bought our homes, it said we would be responsible for mowing and removing debris and making sure it was sodded," complained O’Brien. "But it never mentions sinkholes."

According to O’Brien, when a similar situation began to occur in the Eastbrook development, homeowners were upset to find that they would be responsible to repair the sinkholes. At that time, he contends the township decided to do whatever it could to warn potential buyers about the possibility of sinkholes in that region by adding documents to that effect to the sales process.

At the time when Martin wanted to put in the liner, from an engineering perspective, it sounded like an improvement. Not interested in repairing the basin later on if it developed sinkholes, supervisors at that time told Martin they would only agree with this change to the retention pond if he would agree to be responsible for it for 10 years, even though there was not much authority on the municipal board to do so.

As the situation progressed, an agreement was made between Martin and the homeowners association in 2005. Later, when O’Brien had a forensic accountant look at the books, it was determined that by literal interpretation the $50,000 the ordinance required to be held in escrow was in the account but never earmarked for sinkholes and capital improvements as the agreement stated.

And that is where there seems to be some disagreement.

O’Brien said Martin and his attorney maintain that the funds were there and that the homeowners association was informed it was to be used for reserve funds.

"This is in dispute, whether or not it was ever earmarked," said O’Brien. "Our accountant says no, but their attorney indicates it was and that the homeowners association was told; therefore, the homeowners would be responsible for the sinkholes."

Chairman of the board of supervisors Clark Stauffer noted that Martin also claimed he had made repairs for sinkholes in the basin and never asked for compensation from the homeowners.

"The only thing Martin has not been able to do is produce a check, nor have we seen any written check saying it was earmarked, or a cover letter that appears to cover this," said Stauffer. "It appears it may have been done verbally at a meeting, but there are no signs of minutes of any meetings showing it was ever done."

Both the township and association are looking for additional documentation to clarify who was supposed to do what and how funds were to be used.

Concerns were also raised whether or not, even with a court judgment against Martin, any funds could be collected because Martin may not have assets to cover such a judgment.

"I remember what was said about the liner," commented Stauffer, who was on the board of supervisors at that time. "Martin was to put in a liner and I believe at that time that owners would be responsible for it from then on with the liner in it. If there was ever a sinkhole under the liner, it would be a tremendous cost. By using a clay liner, it would be far more cost effective to just repair the sink hole."

Stauffer added that the fund was to be established and says in the agreement it was to be established separately so that it would always be there for the future of the residents.

"We just asked that there be a special account," said township solicitor Charles Sheidy. "The resolution with the homeowners was to set up the account. We wanted to make sure an individual homeowner would not get stuck for a sinkhole."

Sheidy added that one cannot get insurance for the repair of sinkholes, although it can be purchased for the damage caused by the sinkhole.

Stauffer added that his understanding was that the fund was established for the basin only, with each homeowner responsible for sinkholes on their own property.

In supporting documents presented by O’Brien, the declaration of deeds includes that the basin is private property owned by a property owner, but the swales behind the homes are the responsibility of the homeowners association.

"If I have a sink hole in my front yard, that’s my issue," said O’Brien. "Gateway Realty advised us of this when sinkholes began to open up."

Stauffer questioned O’Brien whether or not the deeds stated who was responsible for sinkholes on personal property. O’Brien said it did not, but did mention that the homeowners association was responsible for the swales.

O’Brien added that Charity Gardens was always an agreement between the township and the homeowners, not between the owners and developer. The developer agreed to have a fund in the amount of $50,000 to be maintained from the date of the last sale and three years out. The last lot was sold in October, 2009.

"It seems clear to me the agreement recognized there was future risk to the storm water basin and wanted to insure a guarantee in 2012, a full three years after, with $50,000 in restricted storm water fund," added O’Brien.

"I think Marin has obligations, but the owners also need to know the township did not need to do anything," said Stauffer of the negotiations with Martin in 2005. "We did want to protect the homeowners. As a farmer, I know the cost of sinkholes."

Stauffer also pointed out that the $50,000 in question was more of a gift, with O’Brien contending it is more like an obligation.

"But (the $50,000) would not be there unless the township had worked with the developer to put it there. We made a mistake for doing what we did; we did not need to do this. If that liner had gotten a hole, it would have cost big bucks."

To O’Brien’s point, he explained that the township gave the developer clearance for the revised plan in exchange for Martin agreeing to maintain the fund for three years past the sale of the last lot.

"If so, we made a mistake," said Stauffer. "But if we had not done that, you would have nothing. I think by rights, if Martin can show that he has spent $50,000 of his money in the term, he needs to show that."

Township manager Steve Sawyer weighed in:

"Had a fund been established in 2005, the resolution states that he is responsible to have $50,000 in it in 2012, but the association is to replenish any funds used between 2005 and 2012 to make sure it stays at the $50,000 minimum," stated Sawyer. "I agree wholeheartedly that it should have been set up per the 2005 agreement."

While Martin was not present, Stauffer said he had promised in a letter to the supervisors that he would search records and provide invoices or documentation of repair to sinkholes. Both Stauffer and O’Brien agreed they would prefer to work this out among the three parties if possible.

In the end, it seems to be a disagreement over the 2005 agreement. O’Brien contends the intent of the agreement was that on the date when the developer could walk away in 2012, the account was to be at $50,000. Stauffer feels that it should be viewed as an initial gift of $50,000. And the homeowners feel it was to be maintained at $50,000 at the end.

Supervisor Tyler Zerbe assured O’Brien the township staff and solicitor together would keep working on the matter.

"You will hear from us in the near future," promised Zerbe. "How soon? I’m not sure. That depends on how fast the wheels spin, and they are spinning." More EPHRATA TWP., page A6

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