Developer set up escrow account with supervisors
Sunny Hill Farms developer Rick Bjorkman appeared at the Mahoning Township supervisors meeting last night to try to negotiate an amount for the two year letter of credit for the extension to his development agreement, but actually settled upon setting up an escrow account for one year instead for $150,000. The supervisors agreed as well on a 5-0 vote. A major part of the negotiation was the actual amount of the escrow that should be held by supervisors as Bjorkman disputed the township engineer's estimate for the improvements.
"If I went and got two estimates and they are under the $124,500 amount which is the number your engineer [T&M Associates], would you accept them?" Bjorkman inquired.
Solicitor Tom Nanovic said Bjorkman would need to convince T&M the amount should be reduced. He told Bjorkman the amount is based on the engineer's estimate and the supervisors are allowed to add 10% to that amount for each year of the agreement making the total letter of credit $165,709 for two years. He explained the current value is actually $136950 and that $124,500 was the original amount that was already increased. The increase is necessary for covering escalating costs.
Nanovic suggested that perhaps Bjorkman was trying to do too much and might be more successful at providing the escrow for one year instead instead of committing to a two year amount. He pointed out that as improvements would be made money would be released from that fund which would lower it.
Bjorkman repeated that he believed the amount for the infrastructure improvements was too high and took exception to T&M's charges for service. He told supervisors Tirpak [Carbon Engineering] did an estimate for his development originally in 2010 and charged him around $160 for the review of the plans. "Your engineer didn't do anywhere near the work he did and charged me $1500 for it. I think your engineer is robbing you and this area," Bjorkman said.
Chairperson John Wieczorek asked Bjorkman for documentation that showed T&M was unfair. Bjorkman said he had it. "If I can get an engineer to provide a lower estimate would you accept it?"
Nanovic said he would have to convince the township engineer and not the board. "You have to convince our engineer the amount should be lower."
Bjorkman said he would rather give the money to the board for an escrow account than deal with the bank again. "Each time I go to the bank they charge me $4,500. I would rather give the money directly to you and not have to come back again." Nanovic said he could but the account would need to be set up before the expiration of the letter on June 1st.
He also questioned how the money is stored and Supervisor Bruce Steigerwalt showed him the page from the Treasurer's Report that contained escrow accounts. "Each one is in its own account. It's not mixed with township moneys. It will be as secure as the bank is."
After some more discussion over the amount of the letter, Steigerwalt said he would be amenable to requiring an escrow in the amount of $150,000 for one year. Bjorkman was agreeable to the amount as well as reducing the extension to one year for now. The board voted 5-0 to approve it and Bjorkman said he would discuss it with his partner and if it was okay, they would provide the escrow by the deadline of May 24.