Kingman Mayor: City wants to keep developers providing cash assurances

Hualapai Foothill Estates is being developed by Angle Homes along Cheyenne Avenue and Cherokee Street as photographed Friday.

Photo by JC Amberlyn.

Hualapai Foothill Estates is being developed by Angle Homes along Cheyenne Avenue and Cherokee Street as photographed Friday.

KINGMAN – At Tuesday’s City Council meeting, a local subdivision developer asked the city to consider to bringing back the ordinance that allowed escrow agreements as a form of assurance for improvements, rather than the more costly bond process.

Doug Angle, CEO of Angle Homes, Inc. spoke at the meeting about the company’s request.

Kingman Mayor Monica Gates said in an interview Thursday that the council discussed the request and the consensus was to keep the ordinance passed in 2014 that eliminates escrow as a form of assurance.

Both the staff and Angle Homes brought the matter before council to find out if there was any interest in bringing back this form of assurance before the city invested time and money in preparing a formal request to go before the Planning and Zoning Commission, the mayor said.

City ordinance No. 1773 eliminated escrow agreements as a form of assurance because “there were concerns that there is no cash associated with this particular assurance method, and therefore no means for the city to pay for uncompleted improvements should a developer fail to perform construction,” as stated on the city council agenda.

Mayor Gates said a number of cities and towns during the recession had to use taxpayer money to pay for the completion of improvements when developers were forced to abandon subdivisions.

However, the city of Kingman was “very fortunate” and “did not have much of a burden” during the recession, she added. Mohave County, on the other hand, was not so fortunate.

“The city did not want to be in the position of guaranteeing subdivision improvements in case a project was abandoned,” the mayor said about the recent council discussion.

Gates said the city “wants to treat every developer the same” and to change the ordinance now would favor one and not the other.

Tyler Angle, president of Angle Homes, said the city used to allow escrow agreements as a form of assurance for improvements for many years.

Angle said the company made the request because it is “easier to put in improvements without (having to acquire) additional financial backing.”

The current ordinance requires the developer to pay for improvements and put up another 130 percent of the cost of the improvements as cash assurance on top of that, he said.

“Banks don’t give letters of credit or performance bonds for free,” he said. “Banks are taking a risk if the developer does not perform” and they charge a fee for that risk.

Ultimately, this cost is passed on to the buyer of the residential property, he added.

He said Flagstaff, Lake Havasu City, Bullhead City, the state and Mohave County allow escrow agreements as a form of assurance.

Angle Homes has three subdivisions in the Kingman area and some additional subdivisions “in the works” for the future, he said.

“By the city not allowing escrow agreements, it could become a problem by making it a little bit more difficult for the building of subdivisions in the future,” Angle said.