Construction Exceeds Builder’s Debt Collection by City of Nolensville | Nolensville homepage
Performance bonds paint a picture in Nolensville of significant growth underway, although some contractors have an outstanding debt to the city government for their projects.
The Planning Commission launched several bail actions this month. The vast majority of these actions concerned the extension of different types of guarantees for 10 ongoing projects. Of those 10, there were eight extended performance bonds.
Since performance bonds are directly correlated to ongoing development projects, they are an excellent indicator of the city’s growth. The city has seen steady development recently, especially since the transition to a commission charter like Brentwood or Mt. Juliet as opposed to city council charter like Franklin or Spring Hill from which it originated. Mayor Derek Adams would attribute the most recent rise of local growth to this change, adding that since the change, “developers have started coming to us with these really big projects.”
However, as the city carries out these extensions, there are other extensions already carried out whose statutes inspire less confidence.
“I’ll tell you about the extensions that I notice in the files all over the timelines: some we collect, and some we don’t get – it seems – successful collection,” said Brent Schultz, director planning in Nolensville,” but Janice [Lupo], our new administrative assistant, is there to take care of people, to make them pay their extension fees. We have letters we write, and his emails are getting their attention. I also think that the Planning Commission’s emphasis on this catches people’s attention, and I also appreciate it because they are reaching out to us.
Lupo took up his new duties almost exactly a month ago.
The city has extended three Telfair construction obligations through Aug. 9, marking two additional months for each and collectively totaling more than $700,000. The largest of three extended bonds Telfair’s investment increases added $355,760.
The longest extensions added a year to two projects – one for Kingsbarns and the addition of Burkitt Village. The first added $303,246. Other developments that also saw performance bond extensions were the Providence Baptist Church Landscape Project, the Nolensville Daycare Landscape Project, and the Burkitt Commons Landscape Project. Each of these extensions added four months to their respective investments.
Telfair is an upscale neighborhood that entered its third phase of development just before the pandemic hit. DeFatta Custom Homes, the Telfair builder, is one of many developers to recently set up shop near Nolensville High School. Homes there range from about $675,000 to $800,000.
Telfair represents the types of projects that progress as the city hopes, where contractors comply with city requests in a timely manner. In the case of Telfair, residual funds beyond the scope of the bond refund are pooled for the homeowners association to address any outstanding issues after construction is complete, which goes beyond this which is requested.
Performance bonds are essentially the means by which governments protect taxpayers’ money when the city, county or state in question invests those dollars in development projects – usually road building or real estate development. The government will usually ask the bank or a private company to issue the bond to guarantee that the project will be completed with the loan from the city. If the contractor did not meet all of its obligations, the city would post a claim – similar to an insurance claim – and the issuer would pay it and then seek reimbursement from the contractor after the fact.
Jerome Powell, Chairman of the Federal Reserve, admitted during the Senate Banking Committee hearing on Wednesday, June 22 that continuing to raise interest rates in response to inflation could trigger an economic recession.
He argued that a worse alternative would be to let inflation run unchecked, and even if gas and grocery prices — the key indicators of economic performance on which Sen. Elizabeth Warren (D-Mass .) Grilled Powell – remain uncomfortably high, inflation bodes well for municipal bonds.
Bond prices fall as interest rates rise, so the more the Fed raises interest rates, the better off municipal bond investors are. In other words, 2022 is a great time for some investors to look at municipal bond opportunities. It also makes it easier for cities to get bonds issued for those they contract on municipal projects.