Town to go after bond for Birch Hill project
Bankrupt builder left Rt. 9 development largely unfinished
BY JESSICA SMITH
Staff Writer

OLD BRIDGE - Those involved in various aspects of Kara Homes' bankruptcy proceedings are discovering that teamwork may prove the best way to solve the problems left behind by the developer.

"We're all in the same boat," Old Bridge Mayor Jim Phillips said. "The bank, the homeowners and the town have to work together to make this right."

At a meeting May 15, members of the Horizons at Birch Hill homeowners association met with representatives of Amboy National Bank, along with Phillips and Township Council President Pat Gillespie to discuss unresolved issues.

"I think it went pretty well," Gillespie said. "This bankruptcy process is very cumbersome, it's very time consuming."

Since Kara Homes of East Brunswick declared bankruptcy in October, the matter has been in the federal court system.

Old Bridge officials found it necessary to hire special counsel to deal with the proceedings, contracting legal services with Capehardt and Scratchard. Both the bank and the homeowners association have also secured legal representation, Phillips said.

Residents of Horizon at Birch Hill, on Route 9 south about a quarter-mile south of Texas Road, have been left in the lurch, with key elements missing from the development. Roads and curbing remain unfinished, and residents are left with only a temporary sewage pumping station. Common areas such as the pool and clubhouse have not been completed, with the empty pool causing a safety hazard.

"These are not cosmetic problems, these are structural problems," Phillips said. "I still think when it's built, it will be magnificent."

At the Horizons development, an approval was originally granted to build 253 adult homes. There are now 81 that have been built and are being occupied. The remaining homes are in various stages of construction, with some only consisting of the framework, and others yet to be started.

It has yet to be determined what will happen with the remainder of the homes, although Amboy National Bank made a statement that it would take the steps necessary to try to take possession of the project and turn it over to a builder who would complete the work.

Phillips announced that he plans to go after the performance bonds, totaling more than $4 million, that were deposited with Old Bridge by Kara Homes. The bonds are used to ensure that a developer lives up to its promises and builds to specifications agreed to with the municipality.

But because of the numerous financial obligations left unmet by Kara Homes, there will be stiff competition in the courts to obtain the bond money, according to Phillips. If secured by the town, the bonds would only cover major infrastructure work, and not the unfinished elements of individual homes.

"Nothing in the bankruptcy court moves quickly," Gillespie said. "You can't count on something having a delivery date."

In the township's efforts to remedy the situation and to ensure public safety, they absorbed the costs of removing large storage bins from the development and erected fencing around the unfinished swimming pool. Snow plowing and road clearing has also been paid for by the township.

Residents at Bridgepointe, another Kara Homes development in Old Bridge, have also been left with unfulfilled promises. While the housing and common areas have been built to completion at the development off Laurence Parkway, improvements with landscaping and sidewalks have not been addressed. The development's homeowners association is fighting to ensure that the developer will not get its performance bond returned until the work is finished.

"Bridgepointe has legitimate concerns, but at least their roads are built," Phillips said.

Phillips lauded the efforts of Horizons homeowners association President Frank Ramson, saying he is dealing with the issue with grace and aplomb.

"I give him all the credit in the world," Phillips said. "I thought it was a meeting that was very productive."