Unfinished Peninsula clubhouse raises council ire

Sussex officials to withhold building permits if new deadline not met
Sussex County officials have set firm conditions on Wells Fargo to complete the clubhouse at the Peninsula. BY NICK ROTH
August 22, 2014

A line has been drawn in the sands along the shoreline of Indian River Bay.

For more than a decade a debate has simmered among homeowners, owners of the community and county officials over construction of the clubhouse at the Peninsula at Long Neck.

Complicating matters, the community has gone through receivership and foreclosure. Redus Peninsula Millsboro LLC, a subsidiary of Wells Fargo Bank, owns the community and is actively marketing it, expecting a sale to be completed at the end of the year.

Wells Fargo has asked Sussex County officials for a time extension to allow a new owner to start construction of a clubhouse no later than Oct. 1, 2015, with completion a year later.

The bank received approval of its request during the Aug. 19 Sussex County Council meeting with strict conditions. The bank – or new owner – must meet deadlines or face delays in obtaining building permits for new construction.

The clubhouse was supposed to have been completed by March based on a time extension in 2010, the second extension over the past six years,.

Sussex County's planning and zoning commissioners have now said enough is enough. Sussex County Council agreed.

At its July 24 meeting, the planning and zoning commission expressed its dismay the clubhouse remains unfinished and recommended county council adopt a final ultimatum: No more time extensions, with completion of the clubhouse by Dec. 1, 2016. At its Aug. 19 meeting, county council voted 5-0 to accept planning and zoning commission's recommendation, which includes no more time extensions.

The owner will have 60 days to provide to the county with an updated clubhouse sketch or concept plan that contains an estimated square footage of the clubhouse as well as an estimated cost per square foot. The owner must consult with and obtain approval of the plan from the homeowners association.

Council added the following condition to the approval: The clubhouse cannot be less than 25,000 finished square feet and a total 32,000 total square feet – with a value of $11.47 million – without first obtaining approval from the homeowners association.

The owner will have 30 days after approval of the concept or sketch plan to submit a bond or letter of credit of 125 percent of the estimated cost to construct the clubhouse. No building permits will be issued if a new bond or letter of credit is not in place.

There is disagreement over the amount of the bond because there is no definite estimate of the clubhouse cost. Jim Fuqua, the owner's attorney, said the current bond of $1.37 million plus another $3 million held in escrow ensures the clubhouse will be built.

Homeowners and county officials are talking about a clubhouse costing from $11 million to $15 million, which would require a bond of $13.7 million to $18.7 million.

Commission, council, homeowners agree

“We are disgusted with the time delays,” said Commissioner Mike Johnson. “If I was a resident, I would be up in arms.”

“Requiring a bond is not a penalty,” said Commission Chairman Bob Wheatley. “It's the only way we have to protect people who have bought homes there.”

“This has dragged on for 12 years, and that's unacceptable,” said Councilman Vance Phillips, R-Laurel. “We need to put very strict limitations and provisions that will force Wells Fargo to begin construction of the clubhouse.”

Homeowners have endorsed planning and zoning's and council's recommendations. “Homeowners should have a direct say in the size, design and cost of the clubhouse,” said John Gee, chairman of the Peninsula Homeowners Action Committee.

He said the 60-day timetable is workable because Wells Fargo and homeowners have already done a study for an $11 million, 32,000-square-foot clubhouse. “These conditions provide certainty we have not had in the past,” Gee said.

Fuqua said the recommendations are well intended but are not in the best interest of Wells Fargo or the future developer. Fuqua said it would be more prudent for the new developer to design the clubhouse based on its vision of the community. He said requiring a concept plan and estimating costs is a waste time and money. “Granting the time extension is a simpler way to resolve this issue,” Fuqua said during previous testimony.

The county previously granted extensions for clubhouse construction in 2008 and 2010. Fuqua said an extended foreclosure process – that included litigation – prevented Wells Fargo from complying with the 2010 time extension.

The original condition required that amenities be completed within two years of issuance of the first building permit. The first residents moved into the community in August 2005.

The Peninsula, located near Long Neck along Indian River Bay, was approved in 2002 with home sales starting in 2004. The 1,400-lot community contains $48 million in amenities, including 10 miles of trails, a fitness center, restaurant, Jack Nicklaus signature golf course, pro shop, indoor and outdoor pools and spas, eight tennis courts, other sports courts, community garden, fishing pier and wave pool.