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By CINDY SIMPSON
Harriman City Attorney Harold Balcom believes the city could be owed between $1.7 million and $2.2 million for public monies spent on private development at Pinnacle Pointe.
Harriman officials, in turn, plan moving forward with litigation after last month’s failed mediation between Pinnacle Pointe developers and city officials.
“To say [the mediation] was fruitless would be the beginning of everything,” Balcom told Harriman City Council during its regular meeting Tuesday.
The question of who owes whom between the developers and the city will next be addressed in a courtroom.
The city first began investigating the issue of city funds being spent on private development after a state audit found the city was still owed roughly $234,000 from the developers, primarily Jerry Duncan and Steve Kirkham, for public monies spent on the development.
“The numbers are the tip of the iceberg,” Balcom said.
City officials claim their engineering studies show the developers owe significantly more than what the state found.
The developers, however, provided an accounting report they said shows the city owes them $273,000.
Prestige attorney Jim Scott now said the developers’ findings may show the city owes in excess of $1 million.
A complaint or counter complaint will likely be filed, he said.
“It looks like it is going to court,” Scott said. “We think we are in the right — we think we have been for a long time.”
The developers will have their own experts to refute what the city says, Scott added.
If a court finds in favor of what city officials believe is true from their studies, the developers may have been much better off paying the estimated amount the state says is owed, foregoing further study into the numbers.
Balcom said the city spent $3.2 million on the project. With the addition of capital debt administration and utilities, that amount could be $3.5 million, he added.
Though the city spent $3.2 million, officials believe they city’s portion for infrastructure is less, about $1.2 million.
Balcom said they could also be paid back for other costs.
“We paid interest on money we shouldn’t have had to spend on the project,” he said.
Balcom said the developers wanted the city to purchase the roads during the mediation.
That isn’t how it works, however, he said.
“When you dedicate it and we come in and create it, we own the road,” Balcom said. “We don’t own the land under the road.”
He added that the judge “told them in no uncertain terms there is no judge that is going to hear you on that,” Balcom said.
Harriman City Treasurer Charles Kerley explained why the state didn’t find the same thing city officials did.
He said the state and the city didn’t have access to the bid, which was handled by Site Inc., an outside engineering company who managed the project.
City officials received access to that information due to the filing of a lawsuit by Brian Mullins, an excavator who was the lowest bidder on the project.
It appears, according to Kerley, values were changed by someone after the bid was awarded.
A document submitted by Mullins shows the change, the original marked-through amount, to raise the infrastructure portion.
Balcom said the city will pursue litigation against D-K Properties II, LLC, the company that transferred the land to Prestige for development. Prestige, in essence, is just a shell.
Site Inc. may also be sued.
Balcom believes the cost of litigation could range from $30,000 to $35,000.