Falling Waters legal issues won’t be decided until April
By Amy Lavalley Post-Tribune correspondent February 22, 2013 4:59PM
Updated: March 24, 2013 6:10AM
VALPARAISO — Members of the Falling Waters Conservancy District board and residents of the financially troubled subdivision will have to wait until April to find out if they are free of receivership and its associated legal fees, money they say would be better spent paying off the district’s massive debt.
Porter Circuit Court Judge Pro Tem David Matsey continued a hearing on the receivership after about two hours of testimony Friday and rescheduled the matter for April 19.
The hearing is yet another unresolved issue for Falling Waters subdivision, located just east of Lakes of the Four Seasons, which has been through a litany of legal woes.
Those include mounting fees for homeowners of the largely unfinished subdivision, and a Chapter 11 bankruptcy filing by developer – and former conservancy district board member — Tony Floramo, which put a halt to an October 2010 county tax sale of the 252 lots that he still owned.
According to a State Board of Accounts report on the conservancy district released Feb. 14, the district amassed almost $900,000 in legal and other fees over the past few years, paid to its receiver and to legal counsel for U.S. Bank. The bank is trustee for Allstate, which owns the $9.9 million bond used to offer sewer and water service to the homeowners. The bond is in default.
“We want the receivership fees paid back to the bond to get out of default,” said Nathan Bis, attorney for the conservancy district.
He argued that the board has been operating the conservancy district and didn’t need a receiver to act on its behalf.
James Federoff, who served as the district’s receiver through last year and was appointed to that position by the Circuit Court in February 2010, said the district can manage its operations and there is no need to retain a receiver.
He was asked last year to step down by Allstate, and another receiver, Craig Wrathell of Fort Lauderdale, Fla., was appointed in the meantime.
Mark Baeverstad, attorney for U.S. Bank, said the receivership was agreed upon during mediation in bankruptcy court, with the stipulation that a receiver would remain in place for the district until the bond was paid off and no longer in default, and a reserve fund also had been established for the district, none of which have been accomplished.
“This is essentially an effort to undermine the terms established in mediation,” Baeverstad said.