SEQUIM –– City officials have approved an offer to retrieve money held in a bond for maintenance of decaying streets in the stunted Solana housing development.

The City Council in a unanimous vote following an executive session Monday directed City Attorney Craig Ritchie to forward a deal that would repair subpar streets in the Solano development owned by Sequim Highlands.

It also would put the city in the role of overseeing a six-figure trust fund for future repair of streets in the neighborhood that sits on a hillside above Simdars Road east of Bell Hill.

“This will really be a big help for the residents up there who use those roads and have to avoid chuckholes,” Ritchie said.

Sequim Highlands in March of 2006 filed a security bond of $1,500,707 as an insurance policy to ensure a reservoir, water system and roads in the development were built to city standards, Ritchie said.

That agreement allowed the company to begin listing property in its developing Solana subdivision.

Cities occasionally accept bonds from developers to allow them to finalize plat approvals and begin selling lots, City Manager Steve Burkett said.

James Bay, the city’s former public works director, approved the release of $1,200,566 back to Sequim Highlands in March 2008.

Because of unfinished roadwork, $300,141 remained in the bond.

The city’s present offer calls for Developers Surety and Indemnity Co. of Irvine, Calif., to release $200,000 from the leftover surety bond, with an estimated $59,435 of that being used by the bond company to repair some streets and the rest going to the city.

The cost estimate was from Dependable Contracting Services, Lake Stevens.

Some of the substandard or even unfinished streets were given a clear inspection by city employees, which is why the bond company has asked for the remaining $100,000 in the bond, Ritchie said.

“Somehow, it had slipped by us, and the road had changed from what was in the design,” Ritchie said.

Burkett said officials who approved the streets are no longer with the city.

“This is a good example of what happens when you have a lot of development going on and it’s not well-regulated or inspected,” Burkett said.

Ritchie said that if the bond company agrees to the deal, both sides will ask Clallam County Superior Court if it has any objections to the bond funds being released.

Ideally, he said, the funds would be released soon in order to have repairs made during the summer construction season.

The Solana lots began to hit the real estate market in 2007, just when the local housing market began its decline.

“They went just when everybody else did,” Ritchie said.

In 2008, the Clallam County Assessor’s Office valued most of the lots on Solana Parkway upwards of $200,000, with the hilltop “estate lots” on Flying Cloud Street valued in the $250,000 neighborhood.

Last year, many of those same properties were assessed at less than half that value.

Sequim Highlands is owned by Jerrold Hann of Whidbey Island, John Cannon of Kent and Richard Hanson of Lake Forest Park.

Calls requesting comment from Hann and Cannon were not returned.

Sequim-Dungeness Valley Editor Joe Smillie can be reached at 360-681-2390, ext. 5052, or at jsmillie@peninsuladailynews.com.