Oak Creek — When the housing market peaked in 2002, the city was adding 6.5 miles of residential roads in subdivisions per year. It hasn't added one mile since 2006.
The housing crisis that began in the mid-2000s slowed growth in developing subdivisions and stymied the city's efforts to have developers finish infrastructure work like road construction.
In 2011, there were 11 subdivisions in need of infrastructure work in Oak Creek, and today four still require work. Belmont Grove is one of four, and the city voted Oct. 15 to sue its developer, Dillon Group LLC, for the $16,800 needed to complete improvements in the 12-lot subdivision.
The total cost of finishing the infrastructure there is $40,500, but the developer has $23,700 remaining in escrow that will be put toward the project.
City Attorney Lawrence Haskin said the city had been trying to contact Dillon Group since July 31 but has not heard back, prompting the lawsuit.
Each of the four unfinished subdivisions has its own reason for being incomplete, and the city is taking different steps to finish each. The city is looking to recoup $130,000 from Belmont Grove and Willow Creek through litigation and special assessment respectively and, according to city development engineer Brian Johnston, is working with the other two developers on payment.
The developer of Kender Lane, a three-lot unfinished subdivision, has retired and can no longer get a loan to fix the roadway there. The city is levying a special assessment on the vacant lots to pay for completion of the road.
The city also is levying an assessment on vacant lots to pay for infrastructure work in the Willow Creek subdivision and is awaiting a response from the developer of Emerald Meadows. There are 11 unsold lots in the Willow Creek subdivision, which will either be sold or put on the tax roll to pay for the infrastructure work.
Housing bubble blues
Before the housing crisis, a developer was required to finish infrastructure work after the subdivision was 75 percent occupied or when instructed by the city engineer. The lack of homebuying led to many subdivisions never reaching 75 percent occupancy. Since the developers weren't required to finish the work and since they weren't making money due to the economy, many roads sat unfinished.
Completing the work would mean adding a top layer of asphalt, installing curb and gutter and finishing streetscaping. The unfinished roads have been subjected to Wisconsin weather and many now need extra repair.
The Willow Creek subdivision, for example, was estimated to need $24,000 in escrow to complete street work when it was created in the mid-2000s. Since then, the cost of the project has risen to $150,000 due to road deterioration. Many roads never received their top layers of asphalt and now need to be completely ripped up and replaced.
"The longer they sit out there, the more repairs are needed," Johnston said.
Lots in some subdivisions, Johnston said, were selling for $110,000 to $120,000 in the mid-2000s. Recently, lots have been selling for about $50,000. Some developers have gone bankrupt, complicating the city's pursuit of roadway improvements.
Johnston added that although the city and developers have hit many roadblocks, the majority of the developers have worked with the city to finish infrastructure work.
Nearby communities have run into the same problems as Oak Creek, Johnston said. Caledonia has used special assessments to pay for infrastructure work. Muskego tried a special assessment but residents opposed it. Franklin, too, is working with developers to finish projects.
While nothing has been passed yet, Johnston said, the city likely will remove the 75 percent occupancy requirement. Instead, they would require more in escrow and re-evaluate the amount needed in escrow every three years.
The steps are needed because, for the first time since 2006, there is potential residential development in the city, Johnston said.
Three developers have approached the city with serious proposals for residential development, he said. The second phase of the Glen Crossing subdivision, has already been approved by the Plan Commission. The other two are still in the planning phase.
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