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Henderson County orders draw on $1.7 million letter of credit for Lake Townes at Lake Palestine
Summary
Commissioners voted unanimously to draw on an irrevocable letter of credit tied to the Lake Townes at Lake Palestine final plat after finding no visible road construction and noting the letter of credit will expire before the construction deadline.
Henderson County Commissioners Court voted unanimously to approve a court order to draw on an irrevocable letter of credit tied to the Lake Townes at Lake Palestine development, placing the funds into the county-registry process for possible future use on unfinished road work. The vote concluded an extended discussion about unsatisfied infrastructure requirements for the subdivision.
The resolution affects a letter of credit the court recorded at roughly $1,700,000 as security for roads and streets in the Lake Townes final plat. County staff told the court the developer had secured a separate construction performance bond for drainage and utilities but that no road or base construction was evident in recent site inspections. Staff noted the letter of credit expires about eight days before the one-year construction deadline tied to the plat approval.
County staff outlined the options available to the court, including doing nothing, drawing on the letter of credit now and holding the funds in trust or court registry pending inspection and a 60-day cure period under the county's subdivision rules, or pursuing later litigation. The court's adopted motion directs county staff to draw on the letter of credit by site draft and deposit the funds with the court registry while related litigation and lien actions continue.
The discussion also flagged legal uncertainty. Staff cited the Texas Uniform Commercial Code's treatment of anticipatory repudiation and an attorney general opinion interpreting county authority under provisions of the Local Government Code (chapter 232) but said implementation guidance is limited. Commissioners repeatedly raised the risk that the $1.7 million may not fully cover the eventual cost to complete the roads if bids and engineering show higher costs, and they discussed procurement and bidding steps that would be required if the county used the funds to contract for construction.
The court recorded the motion "to approve the order to draw on the irrevocable letter of credit by site draft" and voted unanimously to approve it. The court also instructed staff to hold the funds in the registry of the court while pending litigation between the developer and lender proceeds and while the county determines next steps for inspection, engineering, and potential bidding.
