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County authorizes lawsuit to collect on letter of credit for incomplete Heron Lake road
Summary
DeKalb County commissioners voted to authorize a lawsuit seeking to collect on a letter of credit issued by Wayne Asphalt after Heron Lake Development LLC went bankrupt; commissioners said the letter backed completion of a road that remains unfinished and affects local homeowners.
DeKalb County commissioners voted to authorize filing suit to collect on a letter of credit tied to an incomplete road in the Heron Lake Development after the developer entered bankruptcy.
County legal staff told commissioners Wayne Asphalt issued the letter of credit guaranteeing road completion and that the bankruptcy of the developer does not, in their view, absolve Wayne Asphalt of the guarantee. A staff member said the county relied on the letter when it approved the development and that the county therefore has standing to call it. “We have a letter of credit for this purpose,” the staff member said, arguing the county should pursue collection to finish the road.
Commissioners discussed homeowner impacts if the county declines to pursue the bond, noting residents already live in the subdivision and rely on the road for ingress and egress. One commissioner said denying acceptance of the road would leave homeowners with a privately owned, unfinished road they would effectively shoulder. Commissioners also noted the practical limits of suing a bankrupt developer and that a successful claim on the letter of credit could be the most direct way to secure funds to complete the surface course and curb repairs.
After debate, a commissioner moved to authorize county counsel to file a complaint to collect on the letter of credit; another commissioner seconded the motion. The board voted to carry the motion and directed staff to prepare the complaint and proceed with litigation.
The action directs county counsel to prepare legal filing(s) to pursue remedies under the letter-of-credit guarantee. Staff said the letter of credit expires in May, creating a practical deadline for suit if the county seeks to preserve claim rights under that instrument. The county did not disclose a litigation timetable or estimated recovery amount during the meeting.
Next steps: county counsel will prepare the complaint and return to the board with procedural updates; the board asked staff to track timing tied to the letter of credit’s expiration.
