From: The Daytona Beach News Journal, Section B, FLAGLER, Bunnell, Flagler Beach, Palm Coast, Daytona Beach, Florida,
August 20, 1975, pp. 1B-2B.
**'Palm Coast Predicament'
ITT Performance Bonds Received Routine OK
Palm Coast - Since December, 1969 when the ITT Community Development Corp. (CDC) recorded the
first plats for this giant development, the Flagler County Commission routinely has approved a total of 112 performance bonds
pledging more than $83 Million in roads and drains for some 110,000 lots according to courthouse records examined by New-Journal
In addition, the commission routinely has approved 117 performance bonds from the Atlantis Development
Corp. a CDC subsidiary, pledging better than $95 million to render adequate potable water supply service and sewers to all
These bonds, required of developers everywhere to guarantee completion of promised projects,
recently have come under critical scrutiny of investigators probing alleged corruption of contractors and company officials
The criticism centers on two areas: The utter lack of surety backing all but one of the bonds,
and the timing of their approval shortly before a July 1973 state deadline requiring that new developoments undergo an elaborate
and expersive environmental screening process.
The first problem area concerns the basic purpose ostensibly served by requiring performance
bonds: To ensure that a developer will actually make promised improvements.
Each of the 229 bonds, stapled to a blue cover sheets and carefully embossed with a corporate
seal, state that the CDC or Atantis are 'held and firmly bound' for sums ranging up to $3.4 million for completion of each
of the 89 Palm Coast subdivision units.
However, virtually none of the nearly $180 million promised in the bonds is in fact being held
in escrow or backed by a surety bonding.company, an examination of the bonds by News-Journal reporters has shown.
"Legally, thse bonds are only as good as the company," said Flagler County Atty. XXXX XXXXXXXX
when reporters asked about the bonds, he declined to speculate on what would happen if Palm Coast runs into financial
In fact, only one of the smallest bonds for $61,152 is now backed by surety, a guarantee from
a neutral third party that the money would be available, in this case for six streets in Palm Coast section 3B.
"A Surety is someone or something to fall back on if the principal fails to meet the obligation',
explained XXXXXXXX. "if the principal fails and there is no surety, well, you follow your own line of reasoning."
XXXXXXXX was approinted County Attorney in May shortly after X.X.XXXX , who had been county attorney
during most of the period the bonds were being approved, resigned for health reasons April 30.
The one bond backed by surety is a result of XXXXXXXX'X skepticism about the earlier bonds. When
CDC officials sought to modify an April, 1970 bond he insisted on a surety. On July 17, the Flagler County Commission approved
the modification, backed by surety from Fireman's Insurance Co. of Newark, N.J.
"I wanted to get more security for my client than heretofore existed," XXXXXXXXX explained simply.
XXXX , XXXXXXXX'X predecessor, apparently had tried in the beginning at least, to get similar
surety on the CDC bonds. A new story in September, 1971 of the commission's acceptance of three bonds totaling $711,645 noted
that XXXX "repeated his position that any performance bonds should be backed by a surety company." The commission
, however, overfuled him.
When asked if he ever changed his mind during the three and one half years when CDC and Atlantis
continued to bring bonds without surety to the commission for approval, XXXX firmly stated: "I never changed my mind.".
"I pointed out to the commission that the bonds were't backed by and surety and I made no further
comments. It was none of my business, I don't approve bonds," said XXXXXX . :"I pointed it out to my clients and my job was
XXXXXX said the commission already had set a precedent of approving such bonds before he
became County Attorney in mid-1971. "I didn't push my point of view," he said.
The County Attorney in 1969 when County Commissioners first were faced with and accepted performance
bonds without surety was XXXXXXXX XXXXXXX, now in private practice in Bunnell.
Although in a position to shed some light on the precedent referred to by XXXXXX, of accepting
performance bonds without surety, XXXXXX declined to comment when asked about the first bonds by a New-Journal
"I dont' think I want to become insolved," XXXXXX said Monday, adding he would not
comment unless requested to by an official body, perhaps the County Commission.
XXXXX XXXXXXX , now chairman of the Flagler County Commission, recalled last week he objected
to the nonsurety performance bonds all along, 'but I just never got anywhere."
"I questioned it when we were working up the subdivision regulations, might have been in Devember,
'71'," XXXXXX said, "And I had a runin with XXXX XXXXXXXr (CDC) Project Director. XXXXX
XXXXX and I guess I raised enough hell by myself that they finally came down here with a confidential financial
statement proving what the company's net worth was at the time. They had enough money then, but, they also didn't have very
many bonds posted then."
In Devember, 1971, CDC had issued less than $12 million in promises, about seven per cent of
what was to come, according to courthouse records.
The concern of XXXXXX and XXXXXX about surety for performance bonds is shared
by other governemental bodies, the City of Daytona Beach included.
Daytona Beach subdivision regulations insist that performance bonds be executed by surety companies
approved by the U.S. Treasury Dept. for writing bonds on federal project. The city will also accept a cashier's check or cash
for 100 per cent of the construction cost, to be held in excrow until completion.
XXXXXX XXXX, the Palm Coast public relations director, declined to answer questions from News-Journal
reporters last week as to why CDC and Atlantis didn't offer surety for the promises.
Meanwhile, reacting to earlier stories in this series, XXXXXX XXXXXXXX, attorney for contractor
X.X.XXXXX, pointed out Tuesday that his client is not a defendant in any suit by CDC. XXXXXXis named, XXXXXXXX affirmed, as
a coconspirator in three civil suits filed against XXXX XXXXXX, former CDC chief engineer; XXXXXXX XXXXXX Co.;
and XXXXXX XXXXX, Inc. which allege kickbacks and pricefixing
**Part seven of this series will appear in Today's Evening News. The Concluding part will appear
in Thursday's Morning Journal.
Sixth in a series of eight articles
By Stephen Doig and Ronald Williamson, , New-Jorrnal Staff Writers.
FROM: The Daytona Beach News Journal, Morning Journal, FLAGLER Bunnell, Flagler Beach,
Palm Coast B, Daytona Beach, Florida , Wednesday, August 20, 1975 pp. 1B-2B.