Phillips Estates - Public Information

In August of 2006, the Planning Commission approved the preliminary plan for a subdivision of 64+/- lots on 20 acres. The approval contained 13 conditions of approval, one of which required storm drainage to be conducted to Mill Creek. In April of 2009, a Subdivision Plat for Phase 1 was recorded for the first 20 lots. In 2013, plans for Phase 2 were submitted to the City, showing a storm water retention pond with no discharge outlet as a temporary measure until Phase 3 was constructed. The City Engineer determined the plans were incomplete. In August of 2013, JCNW Family LLC started construction of Phase II, even though the construction plans had not been approved by City nor had the City received a performance bond. In April of 2014, the City approved the Plat for Phase 2 lots. In late spring 2014, the City became concerned that the stormwater retention pond was not functioning as designed. After numerous discussions with JCNW Family LLC regarding the stormwater retention pond and the applicant failing to document the pond’s proper functioning, in October 2014 the City issued a stop work order. In May of 2015, the City filed for arbitration, in accordance with the Development Agreement.

Summary of Outcome of Arbitration: City of Stayton vs. JCNW Family LLC

1. Arbitrator confirmed all of the City's seven claims and ruled that JCNW Family LLC was in breach of sections, 1, 3, and 10 of the Development Agreement between the parties.
2. The Arbitrator denied all of JCNW Family LLC's counterclaims.
3. The Arbitrator upheld the validity of the issuance of the Stop Work Order as "justified considering the circumstances."
4. The Arbitrator ruled the stormwater facility was not properly engineered and was not build to standards.
5. The Arbitrator ruled the stormwater facility does not function as designed to have zero discharge.
6. The Arbitrator ordered JCNW Family LLC to reimburse the City for over $280,000 in legal fees

Bill Martinak, owner and principle of JCNW Family, LLC, stated in his deposition that he discussed with his engineer, Steve Ward of WesTech Engineering, that the pond was not performing at zero discharge following the first substantial rainfall following construction in 2013 (deposition page 107, lines 1 - 7). Steve Ward confirmed that he had come to the conclusion that the pond was not going to perform as a zero discharge pond the first winter after the pond was built in 2013 (deposition page 49, lines 8-15). Despite realizing the pond was not functioning as designed as early as December 2013, this information was not disclosed and was actively withheld as the City began to question the functionality of the Stormwater System. Steve Ward, in a September 2014 meeting, refused to admit the pond was not functioning and challenged the City to prove its concerns (minutes from September 23, 2014 meeting).

During the request for discovery, the City learned more information about the engineering of the pond. In a report from Carlson Geotechnical dated June 25, 2013, it was determined that the water table was 3.5 to 4.0 feet below the ground surface. Test pits dug by Carlson in the proposed pond location determined there was no discernible infiltration. Steve Ward sent an email on June 28, 2013, deeming the report “extremely damaging.” On July 9, 2013, Mr. Ward submitted engineering plans to the City that indicated the stormwater pond would infiltrate at 4.1 inches per hour. On July 10th, Carlson Geotechnical was called back out to the proposed detention pond. During this visit Mr. Martinak told Carlson the groundwater level was 6 to 8 feet below ground level. Mr. Martinak took Carlson to a pit location that he had chosen and that he had dug. (Note: It has yet to be proven definitively where this pit was located, but indications are that it was dug outside of the location of the pond. Also, no effort was made to determine the seasonal groundwater level, a critical component in the design of the pond.) During the July 10th test, Carlson observed infiltration of 4.1 inches per hour. The Carlson reports were never shared with the City until they were produced for discovery during the arbitration process.

The Arbitrator found, "Respondent's project engineer, Steve Ward, testified that the 13.3 CFS for a ten year event was the estimate he used to determine the amount of water passing from the Quail Run subdivision onto the Phillips’ property. This estimate was based on a calculation relating to the likely amount of impervious surfaces in the Quail Run subdivision and not on actual measurements. He testified that he did not consider the fairly constant flow of groundwater that flows form the Quail Run storm drainage system onto the Phillips’ property. Further, Mr. Ward testified that he did not perform adequate infiltration tests but tried to go forward with the limited testing that was performed because the developers were under pressure to resolve the drainage issue so the project could move ahead. He agreed that the retention pond, as designed and built, was inadequate to address existing water drainage issues and that he expects that water will continue to flow through the pond onto neighboring properties and beyond during the winter months.” (Page 8, Section 22 of the Final Award)

An independent arbitrator, approved by both parties, oversaw a four day hearing where all evidence and testimony was provided. After the arbitration hearing, the arbitrator confirmed all claims of the City; denied all counter claims of JCNW Family, LLC; upheld the Stop Work Order as “justified;” and awarded the City all reasonable legal fees. The arbitrator ordered JCNW Family, LLC to conduct the proper engineering studies and submit revised plans to the City to conduct stormwater to Mill Creek in accordance with the Planning Commission’s approval of the subdivision.

The City has attempted to work with JCNW Family LLC on implementing solutions to the stormwater issues. The City is waiting for JCNW Family LLC to provide viable proposals.

Below you will find documents in relation to this development and the arbitration. 

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