CRESTVIEW — A 283-home development off Redstone Avenue is in limbo until city officials can upgrade a sewer line serving south central Crestview.

CRESTVIEW — A 283-home development off Redstone Avenue is in limbo until city officials can upgrade a sewer line serving south central Crestview.

The City Council will receive a report at its Dec. 9 meeting to consider before deciding.

The line, an integral part of the proposed Crestview Power Center shopping mall and Redstone Commons housing development, must be upgraded from its current 8-inch diameter to a 15-inch line, attorney Scott Shirley, the city's special staff counsel on the project, told city leaders at their Nov. 25 meeting.

Enlarging the line, which is close to capacity, would facilitate development in the area on either side of State Road 85, just north of Interstate 10.

A partnership between the city, developer D.R. Horton, Beach Community Bank of Fort Walton Beach and Watkins developers, with the intent to upgrade the line, fell apart this summer when Watkins abruptly withdrew from the project.

Watkins planned to build the Crestview Power Center. A subsequent developer interested in the project has cut off contact with the city. D.R. Horton is building Redstone Commons.

Project on hold

An Oct. 28 letter to Shirley from D.R. Horton's attorney stated the housing project has been "dormant" since June, "which is resulting in carrying costs for(DR Horton Incorporated), the loss of sales and other damages."

"D.R. Horton has been a very good partner throughout this whole process," Public Works Director Wayne Steele said, adding the developer "has been very patient."

He and Shirley asked the council to consider one of three options, as follows, to upgrade the sewer line:

•Obtain easements from property owner Beach Community Bank as agreed earlier this year

•Use so-called pipe-bursting to remove the existing line and replace it with a 12-inch line

•Have Okaloosa County provide water and sewer service to Horton's development.

Shirley's Nov. 4 letter to Beach Community Bank Senior Vice President Scott McCormick requesting the easements was not answered, Shirley said.

A call to McCormick for comment was not returned.

Costly alternative

The council and Public Works staff leaned toward the second option, which would entail using existing easements but would cut through the shopping mall site — "a less than optimal solution," Shirley's letter stated.

The cost of pipe-bursting, $586,000, could be partially covered by $264,000 held in escrow to build the 15-inch line, provided it could be lawfully applied to the 12-inch line, Steele said.

An additional $300,000 in sewer impact fee money is available, but Steele cautioned that using it for the sewer line would leave no money in reserve to cover an emergency.

Steele said he would review currently funded public works projects to determine if some could be delayed to allow money allocated toward them to serve as an emergency fund if needed.

"The best option would be for every party that signed that agreement to move forward," Steele said.

Contact News Bulletin Staff Writer Brian Hughes at 850-682-6524 or Follow him on Twitter @cnbBrian.