Fort Knox developer sues over post's stalled housing project - WDRB 41 Louisville News

Fort Knox developer sues over post's stalled housing project

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LOUISVILLE, Ky. (WDRB) – An insurer has failed to approve changes to a housing project at Fort Knox, leading to delays and driving up costs, a company co-owned by the U.S. Army alleges in a federal lawsuit.

Knox Hills LLC, which the Army owns with a private developer, sued New York-based Ambac Assurance Corp. in Hardin Circuit Court in October. The lawsuit was moved to U.S. District Court in Louisville last week.

Ambac, which insures the project's debt, has refused to arbitrate the dispute as required under its agreement with Knox Hills, the lawsuit claims. Knox Hills wants Ambac to enter into mediation.

Attorneys for Ambac did not return phone messages left this week.

Knox Hills operates a family housing development at Fort Knox that planned to build 850 new housing units, renovate more than 1,200 homes and raze more than 1,320 homes, according to an agreement entered in 2007.

The project was started in the midst of the post's expansion under the Pentagon's base realignment and closure plan. But in June 2013, the Army announced it would deactivate a key part of that expected growth – the 3rd Brigade Combat Team, 1st Infantry Division – as it slashed overall troop levels.

“Knox Hills took various steps to mitigate the negative impact of the reduced pool of potential tenants on Knox Hills' family housing installation,” including submitting a change order removing some homes no longer “deemed necessary,” according to the lawsuit.

Knox Hills argues the change order would cut 280 units from the project and result in $39 million in savings in construction and other costs. Property managers also would not have to maintain homes that aren't needed, the lawsuit claims.

The army's partner in Knox Hills, Lend Lease (US) Public Partnerships, has built 712 new homes, renovated 1,028 existing units and demolished 1,129 homes, Lend Lease spokeswoman Meryl Exley said in an email. In an interview, she said no public monies were used in the project's first phase but declined to discuss the financing of subsequent phases.

Attorneys for Knox Hills have asked for the 409-page development agreement, which includes budget and design information, to be sealed; a judge hasn't yet ruled on that request.

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