The developer behind Grand Oaks remains responsible for the full cost of widening State Road 16, now estimated by St. Johns County at more than $60 million, after a federal appeals court rejected its effort to cap the obligation at the original $15 million estimate.
The 11th U.S. Circuit Court of Appeals ruled Aug. 7 that Ponte Vedra Beach-based Southeast Development Partners breached a 2018 agreement with St. Johns County requiring the company to complete and fund widening roughly three miles of SR 16 from San Giacomo Road to Grand Oaks' eastern entrance, according to the St. Johns Citizen.
The decision affirms nearly all of a 2024 ruling by the U.S. District Court for the Middle District of Florida.
Grand Oaks was approved for up to 999 homes, 100,000 square feet of commercial space and 50,000 square feet of offices. Hundreds of homes have already been built and occupied, with builders including Pulte Homes, Drees Homes and Toll Brothers. The 55-plus Summer Bay neighborhood has sold out.
Redesign requirement quadrupled the road's projected price tag
When Southeast Development signed the agreement in 2018, the SR 16 improvements were estimated at about $15 million. In 2021, the Florida Department of Transportation required a complete redesign, pushing the projected cost to roughly $57 million. More recent county estimates exceed $60 million.
Southeast Development sought to cap its share at $15 million and have FDOT finish the work. In February 2023, commissioners Christian Whitehurst, Sarah Arnold, Roy Alaimo, Krista Joseph and Henry Dean voted unanimously to reject that proposal and declare the developer in default, finding it had failed to acquire required drainage ponds or complete designs.
That vote gave the county authority to block approval of additional plats and construction plans at Grand Oaks. Homes already built and occupied were not affected.
Southeast Development sued the county in March 2023, arguing the demands violated the agreement. The county countersued.
Appeals court finds contract language on costs unambiguous
The 11th Circuit found the 2018 agreement required Southeast Development to complete and pay "all costs" of the SR 16 work. The contract expressly labeled the $15 million figure as an estimate and noted actual expenses could change based on final design and materials costs, the court wrote.
The developer argued that an uncapped obligation would produce an unreasonable result it never would have accepted. The judges disagreed, finding the language unambiguous.
"To be sure, this interpretation means the Agreement does not cap Southeast's exposure," the court wrote in its Aug. 7 opinion.
The court also rejected Southeast Development's claim that emergency declarations tied to hurricanes, the opioid epidemic and the COVID-19 pandemic had extended its construction deadlines.
County keeps leverage to block new construction at Grand Oaks
The ruling preserves the county's power to block new plats and construction plans at Grand Oaks, retain roughly $5 million the developer paid into escrow and obtain road-design documents and permits.
The court did vacate one piece of the lower-court decision. An affiliated company, Southeast Land Ventures, which received the development rights, was found not to have expressly assumed the original developer's contractual obligations and therefore cannot itself be held in breach.
The St. Johns Citizen reported it had reached out to the developer's appellate lawyer for comment but had not received a response as of Aug. 20. No county commission discussion of the ruling has been publicly scheduled, and the county's blocking authority over new Grand Oaks construction remains in effect.
