District gets its $815K back and then some
September 15, 2010 - Christmas came early this year for the Oxford school district as officials approved a settlement that will enrich its fund balance by $680,000.
On Monday night, the board of education voted 7-0 to approve a $650,000 settlement with TMP Architecture, Inc., a firm based in Bloomfield Hills, and a $30,000 settlement with Skanska USA Building, Inc.
Both settlements stem from issues related to the new high school's construction between 2002 and 2004. TMP Architecture was the architect on the project, while Skanska was the construction manager.
"Just to have this finally over and done with and behind us is certainly something everyone wants," said Tim Loock, assistant superintendent of business and operations.
As a result of these settlements and a previous payment from Skanska, the district will be completely reimbursed the $814,922 it was originally required to pay out to the Detroit-based Boomer Co. A panel of arbitrators issued the award in February and the district paid Boomer in March.
Boomer commenced legal action against the district in early 2007 because the contractor felt it was owed additional monies for the project's time delays. The contractor did all the steel work on the new high school.
According to Look, these delays were essentially caused by the architect and construction manager, not the district.
"Most of the issues seemed to (be) with the architect in terms of the documents they produced being late or incomplete, which created most of the problem for the steel contractor," he said. "At the end of the day, you're seeing the architect getting a bigger share of the responsibility than the construction manager."
Because the district held the contracts with all of the subcontractors, it was sued by Boomer. It was then up to the district to recover its money from TMP Architecture and Skanska.
Last year, Skanska gave the district $200,000 in cash as a partial settlement.
The additional settlement monies approved Monday night mean when all is said and done the district will have received a total of $880,000 in cash compensation from the architect and construction manager.
This reimburses the $814,922 the district was forced to pay out of its fund balance.
A fund balance is basically a government entity's savings account used to pay for unforeseen expenses and special projects or offset revenue losses.
This settlement money will improve the district's overall financial picture, according to Loock. "It will help with cash flow this year," he said. "We were concerned, and (are) still concerned, that we may have to borrow for cash flow needs as the year unfolds, but this certainly will make that less likely."
It also gives the district approximately $65,000 to help offset its legal fees related to the Boomer situation.
But don't for a second think the district profited from these settlements or broke even.
According to Loock, the district racked up somewhere "in the neighborhood of $350,000" in legal fees regarding this whole situation.
The assistant superintendent noted the district "asked for more" money, but "at some place you strike an accord as to what is acceptable for both parties."
Loock noted that on top of the money it paid to the schools, Skanska also provided the district with about $100,000 in legal assistance related to the Boomer suit.
"They had an attorney present on our behalf," he said. "It amounted to quite a few hours."
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.