Payment to Ka‘u gym project contractor on hold

HILO — Hawaii County has withheld payment of more than $900,000 to the general contractor of the Ka‘u District Gym and Shelter because the structure isn’t up to code for a hurricane shelter.

James Komata, county park planner, said the existing balance owed Summit Construction Inc. is $910,837.30, which won’t be paid until “punch-list items” — a checklist of work that doesn’t conform to contract specifications that the contractor must complete prior to final payment — are checked off and closing documents are completed.

“The last payment to them was approved at the end of the last year. We haven’t paid them since,” Komata said.

The county is awaiting the results of a third-party review of the gym, which opened in October, to make sure it is up to code.

Meanwhile, two subcontractors are suing Summit and project bond underwriter Hartford Fire Insurance Co., claiming they’re still owed money for their work on the almost $18 million structure.

Honolulu attorneys Gerald Clay and Scott Batterman filed a lawsuit Aug. 2 in Hilo Circuit Court on behalf of Acoustic Drywall Systems Inc. Honolulu attorneys Corianne Lau, Shannon Lau and Timothy Partelow filed a separate lawsuit Aug. 9 in Hilo Circuit Court on behalf of IPR Inc.

Acoustical Drywall’s lawsuit claims as of July 20 it’s owed $146,553 “for services, materials and labor supplied for the project subcontract” and that Summit, “despite repeated requests for payment,” hasn’t paid Acoustical Drywall.” It also alleges “Hartford has failed and refused to pay the claim” against the $17 million bond purchased by Summit for the project.

“I received a letter from Hartford on July 25, basically saying they’re looking at everything and that they’ll get back to me,” Batterman said Wednesday. “… We have not yet gone into arbitration because we had to file the lawsuit in order to cover ourselves under the Hawaii law involving the bonding rights to subcontractors on construction projects. … I imagine if we can’t come to an agreement, we will end up in arbitration.”

IPR’s suit claims it’s owed money for three subcontracts on the project.

One was for $392,000 for material and installation of the wooden gym floor. The second was for $253,755 for athletic equipment. The third was $98,693 for installation of the athletic equipment.

Subsequent change orders increased the price of all three subcontracts, according to the complaint.

IPR’s suit didn’t specify how much it’s allegedly still owed by Summit, but alleges at the completion of work, IPR “was owed an unpaid balance on the contract price for each of the subcontracts.” Also alleged is that despite a “timely demand on Hartford to make full payment as provided for under the bond,” the insurer “has failed, refused, or neglected” to do so.

The suit claims IPR and Summit have “each asserted breach of contract and related claims against each other” and are in arbitration regarding those claims. According to the document, “Hartford has refused to participate in the arbitration,” requiring IPR to sue the insurer.

The original contract price on the gym and shelter was $17,032,352.

The gym project has had $748,122 in change orders as of last report, including $229,424 for modifications to the floor because of excess moisture, and $290,601 for modification to windows. Those charges include overtime, at least some of which was paid by the previous county administration, to finish the project more quickly.

Also still ongoing is work on a $100,000 contract signed in December with Honolulu engineering firm Martin &Chock Inc. to ensure the gym meets high-wind and wind-borne debris protection specifications for hurricane shelters in state and county codes.

Public Works Director Frank DeMarco on Friday estimated it will be one to two months before the third-party review of the project is complete.

“The current status is we’re waiting for review of some structural calculations,” DeMarco said.

DeMarco said if the gym doesn’t pass muster as a shelter in the review, “it’s going to have to be fixed.”

“If something is deficient, it’s going to need to be brought up to standards; you don’t want to put your community in there and put them at risk,” he said. “That’s the need for the third-party review, independently reviewing these systems to make sure they are passing code.

“If they don’t pass code, there are consequences. The contractor’s going to have to repair or replace whatever’s needed. But we’re just second-guessing. Until we get the results of the third-party review, we’re just speculating.”

Problems have plagued the project almost from the start. A lava tube and burial site delayed grading, and the building’s floor and windows have been nagging issues.

The concrete flooring for the 21,069-square-foot gym portion of the 43,300-square-foot building was torn out at contractor’s expense and redone after it failed a county inspection in 2015, and county officials reportedly denied there were problems with the windows prior to a change order in late 2016.

Sources previously told Big Island newspapers former Mayor Billy Kenoi fired three Public Works engineers last August because he was frustrated over delays with the project. The engineers reportedly returned to work the following week, but the administration transferred management of the project from Public Works to Parks and Recreation shortly thereafter.

The project itself became a shelter because the late state Rep. Bob Herkes, a Ka‘u Democrat, tried unsuccessfully for five years to convince the state Department of Education to allocate $10.9 million for a gym for Ka‘u High and Pahala Elementary School.

Herkes then changed gears, renamed it a civil defense shelter, obtained $18.1 million from the state, and had the money transferred to the county in 2011, hoping to speed up construction.

Batterman said whatever problems exist between the county and Summit shouldn’t affect payment to his client under the subcontract.

“If (the gym has) been open for (10) months, then everybody should have been paid, and this should be behind everybody,” he said. “If there’s some … punch list work that has to be done, well, fine. Get somebody to do it. But the money should have been paid out by now.”

Summit President Jack Parker and attorneys for IPR didn’t return phone messages by press time Friday.