WINNSBORO – As Fairfield County looks down the double barrel of reduced revenue and a $3.5 million shortfall for the second year in a row, it also faces significant additional costs on the Mt. Zion renovations after four council members threatened to cancel the county’s Mt. Zion lease contract with developer 1st and Main.
The issue is complex.
As part of the county’s contract to lease the refurbished Mt. Zion buildings from developer 1st and Main, the county set up a $1 million escrow account with the developer to give some assurance during construction that the county would not renege on the contract.
In return, to help the county avoid paying for unbudgeted change orders from the county’s fund budget, a process that can lead to lengthy work stoppages and increased costs for the county, Rory Dowling, principal of 1st and Main, allowed County Administrator Jason Taylor to pull from the $1 million escrow to more quickly pay for change orders and limit delays.
But when council members Shirley Greene, Tim Roseborough, Mikel Trapp and Chairman Moses Bell broached cancelling the Mt. Zion contract earlier this year, Dowling moved to protect the escrow and stopped allowing council to dip into it to pay for change orders, according to emails from Dowling to Taylor that were obtained by The Voice through a Freedom of Information request.
As a result of this standoff, the county now has to get approval from council to pay $293,408.26 from the general fund for a work order for six invoices issued in March. That work order has led to work delays that resulted in additional penalty charges amounting to $34,919.50 ($1,587.50/day).
Adding to the delays, cost and contention, Taylor said he does not have a clear answer if Bell will put the charges on council’s agenda for payment even though the county has been forewarned diplomatically in several emails from Dowling that the delays will increase the county’s renovation costs.
In an email to Taylor dated March 26, 2021, obtained through a Freedom of Information request, Dowling wrote, “I understand that you and your team are working with Council on the approval process for the County upfit/modification requests. However, I wanted you to be aware that this particular COR has delay implications. We need to get Clayton approval on the switchgear and panels that were requested by the County ASAP as the lead time on these items puts it in the critical path to complete the project. Each day that goes by past 3/22/21 will result in a delay that contractually allows Clayton to assess extended general conditions ($1,587.25/day). Because this was a County request, we will be invoicing the County for these additional delays.”
In another email the same day, Dowling wrote, “These invoices do not include affiliated charges pertaining to project delays (extended general conditions assessed by the general contractor) or loss of rental revenue as a result of the delays. These will be sent separately.”
During a recent council meeting with Dowling and Parker Poe attorney Ray Jones (who oversaw the writing of the Mt. Zion contract two years ago), Roseborough asked if the county’s legal obligation would be limited to the $1million escrow money if council chooses to break the lease.
“No sir,” Dowling replied. “We would be forced to enter into some legal ramifications with the county because we’re on the hook for $13.5 million.”
Of the $13.5 million, the county will owe approximately $8.7 million. Dowling will receive the balance of the $13.5 cost in tax credits.
According to sources, Bell said there has to be a solution to the issue of the confederate monument that sits on property adjacent to the Mt. Zion property before he’ll move forward on the renovation of the county administration building. So far, he has not agreed to any of the solutions offered.
In the meantime, the county owes a total of $328,327.76 for a change order plus penalties for delay of work. More delays and daily penalty charges could continue until the work resumes.
“If we don’t take action and pay these bills, here’s what we’re facing,” Taylor told The Voice. “The project stops, we may incur more delay charges and the developer could take action and call the contract leading to potential monetary damages including loss of the $1 million escrow, a lawsuit for $13.5 million in connection with the debt and equity on the deal, fraud claims that could increase damages and of course, the cost of defending the lawsuit which could be substantial. There is also significant potential for credit implications, and other costly consequences in the future from walking away from a contract. ”
It is not clear at press time whether a request of action for the $293,408.26 change order and $34,919.50 for penalties will be put on the agenda of the Monday, 5 p.m. finance committee meeting for a recommendation to the full council.
That committee is made up of three of the four council members opposed to the county government moving into the renovated Mt. Zion building – Bell, Greene and Trapp.
Related: Council votes 5-2 to renovate Mt. Zion for Administration Building, Bell calls for review of Mt. Zion contract costs, How much is the renovation of Mt. Zion costing the county?, Developer Answers Questions About Mt. Zion Renovation, Developer: County could be on the hook for millions if it breaks Mt. Zion contract