Money needed to arbitrate vets home debacle

Tuesday, May 10, 2005 | 9:28 a.m.

CARSON CITY -- A construction company pulled off the job of building the veterans home in Boulder City maintains that it is entitled to $15 million.

The state, however, says that Addison Inc. ows Nevada $2 million.

The Senate Finance Committee agreed Monday to introduce a bill that would provide $673,900 for the cost of arbitration between Addison and the state Public Works Board.

Evan Dale, deputy manager of the Public Works Board, told the committee that mediation failed to resolve the dispute. He said an order from the Nevada Supreme Court required the issue be submitted to binding arbitration and the cost to the state would be $673,900 for expert witnesses and other items.

Senior Deputy Attorney General Sonia Taggart said the arbitration is to start Nov. 7 and last four to five weeks.

Part of Addison's claim is for $5 million for wrongful termination.

Addison signed a contract with the state Public Works Board in May 1999 for $14.8 million to construct the veterans home. There were disagreements between the two and the public works board replaced Addison on the job.

Addison asked for arbitration, but the state refused. Addison then filed suit charging the Public Works Board had breached the contract and was guilty of bad faith.

The company then sought arbitration, but District Judge Jackie Glass declined the request. The Supreme Court overturned the Glass decision and ordered arbitration.

Addison claims there were numerous flaws and defects in the design performed by Harry Campbell & Associates of Las Vegas. That required a large number of change orders and that resulted in additional work by Addison.

The board maintains that Addison "impersonated" a general contractor, hired unqualified supervisors, and was guilty of code violations and worker defects during construction of the project.

The nursing home was scheduled to be completed in May 2000, but it wasn't finished until a year later and was $1 million over budget.

The state hired another contractor to complete the job.

Sen. Bill Raggio, R-Reno, chairman of the Finance Committee, noted the binding arbitration would be completed while the Legislature was out of session. He wondered how the state would pay if there were a big judgment against it.

Taggart said the Public Works Board would probably have to come to the Legislative Interim Finance Committee for the money. Raggio replied "The IFC is not an ATM machine," noting it had only $12 million to pay out in emergency claims.