Courthouses near full insurance

lblackford@herald-leader.comMay 15, 2009 

The lawyer investigating the state courthouse construction program said all current projects should be properly bonded by next week, almost two months after he called for "immediate" action on the matter.

Fort Mitchell attorney William Geisen issued an opinion on March 24 saying that construction managers on all court projects should insure them for 100 percent of the construction costs, overturning a practice by the Administrative Office of the Courts allowing several construction companies to provide insurance for only about 5 percent of the construction costs.

A month ago, Codell Construction of Winchester, which is building 24 of the 35 courthouses under way, provided the full insurance required to start building nine new courthouses. Other affected companies include Branscum Construction of Russell Springs and Alliance Construction of Glasgow.

Trace Creek Construction provided a 100 percent bond for the Fleming County courthouse in April.

The two-month delay on the bonding has been caused in part by a disagreement: Geisen and the AOC say construction managers' performance bonds should be in place when the contract is signed, a practice followed by other large public agencies, such as the Finance and Administration Cabinet and the University of Kentucky.

The construction-management companies say they should provide full insurance only when construction starts, not during the lengthy pre-construction and design phases.

Geisen denied that the AOC was getting pressure to cut slack to Codell, a politically connected company that gives generously to politicians of both parties.

"I would say if the perception is that the AOC is bending over backwards to help Codell or anyone else, that's absolutely false," he said.

Geisen's opinion concluded that the practice previously followed by Codell and the AOC — to bond only about 5 percent of construction costs — did not follow AOC regulations, state law or contract language.

Supreme Court Chief Justice John D. Minton ordered an audit of the entire courthouse construction program after Herald-Leader articles about the bonding practice and other issues in the courts' $880 million program. The AOC facilities director, Garlan VanHook, resigned shortly afterward. The 100 percent bonding is required because it protects the owner from default by the construction manager.

Geisen will continue to review the construction program. He said he would be suggesting changes to AOC building regulations.

Reach Linda Blackford at (859) 231-1359.

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