FRANKFORT — The rebuilding of a Morgan County courthouse that was under construction when it was largely destroyed by a tornado March 2 could cost taxpayers an extra $1.5 million.
Much of the increase will pay for additional fees charged by Codell Construction, which is overseeing construction of the courthouse. The building was between 65 to 70 percent complete at the time of the tornado, which wiped out most of downtown West Liberty.
There is a sizable gap between what the insurance company paid Morgan County for the partially completed courthouse and what it will now cost to rebuild it, Laurie Dudgeon, director of the Administrative Office of the Courts, told the legislature's Capital Projects and Bond Oversight Committee Tuesday.
Morgan County issued bonds to pay for the courthouse, but the state will pay off those bonds by making rent payments to the county. The state will have to come with an additional $118,000 a year to pay off the extra $1.5 million for the courthouse, which was originally scheduled to open this month, Dudgeon said.
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That extra money will come from a contingency fund, which has about $236,700 in it, she said.
The building was insured through the Kentucky Association of Counties. KACo's insurance carrier agreed to pay about $8.2 million for damage to the courthouse on Main Street in West Liberty. However, it will cost about $9.7 million to rebuild the damaged building. The total cost of the new courthouse is projected to be $12.7 million.
Rep. Jim Wayne, D-Louisville, questioned why Codell Construction's "extended service" fees jumped from $40,000 to $912,000.
The larger fees stem from the fact that the project will take about 900 more days of work than was originally planned, said Jeff VanHook, a representative of Codell Construction.
VanHook said Codell also is taking on added risk by overseeing what has become a very complicated project because not everything in the building was destroyed. Parts of the project will now be completed out of order, which makes it more complex, he said.
Codell is guaranteeing the work on the property and assuming great risk to do so, said Morgan County Judge-Executive Tim Conley.
"There is substantial risk," VanHook said.
Conley told the committee that KACo and the county had been negotiating a settlement on the courthouse for six months. Originally, KACo's insurance carrier offered $7.3 million. Through negotiations, the settlement increased to $8.2 million.
Wayne questioned why the county did not negotiate a settlement that matched the replacement cost.
Among other reasons, county officials said they were tired of negotiating and wanted to get moving on rebuilding the courthouse. Currently, the courts are meeting in a Morehead State University building in West Liberty.
"We have been waiting six months," Conley said, his voice breaking.
He said he frequently only sleeps two hours a night because he is worried about residents who no longer have homes.
"We're in a tough spot," he said. "Not one building on Main Street is standing ... We've got to get started."
VanHook and others said some of the additional costs also stem from the fact that original bids for the project were let in 2009. Materials were now more expensive, they said.
Many legislators expressed support for the project, saying the contingency funds that will be used to pay the additional $1.5 million were designed for situations like the one in Morgan County.
The committee unanimously approved the additional funds, but Dudgeon said the AOC will negotiate with Codell over the $912,000 in additional fees it says it is owed.
Wayne, who ultimately voted to approve the additional funding, said he hoped that the rebuilding of the Morgan County courthouse served as a cautionary tale for state government.
"We need to make sure that these construction projects are properly insured to the maximum amount," Wayne said.