Cost of Virginia Beach Convention Center's late finish: $1 million

VIRGINIA BEACH

The construction company that finished the first part of the Virginia Beach Convention Center 68 days late will be charged a $1 million penalty.

The company had asked that the fee be forgiven, but the City Council decided in private last week to assess the full penalty, known in the construction industry as liquidated damages.

Basically, it means the city will not pay $1 million of the $160 million contract it reached with Turner Construction, the national company that built the glass-and-steel facility at the Oceanfront.

"We need to hold all of our vendors to the terms of their contracts. Period," said Councilman Jim Wood, vice president of a commercial construction company. "... It is tax dollars. It's not my money to deal with."

Turner Construction asked for "financial relief" from the damages and blamed subcontractors for the delays. A Turner official would not comment on the issue, but the other companies have been identified as Kovach Inc., Century Concrete Inc. and Bay Mechanical Inc. The latter two are Beach-based companies.

Ben Short, an official at Turner's office in Arlington, wouldn't discuss details and said, "That's just between us and the city and the subcontractors."

Representatives from the subcontractors could not be reached for comment, but interviews with city leaders and a review of documents indicate that Turner delivered the first phase of the $207 million convention center later than the contract allowed.

Dave Hansen, deputy city manager, said the first portion of the building was ready 43 days late in the summer of 2005, and another portion was 25 days late. Under the contract, the company accordingly owed $1,004,750 in damages.

Hansen said the damages couldn't be settled until Turner completed its "punch list," a tally of finishing work common to construction projects. Turner's list had about 7,400 items.

Before that work finished, though, Turner asked to pay less, or nothing, in damages and blamed other companies for the delay, according to an April 2 memo to City Manager Jim Spore.

Some of those companies have filed claims with bonding companies and complained to council members, the memo stated.

"This situation is creating a 'catch 22' situation for Turner in that these subcontractors will not complete punch list work... without being paid, and we can not pay Turner until all of these requirements are fulfilled," the memo read.

Turner finished the work in the past few months. Once that happened, council members said city staff recommended in a closed session last week to reduce the late fee, which might help local companies who have a dispute with Turner.

Councilwoman Barbara Henley said she couldn't justify a reduction with no guarantee that local companie s would reap that benefit.

"We didn't have that assurance," she said.

Hansen said council members were presented options because the final decision was theirs.

"This is a chunk of change," he said. "Quite frankly, it was staff's position that they did not want to move forward without... the endorsement of city council."

Richard Quinn, (757) 222-5119, richard.quinn@pilotonline.com