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Work Continues On Congers-Valley Cottage Ambulance Corps Despite Contractor’s Financial Woes

Bonding company deciding which of two firms will replace original contractor.

 

Clarkstown Pubic Works Administrator Ed Lettre expects to know within the next day or so which contractor has been selected by the bonding company to finish the construction of the new headquarters for the .  The original contractor, Nikko Construction Corp. of Valley Cottage, notified the town in late February that it was having financial difficulties and was in default.

According to town officials, Nikko’s bonding company asked other contracting firms to submit bids to complete the project.  Lettre said the bonding company is now deciding between two contractors, both of which are acceptable to the town. The town could veto the bonding company’s selection of a contractor.

Lettre noted despite the default work has continued on the project on Kings Highway.  He said since the bonding company has taken over, it insures that the workers will be paid.

“The unions have kept workers on,” he said. “We’re not going to lose any time.”

Lettre said the involvement of the bonding company means the change of contractor will not cost the town any additional money and that the town’s contractual obligations for the project will be met.

The bulk of the work on the 9,350 square-foot-building – construction, alarm installation, plumbing, electrical and siding - has been completed. The remaining work includes painting, trim, spackling, parking lot paving and landscaping, which Lettre anticipates will be done in six to eight weeks close to the original completion date of April 15.

Mike Hirsch March 06, 2012 at 03:35 AM
This makes no sense. If the original contractor is in default, then I assume his liability carrier is no longer covering the project. If another contractor has not yet been chosen by the bonding company and people are working, then who are they and who is paying them? I have never known a bonding company willing to take a risk if they don't have to, and they never have to, so the only conclusion that I can draw is that the town is taking the risk and promising whoever is working there that they will get paid. It also sounds like the town is acting as the General Contractor at this point, with Ed Lettre directing the work. Not a good idea. But hey, if the town gets into trouble, so what? They have plenty of our money to bail them out.
Mike Hirsch March 06, 2012 at 03:42 AM
Also, I have never heard of a bonding company insuring that workers get paid on what must be a time and material situation at the present time. Are we to believe that the bonding company is guaranteeing the subcontracts that Nikko entered into? I would love to see the books when the dust settles. I'm sure that the only entity that is guaranteeing payment is the town, but hey, what do they care? It's only taxpayer money.
Stephen J. Reich March 06, 2012 at 11:18 AM
There has been no work going on there over the last 2 weeks.
Michael D. Williams March 08, 2012 at 06:36 PM
Who is the Surety?
Richard Pesano March 09, 2012 at 02:13 PM
Mike thanks for your comment. After 22 years in the Surety business i can tell you that the surety' obligation is to complete the contract for the agreed upon price. Any excess costs are the responsibility of the Surety Company not the Town. Only if there are agreed upon changes to the job will the Town pay those costs. The Town must agree with the change order and agree to the price before they must pay. The common misconception in Surety is that it is an insurance vehicle. It is more a credit instrument. Once the contractor is defaulted the Surety inherits all the responsibilities of the contractor as specified in the contract with the Town. That not only includes payment to subcontractors, suppliers and workers but also to the subcontractors and suppliers of the subcontractors. The Town does remain obligated to adhere to the original contract and is responsible to pay the remaining contract funds tothe Surety. That is if the contract was for $100,000 and $80,000 had already been paid to the defaulted contractor then the Town is obligated to pay the Surety $20,000 to complete the project regardless of the cost to the Surety. You feel confident that the Surety Industry takes seriously our obligations under the bond and to act in good faith in completing any project. I hope this eases your concern about this project. As a tax payer I too am always concerned where our hard earned money is going. Thanks for the input and the opportunity to respond.
Mike Hirsch March 09, 2012 at 02:41 PM
Thank you Richard. I think you would agree with me that most times that a surety takes over a project, the schedule slips a lot. The surety's obligation is to complete the project. As a business, they want to complete at the lowest possible cost. If the schedule or the quality slip, so be it.
dennis March 09, 2012 at 08:15 PM
The bank is auctioning the Nikko Construction property Mach 27.
Mike Hirsch March 09, 2012 at 08:22 PM
If that is true, which I have no idea, then their supposed financial dilemma must predate the start of this construction project.
dennis March 09, 2012 at 10:02 PM
Mike goggle Nikko construction march 26
Watchdog March 09, 2012 at 10:26 PM
How did this company get the job and how did they get bonded when, as Mike says, it appears they have been in trouble for some time. It would take at least two years for the bank to foreclose and. Sell the assets. And Lettre onLY finds out a few weeks ago? FISHY FISHY.
Mike Hirsch March 09, 2012 at 11:13 PM
I am very sorry to hear that. It's a very difficult time in the construction industry. Business is down for all of us.
Mike Hirsch March 09, 2012 at 11:15 PM
I am not a fan of Ed Lettre, but you can't pin this one on him. The bonding company obviously either did not do their due diligence or were mislead.

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