Bonding company backs Doerflinger's developer

0 Comments | La Crosse Tribune, Feb 22, 2001 | by Kent, Joan

The bonding company for the Doerflinger building developer says it won't complete renovations of the building at this time, as the city had requested, because neither side seems to be "on totally solid ground" in the dispute.

Frontier Insurance Co. said the city might have based its stop-work order on the wrong set of construction plans and improperly contacted the developer's lender, which resulted in the tightening or elimination of funding to complete the renovation.

"If we were required to make our final finding today, the (company) would have no alternative but to deny the city's claims because there appears to be a good faith dispute between the city and MPC," Frontier attorney Jeffrey D. Horowitz said in a Feb. 16 letter to City Attorney Pat Houlihan.

"Both sides have made reasonable arguments," Horowitz said in the letter. "Unfortunately, this is a matter that may only be able to be resolved by a court of law." Before next week's La Crosse Common Council meetings, Houlihan said he will notify council members of the city's options.

The bonding company's response substantiates 400 Main Street Partners LLC's position that the city improperly issued the stop-work order April 20, said Ian Waddell, a managing partner in 400 Main Street.

The order wasn't lifted until Dec. 20, after about eight months.

"That is not correct," Houlihan countered. "The stop-work order was issued on the recommendation of the state building inspector because the developer was not complying with the code regarding fire and other building code violations."

"That's bull," Waddell said. "It was based on the wrong set of plans. We have proof of that."

The city's contacting the lender, La Quinta Mortgage, caused the developer "so much harm that we couldn't carry on," Waddell said.

But Houlihan said he thinks he had an obligation to contact the lender. The director of inspections, the overseeing architect, the city engineer and a structural engineer retained by the city to determine if the project was adhering to plans all said that only about $75,000 worth of work had been done, he said.

The lender had provided a $950,000 mortgage, he said. "The contract provides that if there is a default, we need to contact the mortgage holder because they have a right to fix it. We said, 'You have a $950,000 mortgage, we have $75,000 worth of work. What's going on here?'"

Waddell said he now wants to put the disagreements "behind us and sit down and get it worked out." He referred to a proposal for changes to the contract, which council member and mayoral candidate Gerald Every has introduced to the council.

Work is under way on the building, and the developer is within a week of satisfying the Fire Department's requirements, Waddell said.

But the city and developer disagree on what basic improvements are covered in the contract. The city contends they include the mechanical, electrical and plumbing systems. Waddell said they include only roughing in the building.

He said the developer does not want to install the systems until it knows who the tenants will be because different tenants require different systems.