With less than a month to go before the new Horace O'Bryant K-8 school must be ready to accept students into its new classrooms, School Board member Ed Davidson has discovered what he calls yet another financial discrepancy relating to its construction.
This time around the brouhaha involves payments requested by the School District but partially denied by Bank of America, which is entrusted with the bond funding for the $40 million project.
"With four weeks left until we have to close out the HOB stimulus funding, the School Board and the public still have inadequate information concerning more than $2 million in project-related funds," Davidson said. "Add in the disputed change orders and we're well north of $3 million. I have requested some of this documentation, which is specifically required by the terms of the contract, for several months now, but major pieces are still missing from the puzzle."
Of particular concern to Davidson are six requests for payment that Bank of America partially disallowed, for a grand total of $909,550 between December 2011 and February this year.
In one 25-day period this year between Jan. 15 and Feb. 11, the bank withheld $511,827 from the district's payment requests, thus requiring some of the six partially denied billings to be funded from other sources.
"Coastal Construction, the contractor, appears to have been paid hundreds of thousands of dollars that the bank has not reimbursed the district for," Davidson said. "If this is the final decision of the bank, then the disapproved fund requests will have to be paid from other sources, which will require specific board authorization as an official budget amendment."
Davidson added, "At the moment the board has practically no detailed explanation about the specific reasons the bank disallowed these funding requests."
In addition to the partial nonpayment issue, Davidson is also concerned about a 10 percent retainage provision of the original contract with Coastal, which meant that a portion of all payments to the contractor were to be withheld.
Although this provision was later reduced, the retained balance at one point totaled $840,070, though now it appears to have been reduced to $653,392, for which the board, once again, apparently has no explanation.
Besides that, there is a contractor contingency, required by the contract terms, at the level of $563,569, of which the terms and authority to spend are unclear.
"Obviously," Davidson said, "if you do the math, these three issues alone total over $2 million of taxpayer money, which isn't exactly petty cash. This project cries out for the serious and thorough audit, which should have started a long time ago."
Superintendent Mark Porter on April 30 released to all board members, including Davidson, a spreadsheet listing dozens of payments, including the six partial payments in question. It contains a note describing the contested payments as being "incorrectly characterized as disallowed payments," attributed to interim Director of Finance and Performance Jim Drake.
"Call it what you want, but we're short almost a million dollars in bank reimbursements, about which the board was only informed two days ago, at my insistence," Davidson said.
"If it quacks like a duck, it's a duck."
School Board Chairman Andy Griffiths on Friday explained that, "A portion of these requisitions were not appropriate for the stimulus bonds and thus had to be removed from the requisitions. An example of disqualified requisitions would be furniture, fixtures and equipment that are not part of the construction project. This project is slightly over budget due to board-approved change orders, the biggest of which involved removing the contaminated soils and lowering the roof design."
Porter was traveling on Friday and could not be reached for comment.
Davidson said he would bring the matter up at the next board meeting.