A subcontractor involved with the Vermillion Downtown Streetscape Project is claiming that the prime contractor for the project, Schwartzle Construction of Tea, owes it money.
City Engineer Jose Dominguez told members of the Vermillion City Council at their meeting Tuesday night that subcontractor LT Companies, Inc. hand delivered public improvement lien documents to City Hall on Aug. 26.
“LT is claiming that Schwartzle has not paid all of the amounts that is due to them and is claiming a lien on sums due or that are to become due to Schwartzle in the amount of $611,280.75,” the city engineer said. “The city council is required by statute to acknowledge receipt of the public improvement lien.”
The city council did just that Tuesday, following Dominguez’s advice and acknowledging the receipt of the lien. It will take no further action regarding the apparent financial spat between LT Companies, Inc., and Schwartzle Construction.
Dominguez explained that projects of the magnitude of the Downtown Streetscape Project require that the prime contractor that wins the bid for the work hires other contractors, also known as subcontractors, to complete portions of the project.
“These subcontractors are the prime contractor’s responsibilities,” he said, “and the city is not contractually obligated to pay for subcontractors. The prime contractor is, actually. He’s the one with the contract with each of these companies.”
Dominguez noted that the city has paid a little less than $900,000 through four payment requests to Schwartzle from mid-April through mid-July. In mid-August, a change order totaling approximately $143,000 was also approved by the city.
“Schwartzle is requesting payment number five tonight. That’s going to be considered under invoices payable tonight,” Dominguez said. “Payment number five is for $521,319.09.”
Administration recommends acknowledging receipt of the public improvement lien, he said. The city council followed that recommendation and later approved payment number five to Schwartzle Construction as it approved other invoices payable.
City Manager John Prescott told the Plain Talk earlier Tuesday that he didn’t know whether LT Companies, Inc. is still involved with the Vermillion project.
The lien filed by LT Companies is a claim on the $611,280 it states it is owed by Schwartzle. The city has no knowledge of how LT Companies and Schwartzle may settle this disagreement. There is a possibility that the two companies may eventually take this issue to court.
“We will keep paying Schwartzle as invoices are submitted and recommended for approval by the consulting engineer on this project,” Prescott stated in an email to the Plain Talk early Tuesday afternoon. “It is the final amount that may get paid to the court vs Schwartzle.
“There is a payment on tonight’s list of invoices payable, but we aren’t at the threshold of having to pay it to the court vs. the contractor. Hopefully, they will get it worked out by time we get to that point,” he stated.
In March 2021, the city entered into a contract for the construction with Schwartzle Construction Schwartzle for $2,976,602. On Aug. 16, the Vermillion City Council approved a change order increasing the total amount to be paid to Schwartzle to $3,119,851.84.
The city council approved a change order to the Downtown Streetscape Project at its Aug. 16 meeting that made some small changes to the project’s design and gave more time to Schwartzle Construction to complete the project.
The changes also increased the total cost of the project by slightly more than $140,000.
This request came as no surprise to city council members in August.
In late May, the city council considered an agenda item at a regular meeting that would allow Schwartzle Construction to continue with the streetscape project with some proposed changes to the transition areas in the project’s design adjacent to the sidewalks.
The city council agreed to this anticipating that an official change order would come later and mid-August was that time.