Local contractors still fighting to get paid for Lawler School Lofts project
By Ted Pennekamp
Numerous Prairie du Chien and area contractors who worked on the $8.7 million Lawler School Lofts project are still quite angry and still fighting to get paid, more than a year later. Lawler School Lofts is a 40-unit apartment complex. It was the former Wyalusing Academy and is located at 601 S. Beaumont Road in Prairie du Chien.
Steve Steiner of Steve Steiner Construction of Prairie du Chien said Lawler School Lofts LLC, a part of Commonwealth Development of Fond du Lac, stopped paying him in August of 2018. Steiner said the total that contractors have not been paid probably adds up to about $1 million.
“I’m not going to let these guys steal from me,” he said. “It’s become the principle of the thing because they’re (Commonwealth Development) racking everyone up with legal bills. It’s costing a lot of money to get our money.”
Steiner said he would like to save the next small contractors that work on a project by Commonwealth Development.
“They (Commonwealth) offered me half of what they owe me,” said Steiner, who noted the case is in the mediation stage, which is non-binding. He said all contractors are looking forward to the arbitration stage, and are confident that they will win. He also said the site supervisor during the time he and the other contractors in the dispute were working on the project, said he will testify during arbitration on behalf of the contractors. Arbitration is binding, and will settle the case once and for all. Steiner also said he has communications from Commonwealth as to how much they owe him.
Steiner said, however, that Commonwealth disputes how much they owe him and other contractors.
“The idea that the total certain subcontractors haven’t been paid collectively comes to about $1 million is nonsense and has no basis in fact,” said Lance Mueller, the general counsel of the Commonwealth Companies. “I am working to resolve differences with a few subcontractors at this time. These subcontractors entered into fixed price contracts and are asking for payment above and beyond the agreed upon price or payment for work that was not completed resulting in other subcontractors having to come in and complete their work at our cost. These subcontractors have been informed and known all along why we dispute their claims. We have been and will continue to follow the process specified in the contracts to settle disputes such as these. Unfortunately, it can be a long process, but we have different sides with different viewpoints and it is the right and the fair way to resolve this.
“To keep things in context here,” Mueller continued. “Commonwealth has successfully designed, developed and constructed dozens of projects and added much needed affordable housing to communities across the nation. We pay all subcontractors in a manner consistent with our legal obligations and enjoy an excellent relationship with most. From time to time disagreements arise. With regard to this project, we have been left with no choice but to actively pursue claims against certain subcontractors that have attempted to take advantage of Commonwealth.
“Again, Commonwealth is proud of the role it played in preserving a historic building, happy with the high-quality homes we are able to offer and glad to be part of the Prairie du Chien community. We are disappointed that certain disgruntled individuals can diminish an important achievement that benefits many and tarnish the positive reputation that Commonwealth has built over the last 18 years in business.”
Four contractors filed construction liens against Lawler School Lofts LLC. Two liens were filed in 2018 and two more in 2019. The liens were all released a short time after filing because there is a performance bond and a payment bond, the total of which is $6,0051,260, according to Crawford County Circuit Court records. Because there are performance and payment bonds, state law does not allow construction liens.
A performance bond protects the owner, Lawler School Lofts LLC, when a contractor doesn’t complete the work or otherwise does not fulfill the contract. The payment bond protects the contractor in case the contractor does not get paid by the owner.
If a contractor does not get paid, for example, the contractor can file a claim with the surety company that had underwritten the bond. The surety company would then investigate the matter, and if it is found that the claim is legitimate, the surety company would then pay the contractor. In turn, the owner would have to pay back the surety company.
The surety company in this case is North American Specialty Insurance Company of Overland Park, Kansas. The attorney of fact is Bradley S. Babcock of Babcock Solutions of Cedarburg, Wis. The Courier Press left messages with North American Specialty Insurance Company and with Bradley S. Babcock but did not receive a reply.
Steiner says he is owed approximately $52,000. A construction lien for $85,000 was filed on Dec. 26, 2018 by Atkinson Excavating of Wauzeka and released on Dec. 28, 2018, according to court documents. A lien filed on Jan. 24, 2019 by Rickleff Heating and Cooling of Prairie du Chien was for $27,249.15. The lien was later released. A lien filed on Jan. 8, 2019 by My PC LLC of Boscobel for low voltage wiring was for $14,543.33. The lien was released on Feb. 11, 2019. An $84,783.67 lien was filed on July 16, 2018 by Dynamic Contracting Services LLC of Maple Park, Ill. It was released on Jan. 31, 2019.
Steiner said Jim’s Building Center of Fennimore is owed an estimated $200,000 by Commonwealth. Don Atkinson of Atkinson Excavating said there is a dry walling business in Milwaukee that is owed approximately $35,000. He said he also knows of other contractors who are owed large amounts.
Atkinson said he and his lawyer don’t care about the mediation and have filed for arbitration.
“This has been drawn out a hell of a lot long enough,” said Atkinson who is very much looking forward to arbitration and is quite confident of winning. “I am looking forward to arbitration. This has been pretty hurtful.”
Atkinson said the dispute was sent to the surety company, but the surety company has not done any good. Atkinson also said Commonwealth is claiming that they overpaid Atkinson and is seeking $27,000 from him.
“This is now about the principle of the whole thing,” said Atkinson. “We (the contractors) are honest people there to do a good job and to make a living. You did your work and you expect to get paid for it. I’ve been in this business for going on 25 years. You don’t last long in these businesses by being a crook and ripping people off. My work was never second guessed. We do good work and we want it to be good. We were never told to redo anything. We were right on.”
“They didn’t complain about the quality of my work,” said Steve Steiner of Steve Steiner Construction.
Atkinson said he thinks it is Commonwealth’s method of operation to use local contractors and then to “bleed them out” and bring in their own personnel to finish the job. He said Commonwealth tries to make small local contractors stop their fight because they are accumulating large legal fees. “They try to wear you down and try to make you give up,” he said.
Atkinson said he is going through the United States Arbitration Association as he continues his battle.
“They (Commonwealth) will lose in arbitration,” said Steve Steiner. “I hope this will be settled at least by Thanksgiving.”
“We are following the guidelines of the contract to pursue legal action,” said Rich Picha of Ken’s Electric of Prairie du Chien. “We’re going to go to the bitter end on it.”
Picha said he and his lawyer are looking into possible lawsuits. He said the last time he was paid on the Lawler School Lofts project was in June of 2018.
“It was tough going for awhile,” said Picha regarding the money shortage due to not being paid. “It’s now beyond the money. It’s the principle of it. Honesty is honesty.”
Lawler School Lofts was an historic preservation and reuse project. Commonwealth Development utilized both federal and state historic tax credits.
The financing of the project is relatively complex. The Wisconsin Housing and Economic Development Authority (WHEDA) allocated $512,777 in low-income housing tax credits to help finance the project. At the ground-breaking ceremony in August of 2017, Kevin McDonell, the vice president of development at Commonwealth, said that over the next 10 years, the tax credits will add up to nearly $5.13 million toward the project. The Wisconsin Economic Development Corporation and the Wisconsin State Historic Preservation Office contributed state historic tax credits of just under $1.5 million. U.S. Bank provided almost $6 million in equity. Chase Bank provided a construction loan of $6 million and a permanent loan of $654,000. Wisconsin’s Division of Housing provided for $468,000 in HOME funds. Associated Bank provided state historic equity of just under $1 million, and the Federal Home Loan Bank of Chicago provided for a $510,000 Affordable Housing Program Grant.
Lawler School Lofts is named after John Lawler, who, in the late 1800s, transferred railroad cars and passengers across the Mississippi River by ferry. In 1874, he created the pontoon railroad bridge that operated until 1961. He donated the land, once a part of the second Fort Crawford, to the Catholic nuns for a girls’ school in 1870. Lawler also contributed funds for the construction of St. Mary’s Academy, which educated young women for almost a century before it closed in 1968. It operated as Wyalusing Academy from 1969 until 2013 as a private school and residential facility dedicated to teaching students life, academic and job skills.
In 2014, River to Valley Initiatives (RVI) of Prairie du Chien, a non-profit corporation, was selected by the former property owner, Clinicare Corporation of West Allis, to develop the property to be a positive and sustainable entity. The directive was to preserve the historical integrity of the property and save it from demolition, while preserving the tax base. The 14-acre property was officially donated to RVI in July of 2015. In 2016, the Prairie du Chien City Council approved the rezoning of the property from R-1 (low density residential) to R-3 (high density residential). In July of 2017, RVI sold the property to Commonwealth Companies.
The project began in August of 2017 and is now complete. There are 40 apartments in the 80,000-square-foot building. There is also a 31-car garage in back of the building.
