Elkader Council votes on disputed final payment for Carter Street project

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By Willis Patenaude, Times-Register


It’s the project that won’t go away, and even after it’s finished, Carter Street continues to be a thorn in the side of Elkader city officials, who recently voted on a resolution which authorizes the final payment due for completion of the project. However, this resolution is not without dispute, which has been ongoing since December 2022, when JB Holland did not accept the amount of liquidated damages and the final payment.


According to the resolution, the city submitted a final payment draft on Nov. 28, 2022, which listed the project 58 days over substantial completion and 10 days over the final working days. That adds up to $92,000 in liquidated damages and equals a final payment due to JB Holland in the amount of $11,136.73.


Understandably, JB Holland disputed this assessment of the situation and replied on Dec. 15, 2022, seeking a compromise agreeing to just 16.5 days over substantial completion and zero days over the final working days, bringing the liquidated damage total to a little over $24,000 with a final payment of just over $78,000. The city did not budge and sent the original draft proposal on Feb. 15 and April 27, two months after it requested a response. It finally arrived from JB Holland.


In this new proposal from JB Holland, the company would agree to 43 days over substantial completion, while also asking that 15 days be added to the total number of working days. They would reluctantly accept 10 days over the final working days, which would leave $69,500 in liquidated damages with a final payment of over $33,000.


Along with the proposal, JB Holland President William Holland sent a letter arguing the case. One of the biggest complaints in the letter revolves around the city not granting additional days due to issues related to the location of utilities for Alliant Energy, which were recognized as a conflict by JB Holland in the period between March 28 and April 4. JB Holland also argued the city was wrong to conclude that the company did not address the situation until they were on site on March 15, by providing an email chain suggesting they were aware of it as early as March 3.


In response to this claim, Elkader City Administrator Jennifer Cowsert firmly stated that, while JB Holland showed up in March and opened up the intersection, the company did not begin work until May.


“They knew about this situation in the fall/winter and could have been working on a resolution all winter and certainly did not need to open up the intersection and then leave it for several weeks so that it inconvenienced the residents so much,” Cowsert explained.


Cowsert also noted that, when JB Holland initially asked for more working days, the company was informed it needed to request those right away, which, according to Cowsert, did not happen. 


Additionally, the project suffered numerous setbacks, most notably with unsuitable soil— which was originally accounted for in the working days—and the paving issue—which resulted in the six-inch mistake well known to the community at this point.


The letter from JB Holland argues that added engineering costs, which currently stand at over $84,000 due to delays, would have “been greater if JB Holland had not performed many of the functions it did to save the city expenses,” while blaming those functions for having a part to play in the additional time to complete the project. JB Holland went further, stating that project manager Mason Tieskoetter “went above his responsibility on numerous occasions…for the benefit of the city at no cost,” and asserted the city has treated JB Holland “unfairly.”


In response to JB Holland’s assertions, Cowsert plainly stated, “I think a lot of his letter you have to ignore because he is just trying to make a case. I don’t know what he was referencing and, no, I don’t think Mason went above his responsibility. I think that Holland was grasping at straws.”


Throughout council discussion, there was one overarching concern about passing the resolution, which was expressed several times by council member Peggy Lane: what happens if JB Holland pursues legal action? That could ignite a legal battle potentially costing the city of Elkader more than the amount of liquidated damages. 


If that happens, Cowsert stated these situations usually settle out of court, with lawyers and insurance companies getting involved. There is potential it could cost the city more than it would gain, assuming it stands on “firm legal ground.”


When it comes to standing that ground, Mayor Josh Pope unequivocally stated, “I say we stand our ground with all the crap that went on down there.”


Council member Tony Hauber added, “that it would’ve been one thing if the job was exceptionally done and everything had run smoothly.”


“I believe, and our lawyer agrees, that we are owed these liquidated damages. The contractor is allowed to disagree and sue. That is the process. It is not in the town’s interest to ask for less than we believe we are owed to appease a contractor,” Hauber said in a later interview.


Council member Deb Schmidt, though, remained concerned about creating a standstill and risking litigation. Rather than vote for the resolution as the remaining council members did, with the exception of Eric Grau who was not in attendance, Schmidt favored tabling it.


“Giving them the next move only seems to me to start a possible lawyer-to-lawyer fight, again spending money. Businesses need money and holding onto a payment that we as a council and our lawyer feels is ours may just get them to close without such battling expenditures,” Schmidt said.


Pope disagreed with this approach, arguing that, instead of tabling it, the resolution should be approved and put back into the lap of JB Holland.


“We received a lot of negative feedback from the residents about this project. It took much longer than anticipated. And with the street being the route to the hospital and the route to the county road, it was very disruptive to a lot of people. So I feel that we need to stand firm and assess the liquidated damages,” Pope added in a separate exchange. 


Throughout the meeting, Lane remained on the fence as to what the correct action should be, but acknowledged the city needs to move on from the project. While she still worried about potential lawyer fees as a result, she voted for the resolution in the end.


Afterward, Schmidt, who voted “nay” explained her vote: “I voted ‘no’ only because they are insulting our administration, city and not taking responsibility for the project. When asked by our engineer to stop, they continued to keep making the mistake and delaying it by many, many days. I’m in favor of closing the book on Carter Street, but not giving an inch in what is due back to our city.” 


Hauber stood firm, arguing, “We are just following through with what we agreed with.”


Nonetheless, according to Cowsert, the city has gotten into a liquidated damages dispute once before, but eventually had “to give” to prevent it from going to court, which is a likely outcome of this current effort to retain the $92,000 the city believes legally belongs to them.


The council voted on the resolution May 8, and to this point, JB Holland has not responded.


In the words of Pope, “All we can do now is wait and see if JB Holland pursues this…We wait to see what they do.”

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