Contractors working on San Jose’s $11 million Environmental Innovation Center (EIC) walked off the job last month a half-year behind schedule and $1.6 million over budget. A couple weeks later, the company, Modesto-based Applegate Johnston, Inc., filed for bankruptcy. Now it’s unclear if the project will be completed.
Modesto-based Applegate Johnston, Inc. was awarded a contract for San Jose’s EIC in 2011, despite having previously finished two fire stations several months late.
The company in April 2011 submitted the lowest bid out of nine contractors, which, under the city charter, San Jose had to accept or else put the project out to bid again. Well, sort of. The charter technically says “lowest responsible bidder,” so the city arguably could have passed on the guys with an iffy record.
But a looming June 30, 2011, deadline to apply for $4.5 million in “New Markets Tax Credit” financing forced the city to rush into contract to secure those U.S. Treasury Department tax credits.
Here are some meeting minutes from the May 2011 City Council discussion over the project, in which Councilman Sam Liccardo expressed worry over the company’s “compliance issues.”
The center at 1608 Las Plumas Ave. in San Jose, which was supposed to be completed this December and house Habitat for Humanity, a hazardous waste drop-off station and a lab for renewable energy projects, ran into a slew of problems: change-orders, asbestos and contractor delays. The federal financing turned into a complicated tangle, too, pushing the city to hire outside counsel to figure out how to deal with the situation. The EIC is about three-quarters of the way finished.
The tab kept ticking up after the city found out the contractor needed more insurance than originally expected. Plus, Applegate got the city to agree to waive a $282,000 penalty for finishing a fire station late. The city obliged, figuring it would cost about as much to enforce the penalty anyway.
Community watchdog and 2014 mayoral candidate David Wall submitted some correspondence to the Rules and Open Government Committee a couple weeks ago, slamming the city for screwing up and demanding City Manager Debra Figone host a “public apology workshop.”
“One thing is for sure, I am not responsible for the litany of failures that has caused the Environmental Innovation Center to go belly-up,” Wall writes. “I tried to stop this boondoggle, but, no, my warnings were not heeded. Therefore, who is going to step up to the plate and accept responsibility?”
Applegate’s website is down. Its Facebook page, however, is still up, and the target of a pretty angry subcontractor.
“DON’T WORK WITH THIS COMPANY!!! OR DON’T CONTRACT WITH THEM! THEY JUST WALKED AWAY FROM A JOB IN SAN JOSE WITHOUT SAYING ANYTHING!!! AND DECLARED BANKRUPTCY I DO NOT RECOMMEND [sic] THIS COMPANY AT ALL!!!!!!”