AGC Member Sues Fitchburg Housing Authority; No Funds Available After Work Begins

In what appears to be the most blatant disregard of public payment statutes that requires the certification of available monies prior to the commencement of work, AGC member Colantonio Inc., Holliston, (CI) has filed suit against the City of Fitchburg Housing Authority regarding the Groop/Townview Towers Assisted Living Project.

Although the Housing Authority executed a contract with CI and certified that the funds were in place to renovate the building units, the city admitted that there were no funds to construct the project. CI halted work after $1.8 million and four months into the project. The city is blaming the consultant, CenterPoint Foundation in Quincy. CI’s suit is for the $1.2 million it claims remains unpaid. O’Reilly, Grosso & Gross is the attorney for CI.

AGC is assisting with the issue through a letter writing campaign to public officials. 

In December 2006, CI was the lowest, responsible and eligible general bidder for the project.  CI executed a contract in December in the amount of $7,538,000.  FHA executed the contract in March 2007 and in June, FHA issued a notice to proceed to CI.  CI and its subcontractors worked the months of June, July, August and into September, providing labor and materials with a value of $1,857,900.  During that same time period, FHA paid CI $641,524.  On September 18, 2007, FHA notified CI to stop work because there were no more funds available to pay CI or its subcontractors.  At that time, CI was advised that HUD had failed to provide $3,500,000 in grant funding for the project. 

Unfortunately, there have been no commitments by HUD, the State Department of Housing and Community Development (DHCD) or FHA to pay CI and its subcontractors the $1,216,376 presently owed or to provide adequate funding to complete the project. A suit was filed against the city last fall. At this point CI and its subcontractors have not received any funds for the past eight months.  The situation has now become unconscionable. 

In a letter to the Governor and key legislators, AGC maintained that if our member firms cannot rely upon the public awarding authority to have sufficient funds available to pay for the projects upon which they bid, they will no longer bid public work.  What is more egregious is the fact that FHA knew the funding was not in place when it issued the notice to proceed to CI. The Commonwealth cannot allow its political subdivisions to cause contractors, acting in good faith, to spend money bidding and building construction projects for the citizens of the Commonwealth with no guarantee that they will be paid.  At the present time, there are still no guarantees from either HUD or DHCD that FHA will have sufficient funding to pay for the work already performed, let alone to complete the project. 

A summary judgment is expected in the near future.