Dispute over construction documents prolongs University of Iowa building payment fight

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CEDAR RAPIDS, Iowa (KCRG) - A Cedar Rapids business says the University of Iowa owes it millions of dollars for construction work.

But the university refuses to pay.

This stems from an ongoing dispute over construction at the Stead Family Children's Hospital.

Last week, University President Bruce Harreld said they would pay Modern Piping for about $18 million dollars that was owed for work at the Stead Family Children's Hospital.

But Harreld told the Iowa Board of Regents on Thursday that won’t happen just yet.

Harreld said the university will not pay Modern Piping until it receives the final as-built construction documents from the company, a condition of their contract, according to Harreld.

A cover sheet sent to KCRG shows Gilbane Building Company reviewed Modern’s as-builts for the hospital on Sept. 25, 2017, and Jan. 18, 2018. Modern’s attorney, Jeff Stone, said Gilbane acted as an agent for the University of Iowa on this project, and that the university had access to those documents since then.

On June 6, 2018, the project’s engineering and architecture firms both marked the as-builts with “no exceptions taken.” Stone said that distinction means those were the final as-builts, and therefore, the University of Iowa had them then.

But the University of Iowa said those are not the final documents. On Thursday, Harreld told the Board of Regents that those documents hadn’t been received.

“I’ve kind of had it here, and so I actually fully am prepared to pay what we owe them, but I also want in return the construction documents,” Harreld said.

In an email from Friday morning, Scott Hansche of Heery, the architecture firm for the project, told university employees he hadn’t gotten them either: “As well as not receiving the corrected Modern As-Built Drawings for BP 15. We have not received any As-Built drawings for Merits Bid Packages.”

Merit Construction is another contractor that worked on this project and was also owed millions by the University.

Modern Piping said it’s willing to give the University of Iowa a discount on the money that Modern is owed for construction on this building. Modern sent a settlement to the university for $17.8 million, which includes $16.9 million from arbitration awarded in favor of Modern by the court and just under $1 million in interest, also a component of the court’s ruling. Modern discounted $126,129.13 to the university as a “compromise.”

But the University of Iowa has not signed the agreement, choosing to hold out until the documents are delivered.

Harreld said the university needs these documents for building maintenance.

“Then when there is and if there ever is a leak or any other concern, we know what’s behind the wall. We know exactly where pipes and bowels are, and we can go address those,” he said.

More emails show there has been at least one issue like this recently in the building.

An email from January of 2019 from a University of Iowa employee to Modern Piping asked for the as-builts because of “an issue at SFCH [Stead Family Children’s Hospital] where there is a strong sewage smell that are [sic] engineering services and design team are having difficulty tracing the source of.”

Mike Shive of Modern Piping wrote back, “Until this darn claim gets settled, our hands are tied. The as-builts along with completed LEED forms are sitting on my desk ready to deliver.”

Earlier Friday, the University of Iowa said it put the full amount of money ordered by the court to Modern Piping in an escrow account.

The university said that money will be paid once the final as-builts are received.