The cost of razing Kensington Heights is skyrocketing likely doubling to $10 million or more because of a string of problems at the site as well as the federal government's continuing concern over how the demolition is being done.
The latest attempt to take down the long-abandoned public housing complex visible from the Kensington Expressway began last week, when the third in a line of contractors began working under a no-bid contract to demolish two of the six high-rise apartment buildings.
The new contractor, Aria Contracting of Orchard Park, was hired under "emergency" contract provisions after the project ran into environmental problems for the second time since early 2011, and the contractor at the time walked off the job.
The $3.3 million contract -- with a possible $5 million extender -- upset several local asbestos/demolition contractors who didn't get a chance to bid on the job.
"This doesn't seem right to me," said Harold Hibbard, president of Metro Environmental Inc. of Niagara Falls, who recently sent the Buffalo Municipal Housing Authority a letter asking why his company was not allowed to bid.
"In today's environment, every government agency should want to get the best bang for its buck. You want to get as many prices as possible from as many qualified bidders as possible," he said.
"It's shocking, given how much press there has been and the indictments that have come out of this, that they [did not put this out to bid]," added Michael Noville, co-owner of Geiter Done Demolition & Disposal of Buffalo. "A job this big would have attracted out-of-town bidders. The bid should have been on a national basis."
The contract controversy is the latest in an ugly series of incidents surrounding the Housing Authority's efforts to tear down six towers at Kensington Heights that scar the neighborhood and the Buffalo landscape.
And it occurs at a time when the authority has disclosed that the total cost of the project, once estimated at $5 million, is now expected to cost at least $10 million. That's about $5 million more than the authority has available to fund the job.
Housing Authority officials blame the increased costs and the need to negotiate a no-bid contract on the actions of past contractors -- one who was indicted and another who walked off the job -- as well as tougher requirements from the U.S. Environmental Protection Agency.
The Housing Authority is under pressure from federal regulators to get the job done as soon as possible, necessitating the emergency no-bid contract, said Terrence M. Gilbride, a Buffalo attorney hired by the authority.
But the authority is also coming under criticism.
"You can never have a good project with a bad owner," said Jerome P. Williams, vice president of Apollo Dismantling Services, which walked off the job last year.
"The BMHA keeps pushing out one contractor after another from this job. Every time something goes wrong, the BMHA says the same thing -- 'It's not our problem, not our fault.' As far as I can see, the common denominator in all these things that went wrong is the involvement of the BMHA. They seem to have an unlimited supply of money for lawyers, and they always blame everyone else."
>'I think the job is cursed'
Widely considered one of the city's worst publicly owned eyesores, Kensington Heights is close to several residential neighborhoods, three city schools, a playground and many small businesses. And it is highly visible to visitors entering the city via the Kensington Expressway.
After the complex sat vacant for 30 years, the Housing Authority raised hopes in the community in 2009, when it announced the dilapidated towers would finally be taken down and replaced with a $105 million retirement complex.
But efforts to tear down the structures have been a fiasco, resulting in a flurry of lawsuits and criminal indictments, as well as health concerns over asbestos improperly handled and remaining at the site. Plans for the retirement community have been abandoned.
"I've been looking at these abandoned buildings my entire life," said Eric Alexander, 22, who lives in the neighborhood. "I don't see a chance that anything good is going to happen over there. I'd love to see a gym built over there, some apartments something."
There was optimism among neighbors when contractors began work on the site a couple of years ago, "but then it all stopped, and nothing since," added Josh Simmons, 22, who was playing basketball with Alexander and Ramon Burgos outside Lydia T. Wright School of Excellence, a city elementary school adjacent to Kensington Heights.
"It feels like this neighborhood has been forgotten," said Burgos, 21, a Medaille College student.
Said David M. Mazur, a local demolition executive who is not involved with the project: "I think the job is cursed. They have a huge mess over there."
Among the problems:
*Asbestos removal that began in June 2009 was halted in January 2010, after safety inspectors began investigating anonymous complaints that the work was being done improperly. HLM Holdings, which planned to build a retirement community at the site, and the Housing Authority sued each other.
*A new company, Apollo Dismantling Services of Niagara Falls, was hired in May 2011. But Apollo stopped working at the site in September. The Housing Authority said Apollo planned to demolish a building that, monitors found, still had some asbestos in it. Apollo says the Housing Authority misled it on the level of work required to remove asbestos from that building and the entire site. The Housing Authority disagrees. Apollo and the authority are now suing each other.
*In August 2011, federal prosecutors obtained indictments against nine individuals and two subcontractors that had been associated with the asbestos work. The defendants included a state inspector and two city inspectors who were supposed to make sure the work was done safely. The alleged illegal activities took place before Apollo entered the picture.
*Also in August 2011, federal regulators inspected the Kensington site and found asbestos on the grounds and in Dumpsters, presumably left by the original subcontractor. It was determined the amount of asbestos detected outside buildings wasn't a public safety risk. But the Environmental Protection Agency, in a compliance order, accused the Housing Authority of violating the Clean Air Act and ordered that a more-rigorous cleanup plan be adopted.
And now, there's the controversy over Aria's contract, while costs escalate far beyond what the Housing Authority can afford to pay.
>The scope of the work
During interviews last week, authority officials denied giving a sweetheart deal to Aria Contracting. They said they awarded the no-bid contract because they faced an emergency situation beyond their control.
Under state law, a public agency that faces a health or safety emergency can hire contractors without putting a job up for bidding, Housing Authority attorney Gilbride told The Buffalo News.
Under a compliance order issued last September by the EPA, the Housing Authority was directed to move quickly to have asbestos removed from the 17-acre site on Fillmore Avenue, and hefty fines were threatened, Gilbride said.
"The emergency situation was triggered by the EPA's compliance order and concern for the health and safety of the community," the attorney said.
Soliciting public bids for the project would have taken "another 90 to 120 days," Gilbride said, so the authority decided to negotiate with Aria on a contract, which was agreed upon last month.
Why was Aria the only company the Housing Authority approached to negotiate a contract?
Because Aria was the second-lowest bidder last year, when the authority granted an earlier contract for the asbestos removal/demolition job to Apollo, Housing Authority officials said.
The scope of Aria's work, however, is different from Apollo's, because the work must now meet more-rigorous specifications required by the federal compliance order, authority officials said. It also requires cleanup related to work done by the first contractor and reconstruction of barriers removed by the second contractor, Gilbride said.
Apollo was to be paid $3.1 million for asbestos removal and demolition of all six towers.
Aria will get $3.3 million to knock down just two towers as part of what is being called Phase 1 of the project. Phase 1 includes removing asbestos-contaminated soil from the site.
In a proposed Phase 2, Aria has agreed to knock down the remaining four buildings for an additional $5 million. The Housing Authority is interested but doesn't have the funds.
Those costs are in addition to $1.7 million the Housing Authority has already spent on the project, most of that under the initial contract with HLM.
James Jerge, who heads Aria, did not return three calls seeking comment, and a company secretary said no other spokesman was available.
In the 1990s, Jerge's company was found guilty of 14 state code violations involving the removal of asbestos, and a prior company Jerge was involved with, Zeon Corp., was the victim of a shakedown. Jerge went undercover for the FBI and helped authorities convict a Niagara Falls civil engineer.
While Housing Authority officials said they see no legitimate reason why Apollo left the job, Apollo officials recently filed a lawsuit accusing the authority of breaching its contract with it.
Apollo was working at the site and declared one of the buildings ready to be demolished, but monitoring firms hired by Apollo and the Housing Authority determined there was still asbestos in the building, Gilbride said.
New York State regulators then notified Apollo it needed to meet the more-rigorous cleanup standards that were approved for the previous contractor, according to court papers.
"We were told we'd either have to stop the job or use much different procedures, which would have been much more restrictive and expensive than what we were doing," Apollo owner Samuel M. DeFranks said.
Apollo notified the Housing Authority it was terminating their agreement, according to court papers.
The Housing Authority misled the company, having never told Apollo about the stricter state standards required for the job, Apollo charges.
"If we knew about the state variances we'd be dealing with, our bid might have quadrupled," DeFranks said. "We may not have bid on this project at all."
The Housing Authority denies misleading the company.
"Apollo's comments show that they did not understand the terms of their engagement," Gilbride said.
Apollo officials accused the Housing Authority of engaging in "favoritism and corruption" by subsequently handing a no-bid contract to Aria.
"If they put the work out to bid, the BMHA could have saved at least $1.25 million," estimated Williams, the Apollo vice president.
Housing Authority officials denied wrongdoing and said they got a reasonable price from Aria. They said they hope to obtain the additional $5 million needed to complete the job within a year.
"We still hope to eventually develop this site into some kind of senior living project that would be wonderful for the community," said Dawn E. Sanders, executive director of the authority.
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