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Buffalo schools to pay $3.1 million owed LPCiminelli

The Buffalo Board of Education has agreed to resolve its dispute with LPCiminelli and pay the remaining $3.1 million it owes the developer for the decadelong school renovation and construction project, formally rendering the work complete.

The decision finally closes the books on what is widely considered the largest public works project in the city's history.

The two sides have been tied up in litigation for nearly three years, after the school district sued to force LPCiminelli to release financial records showing how much the developer profited on the $1.3 billion school renovation project.

The case took a turn on Wednesday, however, when the School Board decided to be done with the lawsuit and agreed to pay the remaining money the district was holding back.

The two sides released a joint statement calling it an “amicable resolution.”

“We’re very glad that the dispute has come to an end, because there should have been no dispute at all. Ciminelli was unfairly criticized for allegedly making excessive profit and there was never any basis for that claim,” said Benjamin M. Zuffranieri Jr., an attorney for the Hodgson Russ law firm that represents LPCiminelli.

“This was the largest public works project in the history of the City of Buffalo,” Zuffranieri said. “It was successfully completed on time and at the agreed cost. It was done in the most professional way possible.”

The School Board discussed the matter in executive session Wednesday, then emerged from behind closed doors and signed off on the $3.1 million payment.

At-Large Board Member Larry Quinn – who along with former Board Member Carl Paladino pushed for the district to get answers – voted against it.

Appellate decision revives Buffalo Schools case against LPCiminelli

So how much did LPCiminelli end up profiting from the project?

That’s still unclear.

“We were able to access certain information that we felt we were entitled to,” said Nathaniel J. Kuzma, general counsel for the Buffalo Public Schools. “At this point, the board has made a decision that it chooses to invest its dollars elsewhere as opposed to in this litigation and we’re going to move forward from there.”

The district already has paid out about a half-million dollars in legal fees on this case, Kuzma said.

“If we chose to continue, we would certainly battle it out with them and they would battle back and we would be in this for years to come,” Kuzma said.

Quinn understands why his colleagues on the board agreed to resolve the matter, but he was disappointed by the outcome and said he voted against payment on principle.

“It’s amazing to me that a contractor who worked for the School Board, who put us through three years of litigation, and they would not tell us how they spent our money,” Quinn said.

Kuzma, meanwhile, said closing out the payment would release about $11 million in unused project funds that are being held and would be returned to the district. He was unclear how those funds will be used and said that would be up to the School Board to decide.

Buffalo schools embarked on the ambitious plan of rehabilitating the majority of its aging buildings in 2000. In 2002, LPCiminelli was picked to manage the massive public works project and construction started in 2003.

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The construction was divided into five phases, included the renovation of 48 schools, and was completed in 2014 at a cost of more than $1.3 billion.

“At this point the parties have agreed, given the current stage of litigation, to resolve this and move forward,” Kuzma said. “The district is pleased with the work that LPCiminelli has done as it relates to the work and construction of the buildings and the rehabilitation of our buildings. We have fantastic schools as a result of this project.”

The comments made Wednesday were a far cry from three years ago, when the district sued LPCiminelli after Paladino – then a member of the School Board – raised allegations of profiteering by the company.

Attorneys for the school district filed the lawsuit in February 2016, alleging that LPCiminelli, while managing the school renovation project, withheld financial information as part of a scheme to conceal profits.

The district asked for the release of all financial records documenting how much of the $1.3 billion was spent renovating the 48 schools, and said it would have fired the company – or demanded more of the money be spent on school renovations – if it knew how much profit LPCiminelli was making. The allegations prompted an analysis conducted in 2015 by The Buffalo News, which found that approximately $400 million of spending on the project was unaccounted for in public records.

Buffalo school district sues LPCiminelli over school renovations

The lawsuit sought an undetermined amount of financial damages, including repayment of the company’s profits, along with punitive damages and interest.

But, in 2017, State Supreme Court Justice Timothy J. Walker determined LPCiminelli fulfilled its obligations to renovate dozens of schools and dismissed several aspects of the lawsuit.

In February, LPCiminelli won another big victory when State Supreme Court Justice Deborah A. Chimes found no evidence that the company hid information from the district or failed to properly rehabilitate the schools. The judge directed the school district to pay up.

In March, an Appellate Court ruling breathed new life into the case and raised further questions about whether the company withheld any information it was required to provide to the district.

The Appellate Division of State Supreme Court in Rochester ruled for neither side, but returned the case to a lower court to clear up confusion in the contract language between the district and developer.

The court still had not ruled on the most recent matter before Wednesday, when the two sides came to a resolution.

LPCiminelli agreed not to press the district for interest on the payment, because a judge would have to rule on how much and at what rate, and the two sides didn’t want to drag this out any longer, said Zuffranieri, an attorney representing LPCiminelli.

The dispute over the Buffalo schools project was unrelated to the conviction of the company’s former head, Louis P. Ciminelli, who was indicted over the summer on federal bid-rigging charges connected to the giant RiverBend industrial project.

Since the indictment, LPCiminelli – once the region’s dominant general contractor – has been winding down its operations, but still exists in name.

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