After years of allegations and half-a-million public dollars in legal fees, the Buffalo School District last week gave up and agreed to pay $3.1 million still owing on a $1.3 billion renovation project. It was the right call.
Largely at the insistence of Board Member Larry Quinn and former member Carl Paladino, the school district had refused to make the final payment, arguing that the contractor, LPCiminelli, had reaped excessive profits at the public’s expense.
The district sued, seeking to force the developer to release financial documents relating to the renovation of 48 schools. The public project, which was pursued in five phases and was completed in 2014, is thought to be the largest in Buffalo’s history.
But last week, after nearly three years of litigation, the school board abandoned the fight and agreed to pay up. “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,” said Nathaniel J. Kuzma, general counsel for the Buffalo Public Schools. The alternative, he succinctly noted, would to be racking up legal fees “for years to come.” And for what purpose?
The board thought it saw something nefarious in the numbers while defenders of LPCiminelli observed that the project was completed on time and within the budget to which the parties had agreed.
To that extent, if the contractor did walk away with excessive profits – a distinct possibility – then the fault lies with the school district for signing off on the agreement in the first place. And it is absolutely possible that the district overpaid.
The Buffalo News analyzed spending on the project in 2015 and identified about $400 million that was unaccounted for in public records, a figure that suggests profits of around 30 percent. Contractors on similar projects typically clear about 10 percent.
If that were true, then taxpayers have a right to complain. The question would be who to blame. After three years, all that has been shown is that the company and the school district agreed to a price both apparently found acceptable.
Given those facts, it was time to move on, even if LPCiminelli had been profiteering. Legal fees were mounting and there were no prospects of resolution. The district risked throwing good money after bad.
Indeed, momentum in the lawsuit swung wildly in recent months. A state judge dismissed two of the lawsuit’s claims last year and another judge threw out two others in February. In March, the Appellate Division in Rochester revived the lawsuit, but without ruling for either side.
There things stood until last week, when the district decided to cut its losses, and those of the taxpayers whose labors provide its money.
The decision may be cold comfort for LPCiminelli and its former CEO, Louis Ciminelli. The company fractured under the weight of criminal charges against Ciminelli, who faces the possibility of prison as a result of his conviction in a bid-rigging scheme unrelated to the school project.
For Buffalo schools and other public entities, it’s a warning to be sure of what they are agreeing to before they put their names, and taxpayers’ dollars, on the line.