The contractor working on the Nexus Center in downtown Utica is suing the Upper Mohawk Valley Auditorium Authority and Oneida County for at least $10.4 million for work completed on the project.
The lawsuit, filed in state Supreme Court in Oneida County, concerns the 170,000-square-foot athletic facility adjacent to the Adirondack Bank Center on Route 5S in Utica. The $50 million Nexus Center is expected to hold four ice rinks, locker rooms, spectator seating and other amenities for youth tournaments when complete.
Construction on the project has been halted since May due to the coronavirus pandemic and concerns over cash flow. The contractor, Hueber-Breuer of Syracuse, is seeking the amount owed for completed construction, as well as interest since July 6.
The contract between the Aud Authority and Hueber-Breuer allowed work to be suspended for 90 days, according to the lawsuit.
Hueber-Breuer did not respond to a request for comment.
So far, the county has paid $9.7 million of $18.1 million owed to the contractor on behalf of the Aud Authority, according to the lawsuit. The county was being reimbursed by the state for up to $22 million in payments, as a result of a grant through Empire State Development.
Oneida County Executive Anthony Picente Jr. said the county has fronted the money for similar large scale projects, such as the redevelopment of the Adirondack Bank Center, on behalf of the Aud Authority before state reimbursement.
When COVID-19 hit, the county wasn’t able to continue fronting the money due to effects on revenue and cash flow, Picente said. In April, the county told the Aud Authority it could no longer afford to pay upfront costs and await state reimbursement, he said.
The county has remained in contact with ESD over the suspension of work on the project, and Picente doesn’t believe the state funds are in jeopardy.
“It has not been pulled back in any way,” Picente said. “However, we … won’t get reimbursed until the project has a complete financing package behind it, which it doesn’t have right now.”
The Aud Authority had not secured another funding source for the remaining cost of the project, Picente said. So when the county wasn’t able to pay the initial costs before state reimbursement, the project ground to a halt.
Upper Mohawk Valley Memorial Auditorium Authority Chairman Carl Annese said it’s not a question of if the contractor will be paid, but when. The lawsuit was no surprise after payments weren’t made, Annese said.
“We had a contract, and the contract states if payments aren’t made within certain terms, they’re open to be able to go after the money,” Annese said. “So it’s just sticking with the contract.”
Annese said the Aud Authority was in the process of securing the additional funding needed for the Nexus Center when the pandemic hit.
“Municipal bonds went out of the realm of possibilities at that point,” he said. “But now they’re coming into where the rates are favorable, and it’s something that we’re working on.”
The lawsuit said the contract required funding for the full contract cost to be in place by February.
The lawsuit alleged the county intended to use an increase in hotel occupancy tax to finance the remaining cost of the Nexus Center. The tax increase, from 2% to 5%, was approved by the state Legislature and Gov. Andrew Cuomo in 2019.
While a portion of the hotel occupancy tax increase was intended to be used toward the Nexus Center, Picente said the increase was not passed solely to fund the project. The contractor’s lawsuit alleged $27 million of the cost would be covered by the tax increase.
Picente said the Nexus Center would be funded through the state grant, an increase in the county’s hotel occupancy tax and the Aud Authority back in February.
While Picente said while he understands Hueber-Breuer’s need to get paid, the county doesn’t have a contract or agreement with the company.
“I’m not so concerned about the county of Oneida in terms of this (law)suit,” he said.
This article originally appeared on Observer-Dispatch: Contractor sues Aud Authority, Oneida County over unpaid work on Nexus Center