Majority of contractors on city library project unpaid

Companies out at least $149K

SAN ANTONIO - Only four of the 14 companies that helped renovate Collins Garden Library have received payment from the primary contractor on the project, according to city records obtained by The Defenders.

The owner of one of the companies said her business is now on the brink of shutting down, while a second company is being sued after not getting paid.

"It could potentially put us out of business. And that is exactly what I explained to the city," said Elma Demory, owner of Allied Associates Commercial Floors.

Records show Allied performed more than $94,000 in flooring and tile work on the near west-side library, which reopened in late January after undergoing more than $654,000 in renovations.

Demory said she first reached out to the city to get insurance information in January, so she could file a claim with the bonding company - after the primary contractor on the project did not pay Allied for work performed.

The city did not release the bond information until late March, when it finally acknowledged issues with both the project and the primary contractor, the MGB Group, according to emails.

Additional records provided by Demory show by the time her company filed an insurance claim, it was six days too late to recoup any money.

The insurance company also said Demory's claim lacked the necessary paperwork to be processed correctly.

Demory said counting interest on a line of credit Allied took out to pay for the Collins Garden project, her company is now out more than $100,000.

The city entered into a contract with the MGB Group in June 2015, for the El Paso based company to be the primary contractor. 

MGB then hired subcontractors to perform much of the work on the library, located southwest of downtown at 200 N. Park Blvd.

Among the other companies that have confirmed they were not paid for the project are a door company that is out $5,000, a roofing company out more than $17,200 and a window-covering company that was later dropped from the project, but was never paid for administrative work it had already performed.

A representative for an inspection company that city records show was also not paid for the project refused to tell The Defenders how much money her company is owed, claiming her company's attorney said not to discuss the situation.

Bexar County court records show the electrical company on the Collins Garden project, Consolidated Electric Service, is being sued for more than $24,000 by a parts supplier.

The company's owner confirmed to The Defenders via telephone the suit stems from not getting paid for work performed on the library.

Based on figures confirmed by The Defenders, the unpaid companies combined are out at least $149,000.

"We're sympathetic to it," said Mike Frisbie, the city's transportation and capital director. "We're very concerned anytime someone is not getting paid."

Frisbie said TCI began to step in as soon as it noticed issues with MGB earlier this year. The city eventually fired MGB from two other projects: the Nani Falcone Dog Park and French Creek Park Trailhead, both on the northwest side.

"MGB was a new contractor, a small business, a good opportunity for them to show that they could be successful. We worked alongside them to help them be successful, and in the end they couldn't do it," said Frisbie.

Records show the city released more than $16,000 to MGB for flooring under the category "Work Completed" between Oct. 22 and Nov. 23, 2015. Demory pointed out her company did not begin installing floors at the library until last December and had yet to even bring flooring materials to the job site when the money was released to MGB.

Frisbie said its not unusual for a contractor to submit an invoice before work is started, since contractors have only 10 days to pay subcontractors after getting money from the city.

While Demory criticized the city for what she described as a "lack of oversight," Frisbie pointed out the city's contract was with MGB, not with the 14 subcontractors on the project.

"Our legal agreement is with them (MGB), then they hire subcontractors and they have a legal agreement with them to perform work. We're not part of that subcontractor agreement," Frisbie said.

An El Paso obituary indicates MGB's president, the person whose signature appears on payment paperwork for Collins Garden Library project, died this summer.

Demory said her company may have to file a lawsuit against the man's estate.

The Texas Comptroller's website indicates MGB is still licensed to perform work in the state, although multiple owners of companies involved in the Collins Garden project said the contractor appears to be going out of business.

What remains unclear is why the city waited so long to release the bond information to Allied or acknowledge problems with MGB.

During a meeting last month between Demory and officials from TCI and the city's Economic Development Department, a TCI contract manager said the city stopped payments to MGB for the Collins Garden project in January.

The same employee said it is city protocol to release bond information when it is requested by a subcontractor. Demory said instead, her staff was repeatedly told to get the information from MGB.

Additionally, the owner of a glass company who was unpaid for work at Collins Garden told The Defenders she was able to file a claim with the insurance company and got paid, after the city released the bond information to her.

Frisbie said the city recently sent a letter to the bonding company stating it should pay Allied for the project.

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