Newnan Centre subcontractors getting paid through bonding firm’s account
By JOHN A. WINTERSjohn@newnan.com
Subcontractors working on the Newnan Centre, who have complained of not being paid by the contractor, are now getting paid — but not by the contractor.
In essence, the city of Newnan is no longer making direct payments to contractor D. Dean & Associates, but instead sending money to Dean’s bonding company, Ohio Casualty, to ensure subcontractors are being paid. Ohio Casualty is ultimately responsible to ensure the complex is built on time and on budget.
However, at least one major subcontractor said it’s still possible to meet that deadline, if “we can get the ball rolling.” That subcontractor, Jimmy McGuffey, president of Shenandoah Electrical Services Inc., also had high praise for the proactive efforts of city officials to resolve the problem.
In a letter dated Wednesday to subcontractors and Newnan city officials, contractor president Danny Dean said his company was facing severe financial problems. He said the company will shut down April 16 unless the bonding company assumed all payments to subcontractors and vendors, as well as the financial operations of the company’s home and field offices. That apparently includes not only the Newnan project, but other projects Dean has ongoing in other states.
Dean said the bonding company had to agree to that by Friday. His letter was in response to a recent request by Newnan officials to Dean and the bonding company to tell them what they were going to do about the payment problems on the Newnan Centre. That response also was due Friday.
However, Parks Avery, chairman of the Newnan Convention Center Authority that runs the facility, said Friday that deadline was extended to end of business Monday at the request of the bonding company.
“Right now we are just sitting on our hands, and it’s not a very comfortable place to be,” Avery said. “We are waiting to hear from the bonding company, and it’s up to them.”
As of now, Dean is in default on its contract for not paying its subcontractors. The convention authority, with Avery as its agent, can terminate the contract with Dean and make the bonding company take over and get a new contractor. That termination action has not been taken yet.
Also on Friday, Newnan City Attorney Brad Sears said, “We know the bonding company and Dean are talking, and we are waiting to see if we get a response.”
“We are no longer paying Dean directly,” he added. “The city is paying the bonding company, and it’s up to the bonding company to pay the subcontractors.”
Avery said the change in payment methods was at the request of Dean and the bonding company. That change started with the last monthly billing statement.
“This is only on the new bills,” Avery said. “The big concern is the stuff that’s past due to the subcontractors.”
Both Avery and Sears said subcontractors will get paid, but when that will occur for past bills is unclear.
Dean was required to have a performance bond; a guarantee backed by Ohio Casualty that the job would be done on time and on budget. If Dean defaults, Ohio Casualty takes over as contractor and must ensure bills are paid and the complex completed.
The bonding company also faces penalties if the complex is not completed on time, although city officials are declining to say what those damages could be.
“We have reached the point where we’ve put these people -- the contractor and the bonding company -- on notice that they have to fulfill their obligations,” Sears said.
McGuffey, whose local company is one of the biggest subcontractors on the Newnan project, said he started seeing problems toward the end of January and early February.
“The city has really been proactive on this situation,” McGuffey said. “Cleatus (Phillips, city manager) and Parks (Avery) have been on top of this since they heard about it. Their actions have really saved potentially months of downtime.”
McGuffey said it’s still possible to meet the Aug. 8 opening date.
“If we can get the ball rolling, I think we can make it,” he said. “It’s going to be close, but there are some good subcontractors out there and the project superintendent is great.”
