Region businesses say they're owed $2 million on project to build C.P. VA clinic

2012-04-03T19:30:00Z 2012-04-05T00:25:11Z Region businesses say they're owed $2 million on project to build C.P. VA clinicBy Bowdeya Tweh bowdeya.tweh@nwi.com, (219) 933-3316 nwitimes.com

CROWN POINT | Even after seven months of waiting for a check and with legal bills mounting, James Larsen hasn't lost his resolve to get paid $16,800.

But it appears he will have to wait in line with at least 15 other businesses, most based in Northwest Indiana, that are owed an estimated $2 million on a project completed last year. The money is tied to unpaid services rendered to build a larger, replacement Adam Benjamin Jr. Veterans Affairs Outpatient Clinic near the old building.

The clinic at 9301 Madison St. has been a sore spot for many companies since it was completed in September.

"As of today, nothing has happened," said Larsen, president of Mechanical Test & Balance Inc. in Crown Point, on Tuesday. "That sucks, especially in this day and age with the economy. We need our money, and we can't seem to get our money."

While the subcontractors on the project are missing money, disputes have persisted for months on who should foot the bill. Both Crown Point VA Co. LLC, the site owner and project developer, and the general contractor Welty Building Co. believe they are owed money from the other party.

Thomas Crist, an attorney for Carnegie Management and Development Corp., the company that incorporated Crown Point VA, told The Times in January that Welty shouldn't be paid more than the $12.1 million maximum price agreed upon for the project. He also said Carnegie, which is based in suburban Cleveland, directly has paid Welty's subcontractors millions of dollars.

Welty, based in suburban Akron, Ohio, said in a statement to The Times that it recorded a mechanic's lien of nearly $2.4 million against the clinic building, which is the money it said will satisfy payment demands of its subcontractors and suppliers.

"It is a shame that the owner is not paying for work performed by subcontractors and at the same time is collecting rent from public tax dollars since August of 2011," the statement said. "Welty remains willing to discuss with the property owner a way to resolve any issues and get its subcontractors and suppliers paid."

The clinic is part of the Department of Veterans Affairs' Great Lakes Health Care System. The federal government signed a 20-year lease effective Aug. 5 with Crown Point VA to operate the clinic, according to documents provided to The Times in a Freedom of Information Act request. Lease terms call for the site owner to get nearly $143,300 in monthly rent in addition to other building-related expenses.

Absent other options, Clara Murphy, secretary-treasurer of Gatlin Plumbing & Heating Inc. in Highland, said the company plans to foreclose on the property after filing a mechanic's lien last year. The company also sued Welty, Carnegie, Ohio Farmers Insurance Co. and Roth Bros. Inc., of Youngstown, Ohio, last month in U.S. District Court in Hammond for breach of contract, claiming it is owed about $81,500. Murphy said the firm continues to hold out hope that reaching out to officials such as U.S. Rep. Pete Visclosky, D-Merrillville., and U.S. Sen. Dan Coats, R-Ind., can expedite payment.

Although the disputes surround a building a federal agency uses, VA spokesman Mike Molina said he doesn't expect litigation to affect clinic operations. He said the VA would pay whoever the courts tell it to and the VA plans on continuing to be a building tenant.

Welty and Carnegie are also in the middle of subcontractor payment disputes on a project in Indianapolis involving the construction of a new FBI office building, said Tom Linton, project manager for a Youngstown, Ohio, firm involved in both projects. Linton said Roth Bros. is owed as much as $500,000, and the company has filed suit in U.S. District Court in Terre Haute seeking payment from Welty and Ohio Farmers Insurance.

"It's unfortunate the way the system works in that it seems like the vehicles that you have to collect money that you're owed don't seem to be all that productive," Linton said.  

The Adam Benjamin clinic has about 150 full-time staff members, and, in the 12 months ended June 30, the facility had 94,000 outpatient visits for 13,375 individual veterans residing in Northwest Indiana and surrounding areas, Molina said.

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