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County loses arbitration case, must pay $52.6 million to contractor

An arbitrator ruled Wednesday that Clark County must pay $52.6 million to a contractor it had publicly criticized for construction flaws that caused the Regional Justice Center to open four years late and millions of dollars over budget.

The binding decision deals a blow to county officials who had blamed AF Construction for an array of defects plaguing the project and had expressed confidence about winning a long-running legal feud.

The county sued AF Construction, claiming the company’s sub-par work led to cost overruns, excessive delays and breach of contract. The company countersued, saying the county defamed its reputation and withheld essential payments, driving it into financial hardship.

No written opinion was available Wednesday. But Don Burnette, the county’s chief administrative officer, said the arbitrator backed AF Construction and awarded the contractor $39 million in damages plus $13.6 million in interest.

Burnette said the county will explore whether it can file an appeal and, if so, whether it will challenge the finding.

"We obviously need to read the decision, review our options and decide what option makes the most sense," Burnette said in an e-mail.

Burnette didn’t specify what funds the county might tap to cover the cost of the settlement.

Attorneys representing the county and AF Construction weren’t available to comment Wednesday. Paul Faulkner, the company’s owner, also couldn’t be reached.

While in the design phase, the 17-story justice center was hailed as a downtown centerpiece that would augment the area’s redevelopment.

A $120 million bond issued in 1996 provided the funding.

In January 2000, crews broke ground at the site on Casino Center Boulevard after AF Construction turned in the lowest bid of $123.5 million.

But the project became mired in construction problems and bickering between the contractor and the county.

After work dragged on and troubles mounted, county leaders brought in Aviation Director Randall Walker to oversee construction because of his experience with large airport projects. Walker also couldn’t be reached for comment Wednesday.

Walker ferreted out a host of defects, including sloping floors, leaky windows, faulty steel-column footings and tic-tac-toe games scratched into doors.

Company officials blamed the county’s designs for many of the problems and insisted they immediately fixed whatever mistakes crews made.

The county issued 120 noncompliance certificates and refused to pay the contractor until the glitches were fixed. It also penalized the company $12,000 a day for 10 months.

The Regional Justice opened in November 2005, almost four years late, double the size originally planned and $60 million more than AF Construction had bid.

Now the $52.6 million settlement cost could be added to the price tag — a prospect that concerns one taxpayer advocate. With the local economy struggling and the state threatening to slash funding for county programs, this hefty judgment is ill-timed, said Carole Vilardo, president of the Nevada Taxpayers Association.

Vilardo said she was surprised at the outcome.

"I thought the county would prevail," she said. "That is just going to be another item that the county will be faced with as it tackles budget issues in the economic downturn."

Contact reporter Scott Wyland at swyland@reviewjournal.com or 702-455-4519.

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