Government & Politics

KCI airport contractor trailed by local history of delays, defects, payment disputes

When firms submitted their bids to build the new single terminal at Kansas City International Airport, they turned over binders of detailed information about their qualifications and plans.

But the winning bidder, Edgemoor Infrastructure & Real Estate, didn’t disclose that the Weitz Company, one of three contractors it tapped to help manage the $1.5 billion project, had to pay hefty, court-assessed penalties for failures on an apartment development from which it was fired nearly 13 years ago.

Subcontractors that worked with the Des Moines-based firm on three other more recent local projects tell stories similar to those laid out in court records from years ago. They told The Star that Weitz mismanaged the jobs, leading to delays, defects and disputes over payment. The firms had to file liens against the properties to collect hundreds of thousands of dollars they say Weitz unjustifiably withheld. Some of them are still in court battles with Weitz.

Some subcontractors who spoke with The Star said they eventually got paid in full and that such conflicts were typical in the construction industry.

Others were left with poor impressions of the general contractor.

“There’s a lot of people that have had unfortunate bad luck with Weitz,” said Josh Turner, president of Turner Ceramic Tile.

Weitz, which also has an office in Lenexa, is part of a joint venture with Clarkson Construction Company and Clark Construction Group working at KCI. The group — known as CWC — and Edgemoor will lead the city’s most significant public works project in a generation, one voters endorsed overwhelmingly in 2017.

Officials have stressed that the KCI rebuild must be finished on time and on budget. Airlines guaranteeing the construction debt set a hard spending cap after balking at an earlier $1.64 billion budget. Crews broke ground in March and the terminal is expected to open just weeks before the city welcomes fans for the NFL draft in spring 2023.

“We would miss a great opportunity to showcase the improvements we’ve made in this city if we have our airport not open at the time we get national and international attention brought on the city,” City Manager Troy Schulte said. “... We’ve got to deliver this project no later than early 2023.”

When Edgemoor bid against Burns & McDonnell, AECOM and Jones Lang LaSalle to build the terminal, the city asked the firms if they had ever been assessed penalties for delivering a project late or over budget.

AECOM and JLL said their general contractors had not. Burns & McDonnell’s proposal didn’t address the issue. Edgemoor, answering for itself, said no.

But Edgemoor made no mention of a nearly $5 million court-mandated penalty Weitz had to pay as a result of the job from which it was fired.

In an emailed statement, Edgemoor’s managing director Geoff Stricker said the question was directed only at Edgemoor as the bidder, not its entire team. He noted Edgemoor’s lack of prior penalties.

“We are confident in our team’s ability to achieve that same result in Kansas City,” he said.

Stricker said he was aware of the issues — delays, disputes and damages — Weitz has encountered in the area but that Edgemoor would not comment on the business and legal dealings of its project partners. He did not directly answer a series of follow-up questions about its knowledge of Weitz’s history and the firm’s role in the project, instead reiterating Edgemoor’s policy not to comment.

Mike Tousley, the Weitz Company’s executive vice president and general manager, said in a statement that the firm would “not discuss business related to private projects or disclose information related to legal matters.”

Schulte, one of several city officials who evaluated the terminal proposals, said that while he appreciated Edgemoor’s experience with public-private partnerships, Clark’s track record on airports and Clarkson’s status as a local firm, he didn’t give as much thought to Weitz.

“I was looking more at the developer, the ability to deliver the project, but we probably should have done the due diligence and asked (about penalties) for the whole team,” Schulte said.

Despite its inclusion in the bid, Schulte said he wasn’t aware of any Weitz employees currently working as part of CWC. Edgemoor’s bid included at least one Weitz staffer, and he said he understood Weitz’s inclusion was intended to fill a gap for Edgemoor: adding a general contractor with a local presence to complement Clark’s experience building airport terminals. Clarkson builds primarily roadways.

Other potential choices were committed to Burns & McDonnell and AECOM as part of their bids.

As a part of CWC, Weitz will manage the big picture: overall construction, procurement of materials, the hiring of subcontractors and the scope of the work they will undertake. Like the developer Edgemoor, CWC will receive a fee for its work.

But the job of actually building the terminal day-to-day will be competitively bid. None of the three firms is guaranteed more specific construction work.

Schulte said complaints about Weitz’s performance on recent Kansas City-area jobs “would be potential concerns if Weitz were to take on a (general contractor) role at the terminal.”

He said, too, that the massive project will be watched closely by city officials and the owner’s representative the city hired to monitor the project.

“If there are issues, we’ll know about them early,” Schulte said. “... Obviously if there’s enough issues in (Weitz’s) background, that, to me, would be a potential disqualifier, and that decision is made jointly by the Aviation Department, Edgemoor and the airlines.”

From construction site to courtroom

Litigation is far from unusual in construction.

J.E. Dunn Construction was embroiled in a multi-million-dollar fight in 2015 and 2016 with two subcontractors and the owner of the IKEA it built in Merriam between 2013 and 2014. Several subcontractors filed liens against a project at Overland Park’s Prairiefire development, led by McCownGordon Construction.

Even Turner Construction Company, which hasn’t been penalized for getting off schedule or going over budget, according to AECOM’s bid to build the airport, was taken to federal court by subcontractors claiming the firm owed them anywhere from several hundred thousand dollars to $1 million.

But in recent years, Weitz has fallen into trouble on several jobs. Some subcontractors that spoke with The Star said they wouldn’t work with the company again.

Since 2015, more than 30 former subcontractors have filed liens for payment against three separate Weitz projects: Brookside 51, the apartments above Whole Foods in South Plaza; Mission 106, a luxury apartment development in Leawood; and Hyatt Place Kansas City/Lenexa City Center.

Tousely didn’t respond directly to a list of follow-up questions about why jobs finished behind schedule, how disputes arose and what vetting Weitz went through as part of Edgemoor’s bid. In a statement, he said Weitz stands behind its work.

“Challenges arise on all construction projects. When they do on our projects, we always manage them honestly and resolve them fairly,” Tousley said. “Our long track record of project delivery and the professional approach we take with our clients and partners contributed to our inclusion on the joint venture design-build team contracted to Edgemoor.”

Project delays

MacKenzie House, a Denver-based developer, fired Weitz from two separate apartment projects near the Country Club Plaza in September 2006 and January 2007, according to court records.

The developer claimed Weitz caused months-long delays, provided poor quality construction, failed to adequately supervise its subcontractors and didn’t pay them in the end.

Weitz sued over its firing, claiming it had lived up to the contract. MacKenzie House counter-claimed and won nearly $5 million from a jury on one apartment building. Two subcontractors also won judgments against Weitz.

On the other project, Weitz prevailed, winning $981,976. MacKenzie House counter-claimed, bringing Weitz’s payout under $700,000. Weitz also won $462,144 from two subcontractors in that case.

According to the Kansas City Business Journal the Hyatt Place hotel and conference center, developed by RHW Hotels Inc., was to be completed by October 2015, but didn’t open until April 2016. It’s unclear when construction finished, and RHW Hotels declined to comment.

When construction began at Mission 106, KCBJ reported an estimated completion date of June 2015. One of the developers, Doug Weltner, said the first phase was completed around May 2016, nearly a year late, though he didn’t recall the original expected completion date.

Weltner said delays are common on apartment construction and declined to say whether developers charged Weitz with damages for tardy completion.

At Brookside 51, Mike Lollis, managing member with subcontractor AWS Contractors, said the job was off schedule from the start. AWS, a framing subcontractor, is typically among the first to work once demolition is done and the site is ready for vertical construction.

Two other Brookside 51 subcontractors that spoke on the condition of anonymity said the same.

Coordination problems

Subcontractors reported problems with coordination among workers who were performing different tasks. In some cases, they said, that led to mistakes and forced reworking of portions of the project.

Josh Turner, owner of Turner Ceramic Tile, said his company turned down an opportunity to work at Brookside 51 because of its experience on Hyatt Place, where he said Weitz was pushing subcontractors to catch up to the schedule.

“Everybody was on top of everybody just cramming it in as fast as it could be crammed in,” he said.

Subcontractors at Brookside 51 complained of the same. Lollis said Weitz struggled to coordinate subcontractors, leading to mistakes. In turn, subcontractors had to tear out work that was faulty or done out of order and fix problems.

“Somebody else wouldn’t do their job right and we would have to tear off our stuff and put it back on again,” one of the other Brookside 51 subcontractors said.

In the end, several subcontractors at Brookside 51 said they were assessed back charges, penalties general contractors can charge subcontractors to resolve mistakes and pay for rework. But they said they didn’t cause the problems.

“Only after multiple inquiries into why subs had not been paid did Weitz begin to issue backcharges for the same work that a year prior had been requested and authorized...through field work directives,” a Brookside 51 subcontractor said.

Weitz is now suing AWS, claiming the framer caused delays and that its work was defective. In the suit, Weitz claims it’s owed $828,200 in delay damages.

“We’re disputing those. We didn’t cause any delays,” Lollis said. His firm has not yet filed a response in Jackson County Court.

One Mission 106 subcontractor who spoke on the condition of anonymity said Weitz didn’t properly oversee the field, which “led to some trades not doing what they were supposed to and basically having to redo the entire building.”

Weltner declined to comment on whether significant rework was necessary.

Previous penalties

Owners of Hyatt Place acknowledged in a court filing more than 18 months after the hotel opened that they were still withholding funds from Weitz because it failed to perform normal end-of-project tasks.

“Additionally, there are material construction defect issues that are the responsibility of Weitz on the project,” the filing said. It did not specify the nature of the defects.

The claim came from two former hotel subcontractors — H.M.E., Inc. and Leiser Construction — that said Weitz was improperly withholding more than $130,000 from the two firms.

Leiser claimed in court filings that Weitz told them it couldn’t pay until the owner paid Weitz. But when that happened, the subcontractors said, Weitz told them they collectively owed more than $600,000 in damages for delaying the project.

“In an attempt to avoid legal obligations to innocent subcontractors on projects, Weitz has similarly raised bogus counterclaims and backcharges at the end of a project that were never mentioned while the work was proceeding,” the filing said, citing other liens filed on Hyatt Place and Mission 106.

In its filings, Weitz said both companies were responsible for delays on the project and demanded the case be arbitrated.

Leiser settled with Weitz for $85,000, its attorney, Robert Pitkin, said in an email. That sum included the firm’s original claim of $33,617.57, plus interest, legal costs and attorney’s fees.

At Brookside 51, too, Weitz faced pressure from above when the first of the dozen-plus subcontractors began filing liens.

In a June 2018 letter to Weitz, attached as an exhibit to a since-dismissed lawsuit related to Brookside 51, developer VanTrust Real Estate demanded that the company get rid of a lien filed by Matheus Lumber Company.

“Owner hereby notifies contractor that contractor’s continued failure to release or discharge the lien is in breach of the contract,” the letter says, adding that VanTrust reserves the right to discharge the lien and charge Weitz for doing so.

Some of the liens have been in place for more than a year, and subcontractors have joined a lawsuit to force payment. It’s unclear whether VanTrust assessed penalties against Weitz for that alleged contract violation, and the firm declined to comment.

Lollis said it was frustrating to have to hire a law firm and fight to get paid.

“We did our job. We completed our contract,” Lollis said, “and you know, we want to be paid.”

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Allison Kite reports on City Hall and local politics for The Star. She joined the paper in February 2018 and covered Midterm election races on both sides of the state line. She holds a bachelor’s degree in journalism with minors in economics and public policy from the University of Kansas.