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Wednesday, December 12, 2012

Kentuckians Still Paying For Bad Decisions; Taxpayers Hurt By Courthouse Costs.

Still paying for bad decisions; taxpayers hurt by courthouse costs

If any government agency should be able to write standard contracts that protect the public interest, it's the Administrative Office of the Courts.

The law is the AOC's specialty, and the agency is overseen by the state's top lawyer, the chief justice of the Supreme Court.

And yet, in 2005, under the leadership of former Chief Justice Joseph Lambert, an unusual rule was adopted that has enabled a contractor with ties to a Lambert crony to bleed the public treasury of more than $3 million.

The rule, supposedly to compensate construction managers for justifiable delays, is "not the norm in the construction industry," according to one expert. It's also "incredibly favorable" to construction managers.

One construction manager, in particular, has taken advantage of the unusual provision.

As the Herald-Leader's Beth Musgrave and Linda Blackford reported Sunday, Codell Construction has collected extended-service fees totaling $3.1 million on 17 of the 26 courthouse projects it has managed since 2006.

By contrast, of the eight other courthouse projects managed by a company other than Codell since 2006, only one applied for and received extended-service fees.

Pertinent detail: Creation of the extended-service fee rule was overseen by Garlan VanHook, Lambert's personal architect whom he put in charge of an $880-million courthouse-construction program.

VanHook resigned from the AOC in 2009 after the Herald-Leader reported that his brother worked for Codell, which has received most of the AOC construction-management contracts.

In fact, it was Jeff VanHook, representing Codell, who tried to explain to a legislative committee in September why Codell was entitled to $912,000 in extended-service fees for managing construction of the tornado-damaged Morgan County judicial center.

The insurer had balked at the increased cost and the state was being asked to pick up the difference. (In the end a new contract was negotiated that will pay Codell more for finishing the Morgan County project but without extended-service fees.)

The rule on extended-service fees was tightened this year as part of a comprehensive reform of AOC construction regulations launched by Chief Justice John Minton in late 2009.

Among other irregularities, Minton ended the AOC practice of allowing construction managers to expose county governments to great financial risk by drastically under-insuring projects.

Sadly, the tighter rules are too late to protect taxpayers on the half-dozen courthouse construction projects already under way.

And, after splurging on 65 new courthouses since 1998, the state cupboard is bare for such projects.

Taxpayers have every right to be outraged — especially when they show up at an ostentatious new courthouses and find it's closed for the day and the court workers furloughed because there's not enough money in the state budget to operate the courts.

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