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To build Monroe Bypass, DOT staying with indicted paving company, for now

Last summer, Monroe-based Boggs Paving was indicted on several federal charges, including money laundering and wire fraud, in what the FBI described as a 10-year “scheme” that involved more than $87 million in government contracts.

But as Boggs Paving prepares for its fall 2014 trial, the company is being paid millions of dollars to prepare to work on the Monroe Connector/Bypass, a 20-mile toll road that the state highway department isn’t certain can be built.

Boggs Paving is part of a three-firm group, Monroe Bypass Constructors, that was awarded the $308.3 million Monroe toll road contract in fall 2011.

Soon after, in May 2012, work on the project stopped after a federal appellate court ruled the N.C. Department of Transportation had skirted a federally required environmental impact process.

But with Monroe Bypass Constructors already hired, the DOT has had to pay the firm at least $37 million as the project remains in limbo.

The state hopes to restart work on the highway this year, and recently submitted a new Environmental Impact Statement, which it hopes will result in a green light for the project.

At that point, it’s unclear whether the state will stick with Monroe Bypass Constructors and Boggs Paving. The group’s other firms, United Infrastructure Group Inc. and Anderson Columbia Co. Inc., are not accused of any wrongdoing.

Jen Thompson, a spokeswoman with the N.C. DOT, said the department “has not made a decision with Boggs and this existing contract.”

She said Boggs has been suspended from bidding on federally funded projects.

She said “any contract can be terminated if the board determines that a termination ... is in the best public interest.”

Federal indictment

A major part of the federal case is that the federal government claims Boggs essentially used a “pass through” company, Styx Cuthbertson Trucking, as its minority contractor to meet federally mandated disadvantaged business goals. The FBI claims that Boggs “took careful steps to conceal their fraud,” by placing magnetic decals with the Styx Company logo over its own trucks to “create the appearance that Styx was the company performing the work.”

Styx was going to be a minority contractor on the Monroe toll road, but has since been replaced, according to the N.C. DOT.

Monroe Bypass Constructors was the low bidder on the highway, at $32 million less costly than the next-lowest bid.

With no ground broken for the highway, the DOT has already paid nearly $37 million to Monroe Bypass Constructors. The DOT said the money is to compensate the firm for “design work, project management, inspectors, material prepayment for aggregate base course, mobilization, and bonds/insurance.”

In addition to the $37 million, a consultant for Monroe Bypass Constructors told the N.C. DOT it would cost $38 million to terminate the contract, without litigation.

Thompson said the DOT “has not yet verified those costs.”

In an August email, a DOT official said the department’s chief financial officer, Mark Foster, was concerned the claims were “fluffed up.”

On Oct. 29, James Triplett, the toll road’s project manager for Monroe Bypass Constructors, sent the DOT a letter asking for an immediate payment of $9.2 million.

“While MBC remains committed to completing the project ... the financial burden of carrying the damages incurred to date should not be borne by MBC alone,” Triplett wrote.

He also wrote: “... we seek funding from N.C. DOT now.”

Triplett couldn’t be reached by the Observer.

Pete Strom, an attorney in Columbia representing Boggs Paving, said the company still plans to work on the bypass.

“They very much plan to move forward with the project,” Strom said. “What this indictment is about is accounting issues with minority participation. There has been no allegation of sub-standard work. No problems with timing (when projects were finished). All of that is A+.”

Strom added: “They are continuing to do work all through the southeast. They continue to interact daily with South Carolina and N.C. DOT. It’s business as usual with this company.”

The total cost of the bypass is $725 million.

Environmental lawsuit

The Monroe Connector/Bypass has been touted by the DOT and local business leaders as a critical highway for the Charlotte region.

But the Southern Environmental Law Center in Chapel Hill sued to stop the highway’s construction. The SELC has said the highway will lead to unnecessary sprawl, and that the state could make improvements on U.S. 74 that would do more to relieve congestion.

The law center questioned whether the state had fully complied with the National Environmental Policy Act, which requires the state to model the impacts of the highway on the environment. The state was to conduct what’s known as a “build vs. no build” study, to see what would happen if the highway were built against a future scenario without it.

The crux of the law center’s case was that the DOT and the N.C. Turnpike Authority included the highway in its “no build” forecast. Instead of a “build vs. no build” study, the law center argued highway officials did what resembled a “build vs. build study.”

In fall 2011, a District Court judge ruled in favor of the DOT, dismissing the law center’s suit. The SELC said it would appeal.

The DOT, however, signed a contract with Monroe Bypass Contractors that fall. That locked the state into paying the firm, regardless of how the law center’s appeal fared.

In May 2012, the Fourth Circuit Court of Appeals in Richmond, Va., sided with law center – putting the highway on hold until a new environmental impact study could be completed. That Environmental Impact Statement was released in early December.

Kym Hunter, an attorney with the law center, said she’s concerned about the millions of dollars paid to Monroe Bypass Constructors because she believes it “locks in” the DOT to building the bypass.

She said the law center asked in the fall of 2011 for the state and federal government to agree to expedite arguments in its appeal – but they declined.

Hunter said the SELC hasn’t decided if it will challenge the new environmental document. Before the bypass can be built, the DOT needs federal and state water quality and endangered species permits.

The DOT held public hearings on the bypass in early December. The highway still has strong support from the Union County business community, but some are second-guessing the project.

The municipalities of Marvin, Mineral Springs, Hemby Bridge and Weddington have passed resolutions asking the state to look at alternatives to improve traffic flow on U.S. 74 instead of building the bypass.

DOT upset

The N.C. DOT is frustrated by the law center’s efforts to stop the Monroe Bypass, as well as other projects. In early December, the DOT closed the Bonner Bridge on the Outer Banks because of what it said were safety concerns; a new bridge has been delayed by law center litigation (the bridge has since re-opened).

In a news conference in early December, DOT Transportation Secretary Tony Tata blasted the SELC, calling its members “ivory tower elitists” who “file these lawsuits from their air-conditioned offices in Chapel Hill or Charlottesville or wherever ... (while drinking) lattes.”

Ned Curran of the Bissell Companies is chairman of the N.C. DOT board, which makes policy transportation decisions.

Curran said it’s in the “best interest of the state to incur delay costs” for the bypass, which he said is “necessitated by the SELC’s persistent efforts” to stop the project.

Curran was asked what he believes the state should do if Boggs Paving is found guilty.

He said the board might have to make a decision on that issue and said he would decline to answer. However, Curran said the board’s decision would be made based on a number of factors, including what the contractor was found guilty of.

“The Monroe Bypass project is one that we think is extraordinarily worthwhile and we obviously would like to see it completed promptly,” Curran said.

Harrison: 704-358-5160
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