Bidder Battles

Kristine Heykants

When Rebecca Stack opened the doors of her North Minneapolis residence to the Minneapolis and Saint Paul 1998 Home Tour earlier this month, it's doubtful that any of the 400 visitors who passed through knew anything was amiss. Her house looked like a showroom: fine Italian tile in the kitchen, marble Jacuzzi in the bedroom, oak-and-stained-glass buffet in the dining room. It had taken 13 contractors and months of sweat equity to turn the house from a condemned eyesore into a jewel worthy of a stop on the tour. Graffiti in the hallway had been erased by fresh paint. New copper plumbing snaked through the walls. What Stack's guests saw was a home so elegantly decorated, even the throw blanket tossed across the back of the couch looked designer-placed.

But all was not exactly as Stack had planned for the weekend of May 2. She'd like to have steered her guests out the back door and into a garden in the adjoining lot she'd bought at auction for a song. Instead, the lot was empty except for a few stray daffodils. In fact, had Stack allowed anyone to see the rear of her double-lot property, they might have thought a twister had ripped through, leaving a swath of debris and damage in its wake.

Like many Minneapolitans, when Stack bought her house in 1996, she turned to the Minneapolis Community Development Agency for help in financing its renovation. Among other services, the MCDA--the city's development arm--offers low-interest loans and rehab funds to qualified home buyers. Stack qualified, signed for a mortgage and fix-up money, and got to work. The MCDA, she says, was behind her all the way, going so far as to sponsor her house on the tour. But by the time the big day came around, Stack had stopped singing the agency's praises so loudly.

Earlier this year, the agency approved a deal with Thomas Contracting C&D Inc. to raze the condemned house on the lot across the alley from hers, excavate and tear out the foundation, and fill the hole--a fairly straightforward project. In awarding the contract to Thomas, the MCDA followed the same policy it uses for hundreds of other projects around town each year: It called for bids from licensed city contractors, and accepted the lowest bid.

What that policy will end up costing Rebecca Stack is anybody's guess. One day last month, she says, she came home to find a monster-bite chunk of concrete blocks missing from the retaining wall around her garage. She noticed that the remaining blocks had been scored lengthwise--a deep gouge in the wall that left it looking like a sliced layer cake. The whole structure appeared ready to collapse in a heavy rain. She also discovered that the four-by-four wooden posts supporting her chain-link fence had been snapped like toothpicks; the fence itself lay mangled on the ground. Nearby she found the corner of her new greenhouse yanked loose from the roof, with its protective plastic hanging off in shreds. What looked like a tank's tread marks ran through the grass. Something big had backed right up onto Stack's lawn, turned around, and lumbered off. A trail of cracked stucco, pulverized concrete, and dirt led out of her yard and down the narrow alley.

Days later Stack learned the apparent cause of her property's damage, which is likely to run into the thousands of dollars. Not only was a Thomas Contracting worker driving a piece of equipment much too unwieldy for the confined space of the alley, she says, he was using Stack's garden-to-be as a turn-around--and, she alleges, wrecking her garage wall, greenhouse, and fence in the process.

Stack says that when she got on the phone with Tim Thomas, owner of Thomas Contracting, he denied that any of his equipment did the damage. Even if it had, she says he told her, he could little afford to clean up and fix the mess. His bid--all of $5800--would barely cover his own costs. In fact, as Stack recalls it, Thomas was having regrets about offering the city such a cheap deal. But with the agency's policy guaranteeing a contract to the lowest bidder, he couldn't afford not to offer a rock-bottom price. Too bad, he said, about your mess. And hung up.

In a faxed response to a City Pages query, Thomas conceded that damage to Stack's garage wall was caused by one of his company's excavators. Asked about his contracting work on city projects in general, Thomas replied, "To be low bidder and thus the most efficient bidder, and at the same time be very careful and not ever cause any damage to adjoining properties, is very difficult."

The MCDA's low-bid mandate is an element of Minneapolis's decades-old "procurement policy." That policy, last reaffirmed in 1996, is based on federal directives that require all public agencies to accept the "lowest responsible bid" for their projects, says Roger Anderson, who reviews bids for the agency. According to Anderson, Minneapolis defines as "responsible" any contractor licensed, bonded, and insured to work in the city; a responsible bid is one that fulfills a project's specifications. The logic behind the federal regulations, Anderson explains, is the same reasoning his agency follows: always taking the lowest bid assures a level playing field. No favorites. No sweetheart deals. Just simple math.

Obtaining a builder's license in Minneapolis isn't much more complicated than that. Applicants simply complete a short form, provide proof of insurance and bonding, and pay an annual fee of $185. A builder's license gives contractors authorization to perform basic construction from the ground up, including roofing. A demolition license comes with somewhat stricter rules and an extra fee. Some trades--mechanical, electrical, plumbing--also require passing a written and sometimes an oral test.

Thomas Contracting has both a valid builder's license and a demolition license in Minneapolis. But that's not the only paperwork on the company contained in the files of the city's Building Contractors Licenses department--or in court files. Records show that three sets of criminal charges were filed against Thomas in Hennepin County Court between 1994 and 1997, alleging infractions such as backfilling with unclean fill, on-site work violations, and failure to comply with a written order. Thomas pled guilty and paid minimal fines in all three cases. In June 1996 the licensing division held a hearing to discuss other alleged violations on Thomas's part and levied a fine of $2000. But Thomas retained its license and continued to be permitted to bid on city projects.

Mike Williams, an MCDA inspector who tracks damage done by agency contractors, says some sort of "three strikes and you're out" system would keep contractors in recurrent trouble out of the bidding pool. "It would certainly make my job easier," he offers. (Though Williams and other MCDA staffers agree that damage by contractors is problematic, the agency doesn't keep any figures--actual or ballpark--to indicate what those damages might amount to.) Right now, Williams explains, the only way the MCDA is able to exclude a contractor from bidding is through tangled legal proceedings that involve city attorneys and can take many months to resolve. Because the procedure is cumbersome and carries a heavy burden of proof, he goes on, no licensed contractor in Minneapolis has ever been permanently banned as an eligible bidder on public projects; at most, the licensing division has seen fit to suspend or revoke a handful of contractors' licenses for a couple of years.

Karen Christofferson, public policy director at the Builders Association of the Twin Cities, says the lowest-bid policy was a bad idea from the start. Public development agencies like the MCDA, she reasons, are supposed to secure the best possible work at the best possible price. When forced to take the lowest bid for a project, the agency isn't able to factor in other considerations--contractors' track records on previous jobs, say, or past complaints. What happens, Christofferson says, is that "two bids might look exactly alike on paper, but a few phone calls to references could tell a whole different story about one of the contractors."

Five weeks after finding her property torn up, Rebecca Stack has again come fact-to-face with the MCDA's lowest-bid policy. Thomas Contracting's insurance company, she says, is likely to cover the damage on the MCDA's behalf. Still, because the harm was done by an MCDA contractor, she must collect three estimates from qualified contractors--and then award the bid to the lowest among them. Stack says she won't be inviting Thomas Contracting to submit a bid.

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