Fort Smith School District actions result in added costs, delays with Peak Innovation Center

Fort Smith Public School District officials were less than open – especially to the public – about causes of delays in opening the district’s Peak Innovation Center. The delays, often because of decisions by district officials, resulted in at least $1.6 million in added costs, according to info obtained by Talk Business & Politics.

The center, opened March 28, was initially set to open by August 21. The regional workforce training facility was constructed from a donated facility at the intersection of Zero Street and Painter Lane in east Fort Smith. In February 2019, the estate of William Hutcheson Jr. donated the former Hutcheson shoe manufacturing building at 5900 Painter Lane to be the Peak site. The 181,710-square-foot building that sits on almost 17 acres at the corner of Zero Street and Painter Lane was projected to save at least $3 million that had been budgeted to buy an existing building for the career center.

FSPS received numerous gifts and grants for the center. Fort Smith’s ABB, NEMA Motors Division contributed $1 million to the project. ArcBest donated $1 million. Baptist Health-Fort Smith and Mercy Fort Smith invested $1 million – $500,000 each – in healthcare science programming at the center.

In January 2020, Gov. Asa Hutchinson pledged $2.1 million in state funding from the Office of Skills Development (OSD) to be used for advanced manufacturing equipment for the center. It was announced in September 2019 that FSPS would receive a $1.4 million federal grant from the U.S. Department of Commerce’s Economic Development Administration (EDA) to help build the center. In June 2020, the Gene Haas Foundation announced a $1 million grant for expansion of the computer integrated machine lab at the center.

Education programs at the center are available to approximately 43,000 total students from 22 regional school districts. The programs equip career and college-bound students with real-world skills.

INITIAL DELAY EXCUSES
Delays on roofing, moisture control, delayed decisions by the district to approve work, and negotiations with the Arkansas Department of Transportation (ARDOT) did as much to push back the completion date of the project and add to its total cost as the reasons given by the district for why the project was over budget and behind schedule.

When the Fort Smith Public School Board of Education was informed that the center would not open in August 2021, contractor and supply chain issues were cited by school administration. But according to documents obtained from the district, those explanations did not address real issues behind the delays and added costs.

Considering major construction issues had yet to be finalized by early summer and a main water line to the building wasn’t completed by the city of Fort Smith until late 2021, an August opening was simply not possible. And district officials knew of this reality.  It is unknown if board members were privately apprised of decisions that caused the delays and added costs.

Scott Ditto with HOAR Program Management (HPM) of Dallas, the project manager for the district’s millage-related construction projects, told the FSPS board of education June 28 the center would not be ready for students at the start of the 2021 school year as originally planned. The occupancy timeline was moved to the start of the spring semester, Jan. 4, and then later to March 28, after students returned to school from spring break.

Zena Featherston Marshall, FSPS executive director of communication and community partnerships, said delays were caused, in part, by material availability and shipping delays that are “issues on all kinds of current construction projects nationwide.” The national delays were in part because of the COVID-19 pandemic and in part because of a historic winter storm that hit the region in February 2021. She said other delays came from planning, design and permitting. Also, program changes based on stakeholders who have made monetary pledges to Peak included required changes in classes and other components, Ditto told board members.

“Manufacturing requirements, health (program requirements) … caused a little of our delay there. It didn’t affect that terribly much. But the permitting process was also elongated because of those changes,” he said. “Also the highway expansion has utilities involved in it, coming through our property, and we are going to need those for our use before it opens.”

BUDGET DECISION DELAYS
When the delay was explained to the board in June, board members were also told the project would come in over budget. Ditto told the board he did not have the final estimate of the building because negotiations were still ongoing with Turn Key Construction, the project’s construction manager at risk. Turn Key is owned by Sandy Dixon, who is a school board candidate in the Zone 2 race.

The construction manager provides changes to the original budget via GMP (guaranteed maximum price) requests when costs change. According to documents provided by Fort Smith Public Schools, Turn Key submitted its requested GMP No. 4 on April 16. Turn Key did not receive a reply from the district regarding changes the district wanted to make to the GMP #4 until May 13, which caused almost 30 days of delay.

Prior to receiving the requested changes, Turn Key requested several letters of intent for subcontractors from the district. The letters are required to ensure all parties agree on the next steps and the cost of those steps.

“It was determined several weeks later that HPM required more information,” noted an email on the subject between Turn Key and Ditto and Shawn Shaffer, FSPS facilities supervisor.

Meetings on the matter were held May 25 and 28. Turn Key resubmitted GMP #4 on June 2 with higher values because of information provided in those meetings. HPM questioned why anything had changed, according to the email. On June 15, Turn Key resubmitted GMP #4 for a third time with “changes made to the schedule of values as requested by HPM.” On June 16, Turn Key submitted letters of intent requests again for several subcontractors. On June 22, Turn Key received more comments from the district on GMP #4, and on June 25, resubmitted the GMP the fourth time for approval. On June 30, the schedule was “rejected due to variances from the schedule that was discussed with HPM on June 2.”

The email notes that the schedule “changed due to a month passing and Turn Key still unable to put subcontractors under contract.” The schedule was resubmitted on July 2, and GMP #4 was finally approved July 16.

Officials from Turn Key said the delay in getting the GMP approved caused a significant delay in construction because “everything was shut down, our subs were walking off. The school board was told (by HPM) that they hadn’t received (the GMP from us). We wanted to build our building, but (they had) to tell us what to do.” Turn Key officials said they were frustrated because HPM and school officials made it seem as if Turn Key was the cause of delays.

“I honestly believe had they accepted the GMP in April, we were still set to open that building on time,” said a Turn Key official. “But it wouldn’t have had water, though Turn Key was never told they would not have water.”

PROPERTY NEGOTIATION DELAY
The lack of water was caused by delays in negotiations with ARDOT regarding the sale of some Peak property for right of way in order to widen Highway 255. The school board voted June 14 to sell 3.36 acres of the property to ARDOT for $180,525. ARDOT originally offered the district $236,400 for a larger tract of land on Oct. 8, 2019. At the time ARDOT noted it hoped to have the matter settled in 30 days, noted emails obtained from FSPS. The school district had conducted an appraisal and countered, saying they wanted $612,000 for the property. Also, ARDOT requested multiple times, beginning in November 2019, for a required W-9 form from the district. That form was finally sent to ARDOT in March 2020.

On Aug. 27, 2020, negotiations between ARDOT and FSPS were at a stalemate with ARDOT representatives stating that the difference between the $236,400 offered and the $612,000 requested was too great. In November 2020, negotiations resumed and FSPS offered to sell the smaller 3.36 acres for the appraised value on April 8, 2021.

Because approval of the sale wasn’t signed by the board until June 2021, ARDOT could not begin their work and the city of Fort Smith could not install a main water line to the building. According to Fort Smith Utilities Director Lance McAvoy, the city finished the water line in late November or early December of 2021.

“If we had been done in August of ‘21, which we have various reasons why that didn’t happen, but if we had finished, the school still would not have been able to open due to (the school’s delay in selling the property to ARDOT) and the water line running to the building,” Turn Key officials said.

Turn Key was also held up because of the water line. Without water in the building, they were not able to do necessary water tests for the fire suppression system prior to December.

THE ROOF
Roof leaks and moisture issues with the building caused more delays and expense for the district. Tun Key officials said district was informed by a roofing contractor in May 2020, before Turn Key was awarded the contract for the project, that the building’s roof needed to be replaced. The contractor estimated the roof replacement at $400,000. Statements from Turn Key said the original design called for a new roof over the whole structure, and therefore, they had it in their original bid.

“We had it in the project, and they took it out,” Turn Key said.

On Aug. 12, 2020, the district told Turn Key there was a provision to repair up to 25 roof leaks. Turn Key again told the district they needed a new roof. They were told to just fix the leaks, according to Turn Key statements.

“When we got to the end of those (25) leaks and it was still leaking heavily, we presented it with photo documentation and said they needed to reassess a new roof,” Turn Key said.

On Aug. 12, 2020, the district told Turn Key there was a provision to repair up to 25 roof leaks. Turn Key again told the district they needed a new roof. They were told to just fix the leaks, according to Turn Key statements.

“When we got to the end of those (25) leaks and it was still leaking heavily, we presented it with photo documentation and said they needed to reassess a new roof,” Turn Key said.

In July 2021, when the school board was told a new roof was needed and approval was given, that cost had jumped to around $700,000. When the roof was installed in December 2021 by a company selected directly by the district instead of working through Turn Key, the cost had risen to $1.6 million.

Marshall said while it appears that by not going with Turn Key’s original suggestion, the roof project caused the district an additional $1.2 million, the original bids specifications were for a partial roof replacement. Also, supply chain issues after July 2021 when the replacement was approved would not guarantee the receipt of roofing materials for the partial replacement until April 2022 at the earliest, Marshall said.

GROUND WATER ISSUES
Roof leaks were not the only water-related issue to plague the Peak building. Representatives of Geotechnical and Testing Services, Inc. (GTS) of Fort Smith told the board July 12 there was migration of water from a higher elevation and that was addressed through plans for grading and a drainage trench in the original design. But an under-slab moisture concern developed after construction began.

Representative said the original concern about water issues was brought up by the general contractor when they began work to install new plumbing and made slab cuts and excavation shortly before February 2021.

“They had some water develop in their trenches, so that’s when they first saw some water and began their inquiry about what the source may be,” noted a GTS representative.

That representative later said they had encountered moisture in original soil borings before any construction began when a geotechnical investigation using several borings within the building footprint and exterior was done in April 2020. Page 24 of a geotechnical engineering report from GTS dated May 15, 2020, explains, “Additionally, due to the impermeable sandstone and shale layer anticipated to be near plan finished subgrade elevations below the future slab sections, we anticipate that the future floor slab will likely have a high moisture content and relative humidity unless site dewatering is successful. It is possible that the moisture within the existing or future floor slab section may cause problems with any adhesives or floor-covering material.”

District officials were not happy that Turn Key kept raising alarms about moisture under the building’s concrete floor. A letter from the district’s attorney, Marshall Ney, dated March 19, 2021, to Turn Key concerning the Peak project and water issues states: “While you state that Turn Key ‘repeatedly informed’ the District, Corgan, and HPM of the existence of a moisture problem and subsurface conditions, the truth is that the District has long been aware of moisture and subsurface conditions that needed to be addressed during the construction process.”

Turn Key told the district in 2020 the moisture issue could be resolved with a new slab that included a moisture barrier. While that option would have cost the district $600,000, it could have been completed in three weeks and would not have delayed construction, Turn Key officials said. The fix the district opted for cost under $200,000, but again delayed construction for months, the documents show.

According to Marshall, engineers predict a 95% confidence in the chosen solution to mitigate moisture in the flooring system. The district’s fix for the moisture is working, according to Marshall, who said five monitoring wells dug at 10 feet, 12 feet and 15 feet were installed at different points in the building by geotechnical specialists in conjunction with civil engineers to monitor the levels of groundwater in relation to the slab.

“Reports from June 2021 to October 2021 demonstrate that the groundwater did not rise any closer than five feet and has been as far as nine feet below the finished floor. Currently, the groundwater is no closer than 5’ 9” below the finished floor and as far as 6’ 10” below the finished floor,” Marshall said.

Because of a concern for mold in the building caused by the moisture issue, the district’s fix also included the use of purple board for wall coverings instead of traditional drywall.

“The purple board that was done was not for water. It was really done because we couldn’t get an ambient temperature inside the building without, you know, we had humidity. We had rain. We have heat. So that was constantly changing. So the purple board is, another purpose of it, you are correct, it is for water. But it also is for mold. What it does, it has a spore guard. And that keeps it from taking any, obviously, spores or starting mold,” Ditto said.

But delays in obtaining purple board and waiting for optimum dry conditions in the building resulted in a construction delay of 41 days, according to Turn Key.

OTHER ISSUES
Another delay and added cost involved the use of metal-clad (MC) cabling. The use of MC cabling, typically not allowed in Arkansas’ public schools, was questioned by Turn Key’s subcontractor in August 2020. The electrical subcontractor was told in writing from the district’s design team that MC cabling was allowed.

In March 2021, when wall studs were being installed, FSPS facilities supervisor Shawn Shaffer said MC cabling could not be used. Turn Key officials pointed to the earlier documents saying they could, but Shaffer required a change order. The change resulted in 10 days of extra work to pull MC cabling already installed and replace with approved cabling. The change resulted in around $200,000 in increased cost.

Turn Key also said in April-May 2021, they were notified by Shaffer of a “budget snafu” in which a “significant” mistake was made resulting in having less money for other millage projects, including Trusty Elementary. Talk Business & Politics made several inquiries about that issue to the district, including a Freedom of Information Act request, but have yet to receive any documents responsive to the inquiry.