Sunday, August 13, 2000

Reds park faces insurance spat

Contractors threaten to not bid

By Ken Alltucker
The Cincinnati Enquirer

        Contractors are threatening to walk away from the new Reds stadium if Hamilton County requires them to use one insurance company for the entire $280 million project.

        A construction trade group says the county's plan would inflate costs, reveal private financial information and protect fiscally weak contractors. And if the plan passes, contractors say the county can build the Great American Ball Park without their help.

        “Contractors have told me they would be hesitant to bid on anything,” said Judy Short, executive director of Allied Construction Industries, a local trade group. “They say it could save money. We think it will actually cost money because some people won't bid.”

        At issue is a proposal to use a “wrap” plan designating one insurer for all contractors bidding for work at the new Reds stadium. The insurer would provide surety bonds as financial guarantees that the contractor finishes the job.

        Surety bonding is a common industry practice, and most contractors already have contractual relationships with an insurer that provides that service for them. But the county thinks a single company providing for all contractors — instead of companies choosing their own insurer — will lower costs.

        Hamilton County Risk Manager Tim Grabenstein solicited bids from six insurers to provide this service for all Reds stadium contractors. Citing trade secrets, he refused to name the insurers or the contents of their proposals.

        Mr. Grabenstein will provide more detailed information Monday to Hamilton County commissioners, who have been inundated with complaints from rankled contractors.

        “It sounded like a good idea, and now they're telling me it's a rotten idea,” said Commissioner John Dowlin. “I may be the culprit behind this idea because I wanted controlled insurance.”

        Mr. Dowlin said he wants the wrap program studied and possibly used because a similar method of pooling workers compensation and liability insurance saved $5 million on the new Bengals stadium, scheduled to open Saturday.

        The contractors oppose the plan for several reasons. More established construction companies have lower rates than a wrap insurer could provide, Mrs. Short said.

        The companies also would have to break ties with their regular insurers if they want to complete work on the Reds stadium. That means providing detailed financial informa tion, possibly including future projects.

        Although legal in Ohio, wrap programs have been outlawed in 26 states, Mrs. Short said. Plans to use a wrap program for construction of a new baseball stadium for the Pittsburgh Pirates were scrapped after the city discovered Pennsylvania law prohibited it.

        “There is no real hard-and-fast data showing it saves money,” Mrs. Short said.

        The proposal comes as Hamilton County Commissioners search for ways to lower costs of the Reds' Great American Ball Park and avoid a situation like the estimated $46.2 million in overruns at the new Bengals riverfront stadium.

        “After I looked into this plan a little more, I don't believe I support it,” said Commissioner Bob Bedinghaus. “Relationships are built up. I can see where contractors would be hesitant to divulge information.”


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