GALVESTON — The city has asked a district court to take control of more than $700,000 being claimed by more than two dozen businesses.
The money is what’s left of grant funds given to the city by the state to pay for disaster recovery work managed by housing contractor Consolidated Concepts Inc. However, the funds are also at the center of a dispute between the business and various subcontractors and material suppliers it had hired to help with repair and construction work.
According to a court filing made the city Friday, 27 subcontractors and material suppliers are seeking payment from the $700,684.94 in grant funds the city was holding. The money also had been requested by Consolidated Concepts itself, JP Morgan Chase and a bond company.
In the filing, city lawyers said Galveston had “no way to determine the proper allocation” of the funds between all the competing groups.
Consolidated Concepts Inc. was hired by CDM Smith, the company that managed the city’s disaster recovery housing projects from 2009 until January 2012. During that time, according to the city’s filing, complaints began to arise about Consolidated Concepts not properly paying its subcontractors.
Because of that, the city arranged a program that would allow it to issue joint checks to pay both Consolidated Concepts and the subcontractors at the same time.
However, at some point, the company stopped participating the program, leaving the city with hundreds of thousands of dollars that it could not pay.
The city’s petition claims that “CCI stopped negotiating those checks and they have since gone stale.”
The petition says the city is making no claim to the money.
“The City is not responsible for the conflicting claims and merely seeks to have the funds delivered to the parties to which they are rightfully payable,” the petition says.
The city has not filed similar requests to the court for contractors Compass Pointe Homes and J.C. Cantera Homes, which also were dropped from the recovery program and were being paid jointly with subcontractors.
At last week’s city council meeting, Assistant City Attorney Donald Glywasky said the city has a check payable to J.C. Cantera. However, the council ordered Glywasky to delay giving the money to the company until more information could be obtained about its own payments to subcontractors.
A pretrial hearing on the Consolidated Concepts petition is scheduled for March 6 in Galveston’s 56th Judicial Court.