The town will pay an additional $2 million to finish the beleaguered Water Street sewer project, pushing the cost of the job to $6.5 million.
But that’s not the end of the liability story.
On Feb. 16, a lawyer representing two waterfront restaurants – Mamma Mia’s and Ziggy’s – sent the town a letter demanding more than $5 million to cover property damage and lost business caused by the work, which recently restarted after being halted last summer.
The settlement with Northern Construction was approved unanimously without debate by the Select Board Tuesday night. It requires the contractor to finish the job by June 30. The deal avoids litigation, but neither side admits liability for problems that delayed the project last year and damaged the adjoining buildings. In fact, the town and the contractor continue to blame each other.
“If this had gone to court, it would have taken years to litigate and cost the town about a million dollars in legal fees,” said Town Manager Derek Brindisi. “We believe this settlement was in the best interest of the town.”
At issue is the installation of a quarter-mile section of 30-inch sewer pipe under Water Street to replace the existing line that runs under the edge of the harbor. Palmer-based Northern Construction won the job in 2022 with a low bid of $4.5 million.
Work began in December 2022 and was supposed to be finished by the end of June 2023. But in March 2023, groundwater problems, shifting soil, and damage to the street, sidewalks, and five buildings on Water and Chilton streets forced a shutdown of the project so engineers could evaluate the situation.
That review led to additional groundwater monitoring and relief wells placed within the working trench to prevent further damage. With those changes, the project resumed briefly last year but the town ordered work to stop June 30, 2023, for the benefit of the tourist season, which was already underway.
Northern Construction planned to restart in December 2023, telling town officials that the delay and additional groundwater management measures would cost an extra $4.5 million, doubling the project cost to $9 million. The town disputed that amount and the contractor refused to finish the job unless a settlement was reached.
Over the past several months Brindisi and the town’s lawyer negotiated the settlement with one of Northern Construction’s owners, John Rahkonen, and its legal team. Northern Construction did not respond to requests for comment.
Brindisi said town engineers estimated that about $800,000 of the cost overrun was attributable to demands the town made for added water mitigation and for delaying work during the tourist season. “When you consider what we rightly owed, plus the cost of litigation both in dollars and in further delays on getting the work finished, settling for $2 million made the most sense,” Brindisi said.
The additional $2 million in cost overruns will come from the town’s remaining balance of federal American Rescue Plan Act (ARPA) funds, Brindisi said.
The settlement, however, does not address structural damage to five buildings near the construction site. Mamma Mia’s and its detached commercial kitchen, along with Ziggy’s Ice Cream, the adjoining apartment building, and the former Gourmet Exotic Jerky building to the rear, were heavily damaged when the excavation trench flooded and surrounding soils shifted. (The Gourmet Exotic Jerky building was beyond repair and demolished.)
Attorney William Burke, who represents those property owners, said both the town and the contractor share responsibility for the damages. While Northern Construction did the work, it was also the town’s responsibility to review the contractor’s proposed work plan, he said.
“The Town of Plymouth had an obligation to review and approve the dewatering plan submitted by Northern to ensure that no damage to the adjacent properties would occur,” Burke wrote in the demand letter. “The Town’s failure to exercise its duties resulted in the damage suffered.”
Brindisi said the original contract for the sewer project requires Northern Construction to indemnify and defend the town against the claims for damages. Burke agrees on that point, but said it remains to be determined whether the company has enough insurance to cover the claims. That means Northern Construction or the town may have to pay the difference.
“The estimate for the essential measures needed to stabilize the soil and prevent any further damage is between $1.15 million $2.15 million. The costs to repair the damage, as well as the economic losses our clients suffered are significantly more. In total, the damage will be well over $5 million,” Burke wrote.
When asked about the town’s settlement with Northern Construction, Burke said, “It looks like the town is now paying $2 million for a fix that should have been in place when they started the project. The geotechnical and hydrological conditions in that area of Plymouth are no mystery. These things were knowable and the problems preventable.”
Brindisi dismissed Burke’s characterization of what went wrong.
“Attorney Burke is not in a position to comment on the means and methods of the contractor,” he said. “The town will seek his advice when he gets his professional license as an engineer.”
State law requires the town to respond to the property owners’ demand letter within six months. A similar demand was also made of Liberty Mutual, the contractor’s insurance carrier, which must respond within 30 days, Burke said.
“We will take this step by step,” he said. “I will say that these people are long-time Plymouth residents, running successful businesses that are a benefit to the community, and they are not being treated appropriately.”
Michael Cohen can be reached at michael@plymouthindependent.org.