$1.02 million judgement in favor of Catco Construction of Alden

City officials announced Tuesday a $1.02 million judgement in favor of Catco Construction of Alden, the primary contractor on the North Union Street overhaul, and the Common Council authorized transfers to pay more than half from the general, water and sewer funds.

OLEAN — The Common Council approved transfers to begin paying off a $1.02 million judgement to the top North Union Street overhaul contractor.

The council unanimously approved transfers from the general, water and sewer funds totalling $586,849 — with $431,986 from the general fund, $90,676 from the city’s water fund and $60,186 from the sewer fund — to cover more than half of the $1.02 million judgement in favor of Catco Construction of Alden announced Tuesday.

The city will move ahead on a five-year bond to cover the remaining $431,986, said council President John Crawford, I-Ward 5.

“It’s kind of a bitter pill to swallow, but it is what it is,” Crawford said.

Olean Mayor Bill Aiello announced the judgement during the committee of the whole meeting before the regular council session, noting that a lawsuit under Article 78 of the state Civil Practice Law and Rules was filed after the city refused to pay a bill of more than $994,000 over disputes about the work that was performed.

In total, Aiello said the city was found liable for $1.02 million — about the same as the 2017-18 budgets for the city’s streets, bridges and snow removal programs combined.

Catco lawyers contended that the city had not paid for any work performed between Nov. 30, 2016 — after the ribbon cutting for phase one of the Walkable Olean project — until the spring of 2017. According to court documents, much of the work being billed after that date was for landscaping, light poles and other finish work.

Work from Nov. 30, 2016, to March 22, 2017, consisted of almost $994,000, according to a document dated April 6, while work billed after that date plus interest put the total sought by Catco at more than $1.28 million.

Under state General Municipal Law, the April 6 bill was due May 21. On June 22, Catco notified the city it would file a lawsuit if payment was not received by June 30. The suit was filed Sept. 18.

Crawford said that splitting the move will put the city’s general fund balance to about $2 million, noting recommendations that the city keep between 10 percent and 20 percent of its annual expenditures in the general fund.

“That would put us under the 15 percent, but above the 10 percent,” he said, adding the council does not have a standing policy on a level to maintain the fund balance.

“We’re fortunate that cash really isn’t of a concern at this time — that all could change after something like this, of course,” he said. “We have plenty of cash on hand to make this payment.”

To date, the city has paid out roughly $1.5 million from its surplus for the Walkable Olean project, Aiello told the Olean Times Herald in March, with that total now at more than $2 million.

Project planning for Walkable Olean began in 2011, with the Common Council accepting a $6.5 million federal TIGER grant to cover the majority of the project costs in November 2012. The project began Sept. 16, 2014, with Catco as the primary contractor with a bid of $7.79 million.

(Contact reporter-editor Bob Clark at bclark@oleantimesherald.com. Follow him on Twitter, @OTHBob)

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