February 20, 2019

New commissioners explain county building construction delays

Board states transparency on this issue is important

Posted

MIO — After talks with Wolgast, the Oscoda County Board of Commissioners is stating the current delays of the new county building construction are being brought about by the county’s insurance company.

With the stated intention of being as transparent as possible, the commissioners gave a full explanation of what has led to the delays at their Jan. 22 county workshop meeting.

Commission Chairman Kyle Yoder began the discussion by noting that he and Commissioner Jackie Bondar recently had two conversations with Wolgast Contract Manager Will Olsen. The goal of those conversations was to become fully aware of the situation at hand, and what has led up to it.

“We wanted to make sure we were fully informed before we started to take any action,” Yoder said.

After the talks with Olsen, Yoder said they’ve found that the main issue causing the delay is with the insurance company, Tokio Marine America. The county insurance policy calls for a “replacement” of the structure that burned down. The specific issue is that the insurance company is disputing what constitutes a replacement of a 100-year-old building.

Yoder said Tokio Marine has been examining the itemized costs of the build project with the intention of coming up with things it does not believe it should pay for. He said on multiple occasions it has asked for two-week delays to continue to examine the build.

Commissioner Libby Marsh asked Yoder if he believes Tokio Marine is going to be faithful to the most recent extension it asked for.

“Do you feel genuine about that, that they’ll get back to you?” Marsh asked.

“No,” Yoder said. “I don’t know why we would. … We are going to have to press a little harder.”

Tokio Marine has not released a list of items it is disputing payment of, nor has it mentioned the general types of things it is examining. Yoder said so far the few examples he’s heard have included parking lot lighting and grass planting. He said with the amount of time the insurance company has been taking to review this, he expects the list of disputed items to be “substantial.”

Yoder said going forward the next issue the county faces with the build will most likely be working with Wolgast to ensure the insurance company pays for as much of the build as possible.

“What portion of this rebuild plan are they not going to pay for?” Yoder asked rhetorically. “We don’t know if it’s going to be $50,000 or $100,000 until they get back to us. … Our goal is to come out of this without a large sum not paid for by the insurance company.”

Originally the insurance company estimated the rebuild should cost roughly $1.1 million. After finalizing blueprints, Wolgast came back to the insurance company with an estimation of $1.9 million. After Wolgast asked for bids from contractors, it found the cost to be even higher at roughly $2.5 million.

Upon receiving the most recent estimation, Tokio Marine brought in a third-party appraiser to confirm the estimation was valid. That appraisal came back in favor of the $2.5 million. Since that third-party appraisal, Tokio Marine has been asking for the extensions to review the build plans.

In the past residents have mentioned making changes to the current build plan in order to include other departments or to cut costs. Yoder said Wolgast representatives strongly advised against that, explaining it would only delay the process even more. The board came to the consensus that it would push forward with the current plan, and make any changes to the building as needed down the road.

If issues continue to arise with the build, the board of commissioners said it would not rule out taking legal action against the insurance company, but explicitly said that would be a last resort. Commissioner Chuck Varner said taking legal action would only extend the delays further. He said the board is more interested in getting the structure built than prolonging the current struggle.

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