The fraught relationship between the Haines Borough and Lutak Dock contractor Turnagain Marine is officially ending, with the assembly Tuesday voting to cut ties with the contractor.
The city hired Turnagain in 2022 to design and rebuild the dock, but construction did not go forward as planned – the cause of which is the subject of a dispute between the borough and the contractor.
A clause in the dock contract allows the borough to “terminate for convenience,” which means the borough can end the contract without cause or penalty, provided it pays for already completed work and demobilization. With Tuesday’s assembly authorization, borough manager Alekka Fullerton will now exercise that clause.
The borough assembly has made it clear in recent weeks that its top priority is having construction on the dock resume as quickly as possible. This summer, Turnagain said that it could not deliver the borough’s minimum dock needs with its planned design, and within the borough’s available funding. Since then, multiple assembly members have suggested putting the project out for rebid to find another contractor.
At Tuesday’s meeting, Fullerton said one construction firm and one engineering firm have approached her to signal interest in taking on the project. The engineering firm would replace owner-advisor R&M Consultants, whose contract was also terminated Tuesday. It has not yet been decided whether a new contractor would build an existing design, or redesign the project before building.
Borough attorney Taylor McMahon, of Anchorage-firm JDO Law, advised assembly members at the meeting that if they wanted to move forward with another contractor, they would have to first cut ties with Turnagain.
“I want to emphasize that you can’t be under contract with two contractors for the same work,” McMahon said.
Assembly members have been wary of legal liability with respect to the dock project, especially since last November, when Turnagain filed a suit against the borough, alleging that they had not been paid for work they were authorized to complete. The borough has denied these claims, and says it never authorized the contractor to move past the initial phase of the project.
The lawsuit is on hold right now as the two parties attempt to come to a settlement in a contractually-mandated mediation process. If no settlement is reached, the litigation will resume.
That pending litigation allowed the assembly to hold much of its discussion on the issue in a closed-door executive session, allowed by state law in only a specific set of circumstances. Those circumstances include subjects “the immediate knowledge of which would clearly have an adverse effect upon the finances of the public entity.” Legal strategy and attorney-client discussions, the borough said prior to entering the session, fall under this category.
During the portion of the discussion that was public, McMahon, the attorney, seemed to advise that terminating the contract would not be a clear increase in legal liability.
“You are entitled under the contract to terminate for convenience, you’re already in litigation,” McMahon told assembly members. “Will it rock the boat? Maybe. But I don’t know if that should prevent the borough from moving forward from terminating for convenience if they want to progress the project.”
When it came to vote, all assembly members endorsed terminating the Turnagain contract except for assembly member Mark Smith. When asked after the meeting why he voted to keep the contract, Smith said that he was not satisfied with answers to his questions about what terminating the contract would cost the borough. He did not explain further what his concerns were, citing the confidentiality of executive session.
Borough manager Alekka Fullerton’s position, she said last week, is that after terminating the contract, the borough will not owe anything beyond the $310,000 already paid to Turnagain for initial phase one work and permitting.
The assembly also voted to terminate its contract with dock-project owner-advisor R&M Consulting. In addition to Smith, assembly member Richard Clement also voted against terminating the R&M contract. The borough has retained R&M to help manage and oversee the dock project. Fullerton described R&M’s contract as “associated with” the Turnagain contract and advised terminating it, even if the borough wanted to later bring R&M back to fill the same role on the project with a different contractor.
The developments come as the assembly prepares to seat the newly-elected Eben Sargent, who will replace Clement beginning at the next assembly meeting in two weeks. That had some effect on the proceedings, as Clement had been on the borough’s mediation team, along with Fullerton and assembly member Gabe Thomas.
With mediation resuming as soon as the first week of November, the assembly voted to replace Clement on the team with Smith. Only assembly member Craig Loomis voted against putting Smith on the team, saying that he hoped to wait until Sargent was seated to make the decision.