Contractors file claim against Santa Rosa seeking to recoup costs tied to troubled Fulton Road project

After Santa Rosa city engineers began flagging in 2023 what they believed were irregular rough surfaces and other issues on a mile-long stretch of Fulton Road where major pavement work was underway, contractors determined a "distinct but limited number" of the thousands of concrete panels installed needed to be replaced and they agreed to do so at their expense.

But as city engineers continued examining the work, Ghilotti Bros. and its partner Vanguard Construction say the city called for an increasingly greater share of the panels to be ripped out - some more than once.

The contractors claim the city was unfamiliar with the specialized concrete Santa Rosa chose to use in the project and was unable to distinguish between improperly installed panels and what the firms say is the normal, coarser texture of roller compacted concrete, leading to unnecessary and costly repairs that delayed work.

The allegations, raised in an April claim notice Ghilotti and Vanguard filed against the city, pull back the curtain on an apparently bruising episode between the city and one of its largest public works contractors, with Ghilotti now trying to assign blame for fundamental problems in the project to the city.

"The city's employees had no real world understanding of (roller compacted concrete), its placement, or how the finished product should appear," the firms wrote in the complaint.

The multimillion-dollar widening project was expected to help address congestion between Piner and Guerneville roads as well as improve the condition of the roadway, sections of which had been ranked by drivers as some of the worst citywide.

For Santa Rosa officials, the project also was an opportunity to test a new road-building technique expected to extend the life of the surface and cut down on long-term maintenance.

But two years after work began in June 2022, it became a source of questions and growing frustration for residents and commuters on the critical westside corridor who were left wondering how much longer it would take to finish.

Contractors now allege the city's inexperience with roller compacted concrete led to disagreements that tied up the work and ultimately resulted in Santa Rosa prematurely terminating the contract.

The companies say the city has withheld payment they're owed for the work and they're seeking to recoup costs for repairs and other fees and penalties.

Assistant City Manager Jason Nutt, the city's long-time public works chief who oversaw the department through the early construction phases, did not respond to a request for comment. Nutt last week was tapped to temporarily lead the city for the foreseeable future after the departure of the interim city manager at the end of June.

A City Hall spokesperson, responding to an email sent to Nutt and a separate request sent to city communications officials seeking comment, said the city does not discuss legal claims.

They did not respond to a detailed list of questions regarding the scope of the repairs, whether staff conducted any audit or investigation to determine what went wrong with the concrete installation, or final project costs, including the cost of the repair work.

According to the claim notice, Santa Rosa officials used an outside consultant during the planning stages because they didn't have experience with the application of roller compacted concrete.

The project, initially valued at $15.6 million, represented a major undertaking for the city.

It called for expanding traffic lanes to two in each direction and adding a center-turn lane and new medians to accommodate future traffic in one of the fastest-growing areas of Santa Rosa and along a busy north-south thoroughfare leading from Highway 12 to the county airport.

Work also included the addition of bike lanes in each direction, wider sidewalks, a new crosswalk signal south of Piner High School, storm drainage improvements, and new landscaping and streetlights.

City officials had eyed the use of roller compacted concrete to extend the lifespan of the city's road network, touting it as a more durable and cost-effective alternative to traditional asphalt that would result in lower projects costs and long-term savings on future maintenance.

Roller compacted concrete is more commonly found in dams and airport runways but is commonly used in the Midwest and southern United States. While it's made of the same ingredients as conventional concrete, it's a drier mix able to be compacted by large vibrating rollers rather than by hand or other smaller machinery.

The city first proposed using the technique to reconstruct a smaller section of Fulton Road between West Third Street and Occidental a few years earlier but Santa Rosa abandoned the idea and opted instead to use a more traditional concrete mix.

A project supervisor with Ghilotti, who also was the contractor on that project, said at the time the mix was too weak to withstand the stress of daily trips and didn't meet the city's standards.

Efforts to use the specialized concrete in the larger Fulton project didn't fare much better.

Vanguard, a Livermore-based general contractor specializing in concrete construction that partnered with Ghilotti on the project, was tasked with installing the concrete and was required to install a test strip prior to the start of paving.

That test strip, which the city and its consultant signed off on, would be used as the model for the rest of the project, according to the claim notice.

After facing setbacks due to winter rain in early 2023 and equipment and technical issues that further delayed work, pavement work got underway in May of that year.

City officials previously said inspectors found the contractor's installation of the concrete didn't meet specifications in the contract soon after the work started.

They noted defects on the surface such as delamination, raveling and depressions that they said could result in costly ongoing maintenance.

The issue was pervasive, according to the city, with about 80% of the 10,000 concrete panels installed needing to be repaired or replaced.

Nutt, the assistant city manager, said at the time it was unclear what led to the problems but that city officials were working with contractors to determine a cause and address the issues at the contractors' expense.

A project manager with Ghilotti also said it was unknown what had caused issues with the project, referring questions to Vanguard.

Construction crews in December 2023 began systematically cutting into and removing substantial portions of the pavement and replacing it with a more traditional concrete, work that lasted months and required overnight and weekend work to ensure the project remained on schedule.

Once repairs were complete, final work in the intersections and medians was expected to wrap up by summer 2024.

But by that July, city inspectors assessing the newly installed panels indicated some of them had to be replaced for a second time, further delaying the project.

Behind the scenes it appears the parties disagreed on the scope of the repairs.

Ghilotti and Vanguard argued in the claim notice that the majority of the panels "were equal to or better than the city-approved test strip," while the city found that an ever-increasing number had defects.

Unable to agree on how much of the roadway should be repaired, they turned to an independent consultant to examine the work.

Ghilotti and Vanguard said the consultant's analysis confirmed their position that most of the work was up to the standards specified in the contract and was similar to the model strip initially installed, according to the claim.

The firms allege that roller compacted concrete has a rougher, coarse texture compared to traditional concrete or asphalt and the surface can show alligator cracking.

"Unfortunately, because of the city's limited experience using RCC as pavement, the city's expectation that the finished road would look like traditional concrete paving led it to take untenable positions that caused (the firms) to incur millions of dollars of additional costs," the claim notice continued.

The notice of claim was first disclosed in the monthly city attorney's report included in the May 12 council agenda and a copy of the claim was provided to The Press Democrat under a public records request.

Mike Ghilotti, president and CEO of San Rafael-based Ghilotti Bros., said he and his partners would not be commenting on the claim, raising concerns about the paper's prior reporting on the project.

An attorney representing the companies did not respond to repeated requests for comment.

Despite the independent consultant's findings that the work met city standards, the city continued to mark additional panels for removal weekly, according to the claim, "with no reasonable or contractual basis for its decisions." City officials also raised concerns about the pavement slope and gutters and other issues that the firms say could have been addressed without requiring that they be replaced for a second time.

Contractors submitted change orders to the city to account for the additional costs and time to remove and replace panels that they had not previously agreed to replace, but the firms allege the parties couldn't come to an agreement on who was responsible for picking up the tab, according to the claim.

The firms said significant progress on the project was held up amid the impasse "resulting from the city's unwillingness either to accept objectively acceptable work or to pay the cost to remove and replace the roadway yet again."

Work on the final phase of the project, including installation of the medians and landscaping, resumed in early September 2024 but the firms allege that within a month staffers again began to raise issue with the work.

Ghilotti and Vanguard on Oct. 26, 2024, submitted a settlement offer to the city outlining what final work was needed for the city to accept the project as well as an offer to resolve disputes over payment for repairs, according to the claim.

Under the proposal, Ghilotti and Vanguard agreed to accept responsibility for a portion of the replacement and other repair work - which they estimated cost more than $6 million.

The companies allege the city instead sought to prematurely end the contract when the project was 95% complete.

The city on Nov. 12 issued formal notice to the contractors that it was terminating the contract under a clause that allows one party to terminate a contract for any reason without needing to prove the other party was negligent or in default, according to the claim notice.

A City Hall spokesperson did not respond to questions regarding the contract termination. They also did not respond to questions about what additional work was left to be completed when the contract was ended and whether that work was ever completed and, if so, who carried out the work, instead referring the reporter to an outdated project page.

Archived versions of a website set up to update residents on the project's progress show that an update in early November stated work on the medians was expected to continue through December. A final update on Nov. 22 indicates rain delayed road striping and landscaping work to early 2025. No further updates were provided.

According to the claim notice, the parties attempted mediation to resolve outstanding issues but a meeting scheduled in February was rescheduled.

Attorneys for Ghilotti and Vanguard served the city with the claim notice on April 9, which accuses the city of breach of contract and of not operating in good faith. They allege the city interfered with workers' ability to complete the project as specified in the contract and in a timely manner by continually requiring additional repairs. The companies also allege the city has withheld payments for costs they incurred, as well as fees and other penalties associated with terminating the contract early, among other costs.

The firms argue the city can't withhold payment for perceived issues in the design or because the final product varies from what they anticipated because the city is required by state statute to provide complete and accurate plans and specifications to contractors, which they say they followed.

"When an owner specifies how work is to be performed, such as the materials installed, the contractor performing the work is not liable if the work, when performed as specified, does not satisfy the owner's intent," according to the claim.

They further argue the city is liable for the costs because the city terminated the contract without cause, meaning they aren't entitled to claim a credit for work it found nonconforming.

The companies retained a forensic accounting firm to prepare a detailed accounting of the costs they believe the city is liable for, according to the claim, though the estimated cost was not disclosed in the notice.

Officials with Ghilotti, which over the last decade-plus has received more than $38 million in city contracts to repave roads, update the Transit Mall and more recently build a garden at the future Kawana Springs Park, did not respond to a question about the total amount sought.

It's unclear whether the parties will resume settlement negotiations or if contractors will file a complaint in court.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.

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