Loading...
HomeMy WebLinkAboutSEOPW CRA 2023-12-14 Document Submitted into the RecordL Loren & Kean Law June 1, 2023 VIA Email Only Southeast Overtown/Park West Community Redevelopment Agency c/o Vincent Brown, Staff Counsel 819 NW 2nd Avenue, 3rd Floor Miami, FL 33136 VtBrown@miamigov.com Re: Electraserve, Inc. - CitizenM Miami World Center Project Miami WorldCenter Economic Incentive Agreement Dear Mr. Brown: As you are aware, this firm is counsel to Electraserve, Inc. ("Electraserve") in connection with its agreement with Suffolk Construction Company ("Suffolk") on the CitizenM Miami World Center project (the "Project"). Please allow this correspondence to serve as Electraserve's response to the allegations of the Southeast Overtown/Park West Community Redevelopment Agency (the "CRA") and its consultant, Harold A. Johnson Consulting Group (the "Consultant"). It is Electraserve's position that the penalties proposed by the CRA and its Consultant are exorbitant, hold no basis in fact, and are not supported by the Amended and Restated Miami WorldCenter Economic Incentive Agreement (the "Agreement"). Electraserve sourced each employee at issue through labor providers K&P Electric/CAAL Electric (collectively "K&P"). Electraserve undertook this project with an understanding of the requirements of the CRA and the Agreement, and always intended to comply with those requirements. There were no issues with the payroll for Electraserve's own employees on the Project. Furthermore, at the time it committed itself to this Project, Electraserve intended to perform all work with its own employees. Unfortunately, the effects of COVID-19 on the Project timeline and workforce made it such that Electraserve needed to supplement its workforce at certain times. This need arose due delays outside the control of Electraserve resulting in the need to accelerate the anticipated timeline of Electraserve's work. Furthermore, because of unprecedented shortages in the labor market, Electraserve was unable to find qualified employees to hire directly and was forced to reach out to K&P to supplement its workforce on the Project. Nevertheless, Electraserve did complete the vast majority of the electrical work on the Project with its own workforce, with K&P employees only providing approximately 10% of the labor. See Exhibit A — Summary of Hours Reported. Electraserve made absolutely clear to K&P the responsible wage requirements contained in the Agreement, and was always under the impression that K&P was complying with those requirements. 7111 Fairway Drive, Suite 302, Palm Beach Gardens, FL 33418 1' 561.615.5701 1 561.615.5708 hnenkeanlaw.com 1580 Sawgrass Corporate Parkway, Suite 130, Ft. Lauderdale, FL 33323 P 954.474.7200 1 561.615.5708 lorenkeanlaw.com Vincent Brown, Esq. Southeast Overton/Park West Community Redevelopment Agency June 1, 2023 Page 2 of 4 Nevertheless, since it was first brought to our attention, Electraserve acknowledges shortcomings in K&P's payments to its employees. When the Consultant first advised Electraserve of K&P's shortcomings, the Consultant directed Electraserve to immediately locate and make catch-up payments to the underpaid employees. Electraserve immediately attempted to locate employees that were underpaid and provide additional payment. Unfortunately, many of the employees no longer worked for K&P and could not be otherwise located. Nevertheless, Electraserve was able to make $18,562.20 in catch-up payments to the four employees it was able to locate. In its continued attempts to resolve this with the CRA, Electraserve is not seeking any set-off of this amount from the penalty, rather, Electraserve reiterates these efforts to show its good -faith attempts to comply with the CRA and its Consultant's directives throughout this process. Electraserve then undertook a second analysis of the work -hours actually performed by Electraserve's sub -subcontractors' employees, obtaining corrected information from K&P. Based upon the corrected information, Electraserve provided revised certified payrolls showing actual hours for every K&P employee (the individuals identified in the Consultant's evaluations). These revised payrolls were previously provided to your office, and can be accessed again through this link: https://www.dropbox.com/sh/e71 j ihwbip2lsgl/AADgHha8NYpzgokXwAdOmpzUa'?d1=0. It is Electraserve's position that the corrected payrolls are the proper source for determining the penalty under the Agreement. Nevertheless, the CRA and, more specifically, its Consultant, have continued to pursue penalties under the Agreement based upon wild assumptions that have absolutely no basis in fact. Essentially, the Consultant has based his penalty on the mistaken assumption that, every employee of K&P that worked on the Project worked full-time on the Project for between twelve and eighteen months, resulting in unconscionable sanctions. According to the Consultant's analysis, employees such as Javier Dominguez — who has 8 actual hours worked on the Project — should be paid for either 2,080 hours or 3,120 hours, an amount totaling $85,924.80 or $128,887.20, respectively. This is just one example of the assumptions being applied by the Consultant, which include in excess of one hundred thousand dollars in penalties/payments relating to alleged employees who do not exist (as discussed further below). Furthermore, if the Consultant's assumptions are believed, it would mean that K&P employees spent between 60,320 and 90,480 hours on the Project, the latter of which is greater than the total hours spent by Electraserve's combined labor -force. This simply does not comport with the reality that K&P employees supplemented Electraserve's workforce by about 10%. When Electraserve confronted the CRA and its Consultant with this information, the CRA and Consultant questioned Electraserve's revised analysis, and the Consultant insisted that Electraserve was fabricating the hours shown on K&P's pay records based upon another implausible theory that Electraserve's scope of work on the Project could not have been completed in the total hours reported on the Project — 83,346.50. While this assertion has no basis in fact, at the CRA's request and at Suffolk's urging, Electraserve engaged an expert (at a significant cost) to evaluate and prepare an independent evaluation/bid of the manpower -hours required to complete Electraserve's scope of work on the Project (the "Evaluation"). The Evaluation was previously Vincent Brown, Esq. Southeast Overton/Park West Community Redevelopment Agency June 1, 2023 Page 3 of 4 provided to your office and can be accessed again through the following link: https://www.dropbox.com/sh/yp2zyxxugnt 1 vvu/AAATBj9HRCgJUF2bjgQAnOHca?d1=0. A review of the Evaluation supports Electraserve's position. A few things to note: (1) contrary to the Consultant's assertion, the expert contends that the Project should have been completed in 56,220.60 hours, over 25,000 manpower hours less than actually reported by Electraserve on the Project (and less than the Consultant's assumptions for solely K&P's employees); and (2) consistent with Electraserve's position from the start, and again contrary to the Consultant's assumptions, the data continues to evidence that K&P only provided services to supplement Electraserve's in-house labor (about 10% of project hours). All of this information points to only one conclusion -- the actual hours now being reported for K&P's employees is accurate, and any penalties assessed should be based upon those verified hours rather than the Consultant's assumptions. Enclosed for your review are two additional exhibits, summarizing the actual hours worked by K&P employees. The first, attached as Exhibit B, is a summary of hours by payroll for each K&P employee subject to the CRA review. The Second, attached as Exhibit C, is a final penalty analysis. As shown, in accordance with Article 3.1.1.14 of the Agreement, the final penalty is $258,815.41, an amount which Electraserve is willing to immediately pay to resolve this matter. It should be noted that, consistent with the Agreement, Electraserve is not seeking any set-off in this amount for amounts previously paid, which results in significant double -payments to the employees. Exhibit C also summarizes the consultant's position when taking into account actual hours worked by the employees. Aside from the issue of reported hours vs. assumed time worked, there are a limited number of other disputes between the Consultant and Electraserve. The first is the Consultant's classification of Julio Duarte as a First Year Apprentice, as well as Juan Franco, Fernanda Castano and Inson Guerrier as Wiremen. Electraserve maintains that these individuals should be classified as laborers. They were hired only to provide general labor, did not carry any electrical tools, and did not perform (nor were they instructed to perform) any tasks of either a first -year apprentice or wiremen, respectively. As such, it is Electraserve's position that these employees have actually been overpaid for their services on the Project when compared to the rates associated with laborers. The other dispute is the Consultant's counting of two alleged employees that did not exist — "Ronney Taicano" and "Juan Mantis". It is Electraserve's understanding that these names came from daily sheets used on the Project. These names are the result of either: (a) illegible handwriting on the daily sheets; or (b) employee's use of alternate surnames when signing a daily sheet (which is relatively common in the local industry). Based upon the dates worked, Ronny Taicano is actually Ronny Marcano, who is already separately included in the Consultant's analysis and, as shown in Exhibit B, Electraserve acknowledges a penalty for in the amount of $23,893.70. Similarly, "Juan Mantis" is actually Juan Martinez, who is also separately included in the Consultant's analysis. Again, as shown in Exhibit B, Electraserve acknowledges a penalty for Mr. Martinez in the amount of $14,276.74. Vincent Brown, Esq. Southeast Overton/Park West Community Redevelopment Agency June 1, 2023 Page 4 of 4 This effort has been an exhaustive, and in our opinion unnecessary, but we are confident that upon being presented with this information both the CRA and its Consultant will be satisfied with our analysis and we can put this issue behind us. As set forth above, Electraserve is prepared to issue payment to the CRA in the amount of $258,815.41, the full penalty owed without set-off, to finally resolve this matter and obtain a release from the CRA of Electraserve, Suffolk, and the Project Owner. Please do not hesitate to contact me should you have any questions regarding this summary, its exhibits, or the underlying information. I look forward to hearing from you soon and resolving this unfortunate situation. Sincerely, Kyle W. Ohlenschlaeger kohlenschlaeger(n,lorenkeanlaw.com Enclosures cc: Client Juan Diaz, Esq. (Suffolk)