Traverse City Record-Eagle

Grand Traverse County

January 12, 2010

Attorneys to study septage plant liability

BPW OKs analysis of actions of project manager, design firm

BY BRIAN McGILLIVARY

Related Items

County may have signed away right to damages

Officials 'shocked' by septage report

Prein & Newhof report (PDF)

TRAVERSE CITY -- Grand Traverse County attorneys will try to determine if the county septage plant's project manager and design firm are financially liable for some of its failings.

A county Board of Public Works committee on Monday unanimously recommended that its attorneys analyze liability issues surrounding the alleged failure of Michael Houlihan, project manager, and engineering firm Gourdie-Fraser Inc. to follow professional standards of care when they determined the plant's size and financing method.

Financial and structural problems dogged the plant since it opened in 2005. The plant nearly broke even for the first time in 2009, but faces losses estimated at $2.4 million over the next five years.

"We don't have an option. We have a fiduciary responsibility to our residents," said Rob Manigold, BPW member and Peninsula Township supervisor. "We have to pull the trigger and go to the next step."

Monday's vote followed an independent review issued Friday by engineering firm Prein & Newhof. The report said Houlihan, for 30 years the county BPW attorney, failed to exercise due care when he didn't validate volume projections created by Gourdie-Fraser in 2001 and 2002.

The report also determined Houlihan didn't exercise reasonable care when he accepted the plant as substantially complete in May 2005, despite the fact that key components weren't working. The plant also wasn't able to accept grease, as required, and shoddy construction led to the plant's partial collapse a month later.

Houlihan's attorney, Stephen Turner, did not respond to requests for comment.

Gourdie-Fraser President Joseph Elliott said he was "disappointed" by Prein & Newhof's findings that his firm failed to exercise reasonable professional care in making septage flow projections. He said it appeared Prein & Newhof prepared a report by looking back, as opposed to placing itself in Gourdie-Fraser's position in 2002.

"We felt pretty confident in our numbers then," Elliott said. "These numbers were as good as we had."

Monday's BPW vote came from members of a committee that consists of supervisors from Elmwood, East Bay, Peninsula, Acme and Garfield townships that guaranteed $7.8 million in bonding for the plant. BPW attorney Scott Howard said he'll begin preliminary work on liability concerns before the BPW meets Jan. 25.

"I don't want to prematurely make any conclusions, but there is certainly potential liability," Howard said. "There is definitely some work we need to do to frame all of that, but ultimately it will be up to the BPW if they want to litigate these issues or not."

Area residents told the BPW committee it should look at other parties potential negligence, including county and township officials who didn't detect problems at the plant.

"What standards do you hold on yourselves?" asked John Porter, of East Bay Township. "Did the BPW have any responsibility? What about the administrator of the county? What about the bond counsel? What about the director of the Department of Public Works?"

Howard said the county should look at all possible claims against "professional parties," even if outside the scope of the Prein & Newhof report.

Text Only