Court Finds No Bond Required of Port Authority
Kegler Brown Construction Newsletter October 1, 2010
In a foreclosure action filed by numerous unpaid subs and suppliers on the $150 million Kenwood Town Place project near Cincinnati, subcontractors have been arguing that the Port Authority should be held liable because it failed to require a payment bond of the insolvent contractor/developer on a public parking garage. The judge has ruled in favor of the Port Authority and determined that R.C. § 4582.31 allows Port Authorities to dispense with competitive bidding and security - including bonding otherwise required under R.C. § 153.54. The Court found that this discretion applies to Port Authorities where - as here - no tax dollars were utilized. Art's Rental Equipment v. Beaver Creek Construction, Case No. A0902785, Hamilton County Common Pleas Court.
Claims still remain against the Port Authority arguing that the Port Authority acted as an agent for the contractor/developer who hired the unpaid subs.
This case illustrates the unfortunate trend toward dispensing with traditional payment bond protections when projects are considered "public-private partnerships." Subcontractors and suppliers are cautioned against presuming that any Ohio Port Authority project automatically has payment bond protections.