Marked by deaths, delays and driver angst, the massive reconstruction of Interstate 4 also is at a financial abyss, according to a claim by one of the nation’s biggest road builders that it tried to bail out of the job to cut staggering losses but was blocked by misconduct of the company in charge.
A federal suit in Orlando filed by Lane Construction Corp. alleges that the lead contractor, Skanska USA Civil Southeast, has bumbled financial management of the 21 miles of construction and violated fiduciary responsibilities to the determent of partners.
Starting up in 2015, the $2.4 billion “I-4 Ultimate” project already has cost the public an extra $125 million, an additional year of construction aggravation and has seen five workers killed on the job. Florida’s transportation department declined to comment on whether the lawsuit portends further delays, construction problems or inflated costs for taxpayers.
Among other relief measures, Lane is seeking more than $130 million in damages. Expensive disputes among contractors are not uncommon but the Lane lawsuit bolsters details of the I-4 overhaul under increasing and intense financial distress, with construction partners at sharp odds with each over a financial plunge that, the suit asserts, will continue.
Skanska USA “refutes the allegations contained in the subject complaint,” said company spokeswoman Maritza Ferreira.
Lane’s lawsuit states that the construction partnership it belongs to in the I-4 Ultimate project was expecting losses of $441 million last year when the state agreed to pay the additional $125 million. Since then, the state was hit with — but denied —another builder claim for $378 million. It’s not clear what the claim is based on or even when it was lodged as the state has not responded to a request for a copy of that claim.
With project losses ballooning for the project builders, Skanska USA is forcing partners to help cover the financial bleeding with monthly payments of tens of millions of dollars, including $6.3 million that Lane is required to pay Skanska in January, according to the suit.
In a statement, the Florida Department of Transportation said “this matter is between outside parties and the litigation does not alter” builder obligations.
The $2.4 billion overhaul of I-4 in Orange and Seminole counties, and remaking Orlando’s skyline, is the state’s most costly road work by far. It hinges on a complex arrangement of financing and participants called a public-private partnership.
In 2014, the Florida Department of Transportation opted to take on private funding for the huge rebuilding of I-4, which is installing what amounts to a toll expressway between upgraded free lanes. The transportation department hopes that toll revenues in decades to come will defray construction costs but taxpayers ultimately are obligated to pay off the project.
The department awarded the project to I-4 Mobility Partners, a company set up and owned by Skanska Infrastructure Development Inc. and John Laing Investments Limited.
I-4 Mobility Partners is providing about half of the financing to design, build, operate and maintain the 21 miles of Interstate 4 for 40 years.
The consortium is to realize the majority of its payback and profits through payments from the Department of Transportation after construction is complete and through the 40 years of operation and maintenance of the rebuilt interstate by I-4 Mobility Partners.
I-4 Mobility Partners assembled a joint venture for construction, which consists of Skanska USA, national road builder Granite Construction and Lane Construction of Connecticut. Drawing from the companies’ initials, the venture is called SGL Constructors.
Both Skanska Infrastructure Development of I-4 Mobility Partners and Skanska USA of SGL Constructors are subsidiaries of Sweden giant Skanska AB.
“With respect to the ongoing project, Skanska and SGL Constructors remain fully committed to successfully completing the I-4 Ultimate project as currently planned,” said Ferreira, the Skanska spokeswoman.
In the lawsuit, Lane contends that the construction project allows contractor termination of work if the schedule is significantly delayed by the Florida Department of Transportation. Last April, the state’s transportation department accepted responsibility for delays and agreed to grant the builder another year of construction time.
Lane said that by late 2018, it was clear that the joint venture, SGL, “would suffer a loss of significant magnitude.”
“Though the amount of the projected loss was impossible to predict” because of Skanska’s inability to account for actual and projected costs, the Lane suit alleges.
But when Lane pressed to leave the job, Skanska USA never gave “due consideration” to the request because it knew it “could potentially harm” Skanska Infrastructure Development.
According to the Lane suit, Skanska USA — as the manager of the joint venture SGL Constructors — “could see that even though it was likely to incur substantial losses,” its sister corporation, Skanska Infrastructure of I-4 Mobility Partners could “still achieve a profit of approximately $200 million” over time if the project remained intact.
Skanska USA “committed intentional misconduct, or at least was grossly negligent” by not acceding to Lane’s request to leave the project, the suit alleges.
The Lane suit states that Granite Construction fully supported leaving the I-4 job. Asked to comment, Granite spokeswoman Erin Kuhlman said her California-based company “is not a party to the lawsuit and has no comment on this pending litigation.”
With its suit, Lane is seeking a declaration that Skanska USA breached its fiduciary duties, an end to the monthly payments that are financing project losses and a damages award of at least $132 million.
“Lane can no longer afford to finance the project so that Skanska…sister affliliate and parent can realize their profits,” the suit states.
kspear@orlandosentinel.com
