Leader Blues

Monday, December 03, 2007

TOP STORY >>Contractor at air base promising payments

By JOHN HOFHEIMER
Leader senior staff writer

Under the harsh glare of national and congressional scrutiny, American Eagle Communities LLC on Wednesday suddenly an-nounced that it would pay about $778,000 of the $2.4 million the company allegedly owes contractors and suppliers for its now-abandoned housing-privatization contract at Little Rock Air Force Base, according to Sen. Mark Pryor, D-Arkansas.

“I’ll believe it when I see the check,” said Jack Sullivan, an officer in JR Construction of Cabot, one of the contractors awaiting back pay.

Pryor and Sen. Saxby Chambliss, R-Georgia, had just completed a teleconference with the national press about the failings of Carabetta Enterprises Inc., the Meriden, Conn., developer that has defaulted on four Air Force housing-privatization contracts, when he met with local reporters at the base.

Contractors here have been trying to get paid by American Eagle or by the surety bond company since at least last January, and some have now filed suit in Federal District Court.

American Eagle, which hasn’t paid a nickel since early 2007, announced the decision to pay some debts just before a national press conference on the issue.

The Leader first broke this story in April, when reports surfaced that Carabetta Enterprises, which was managing partner of American Eagle Communities, Little Rock Family Housing, owed contractors perhaps hundreds of thousands of dollars.

Work on building 468 new housing units and remodeling 732 existing units at Little Rock stopped May 7 when the lenders pulled the plug on funding the project, already two years behind schedule.

Work has ceased at Magnolia Family Housing at Moody Air Force Base in Georgia, at Patrick Air Force Base in Florida and at Hanscom Air Force Base in Massachusetts.

Lenders, the Air Force and American Eagle are negotiating with two companies to take over scaled-down projects from Carabetta at all four bases.

One scenario calls for grouping all four projects, another for separating out the project at Moody Air Force Base, according to Staff Sgt. Kati Garcia.

Each contract called for the Carabettas and their partners and subsidiaries to demolish and build some homes, remodel others, manage the military housing and own the housing units for 50 years.

American Eagle has sold its interest in nearly 3,000 Puget Sound, Wash., homes to the Forest City Company of Cleveland. Forest is one of two developers currently negotiating to take over the four failed Air Force jobs, according to Brig. Gen. Rowayne Schatz.

The other is Pinnacle and Hughes.

A new contract to revitalize the project could be signed by mid January, according to the general.

At LRAFB, American Eagle launched the project with great fanfare and quickly completed a “town hall,” but three years into the project, the developers were already two years behind, Schatz said.

“We have a lot of questions about how a company with a history of bankruptcy, defaulting on government contracts and not paying subcontractors landed four Air Force base housing- privatization contracts, Pryor told assembled press on base against the desolate backdrop of vacant concrete slabs behind locked gates at the corner of Minnesota Circle and Texas Boulevard.

Pryor and Chambliss have called for an investigation to determine how a developer with a checkered past was awarded six military housing privatization contracts, how to get the jobs back on track and how to make sure this doesn’t happen again in the future.

“We’re waiting for (Carabetta) to perform and for the Air Force and the Department of Defense to push the contract through,” Pryor said. “We want to see it done.”

“The taxpayer is left holding the bag and one of the real problems is the number of local contractors and subcontractors not paid,” the senator added.

“We’re going to birddog this,” Pryor said.

“I’m concerned that at the end of the day, we won’t see the housing we expected and will get it slower,” the senator said.
“Gen. Schatz here at the base has been amazing,” said Pryor, “but he can’t make bricks without straw.”

Pryor said he and Chambliss would draft legislation to prohibit companies with bad track records from getting additional contracts.

A Cabot contractor, JR Construction, is owed $136,000, according to its lawyer, Davy Carter of Cabot.

“He’s a crook,” Carter said of developer Salvatore Carabetta. He was equally upset with Arch Insurance, holder of the surety bond, which he said had “drawn a white line” and refused to honor any of the claims made by contractors.

Carter said the developers or Arch owed Southeastern Stud, an out-of-state company, “probably a million dollars.”

Central Arkansas Plumbing of Cabot and Jason Ferguson are among the 21 or more subcontractors and suppliers owed on this job, Carter said.

“The hardships caused by American Eagle should never have happened. They cheated the government in the past, they’ve been bankrupt.”

“We’ve made a demand in the past and had to file a lawsuit,” Carter said. The case is in the court of Judge Jay Moody.

“Who signed off on this deal with a company that’s been bankrupt and defrauded the government,” Carter asked.

The Carabettas claim that the Air Force mislead them when discussing base housing occupancy rates for the four Air Force bases where the developer and its partner, Shaw Infrastructures, won privatization contracts.