Mortenson: Vikings stadium cost dispute hurts local subcontractors

The company building the new Vikings stadium says an ongoing dispute over construction costs is hurting the local companies that are actually subcontracted to do the work.

Mortenson Construction officials said Friday that 90 percent of $15.4 million in unpaid work is due to construction companies working on electrical, drywall and other projects on the $1.1 billion project underway in downtown Minneapolis. Mortenson Vice President John Wood said that changes made by the Minnesota Sports Facilities Authority and architect HKS have added costs beyond what was agreed.

"Quite frankly, some of them were in distress," said Wood, speaking about construction companies working on the stadium. "There were a couple that were on the edge of not being able to continue on the project."

He said Mortenson has paid some of the bills to keep work going on the 65,000 seat stadium, although some, like a pair of electrical contractors, remain unpaid. Wood declined to detail the unpaid contractors.

Stadium authority officials said their contract with Mortenson specifies the company was responsible for paying its subcontractors. They said Mortenson had a contingency built into its fee to cover such costs.

The company's response came as the Minnesota Sports Facilities Authority released the arbitration claims and counter claims over the ongoing dispute. Although the project is proceeding on schedule, and Minnesota law caps what the state and city can pay for the stadium at $498 million, the two sides have been disputing who is responsible for changes made to the project since plans for the building were finalized in May 2014.

Mortenson won the construction job by offering a "guaranteed maximum price," which was required by state law. That was initially set at $975 million, but amenities and additions to the project, funded by the Vikings, have pushed the stadium's price tag to $1,083,951,087 as of Aug. 20.

Most of that isn't in dispute.

But the two sides are at odds over items like the need for a third main electrical feed to the stadium. Mortenson says it cost nearly $1 million to tear out some new construction and put in an additional electrical feed, one that wasn't contemplated when construction started more than a year ago. He said amenities like additional TVs and other features have added to the electrical load.

The stadium authority, though, says that Mortenson was at least partly responsible, for suggesting switching kitchens from natural gas to electrical heat sources to save money on construction — and inadvertently upping the power demand that made the third feed necessary.

"The installation of the third line not only eliminated the promised ... savings, but it actually increase the project cost by an additional $800,000," the MSFA wrote in a response letter to the American Arbitration Association, which is handling the dispute.

The stadium authority says Mortenson assumed the risk for cost overruns when it offered a guaranteed price, and agreed to forego requests for additional payment.

But Wood said the Vikings, the stadium authority and the stadium's designers haven't stuck to their end of the deal.

"There were 4,300 sheets of drawings. There have been significant changes made to 2,900 of those sheets, and several hundred new drawings have been added — since the final (versions)," Wood said. "And the authority and the team want all those changes to be done for free, and we don't think that's right, and we don't think the contract says that."

The two sides are heading for mediation and potentially arbitration.

"There are obviously contract interpretation differences," MSFA chair Michele Kelm-Helgen said at a board meeting today. "Whatever the outcome is, we can take care of that. As good stewards of public funds, we need to be careful how we spend our contingency, so we don't run out of money. ... We look forward to resolving this quickly through mediation."