FOUNTAIN VALLEY : City OKs Paying State $85,000 Settlement

By DEBRA CANO

April 9, 1994 12 AM PT

The City Council has approved a settlement of a lawsuit filed by state labor officials, who accused the city of failing to withhold $200,000 from a contractor who allegedly did not pay workers “prevailing” wages to build a library.

Under the terms of the settlement, approved by the council Tuesday in closed session, the city will pay the state $85,000--money the city withheld from the contractor’s final payment because construction on the library was completed a year late, said City Atty. Alan R. Burns.

Labor commissioner Victoria Bradshaw of the state Industrial Relations Department notified City Manager Ray Kromer in June of 1991 to withhold the $200,000 after the state accused Rainey Construction Inc. of La Habra of not paying prevailing wages to construction workers on the library project.

A “prevailing” wage is defined as the minimum pay rate set by the state for public works projects.

But when the $2-million library was completed in June, 1991, the city paid Rainey for the project and accepted a $200,000 bond from the contractor to cover the state’s claim.

“The state notified us late and didn’t give us full notification,” Kromer said. “By the time they notified us, we had already released money to finalize the contract.”

An attorney representing the state labor commissioner could not be reached for comment.

The labor commissioner sued the city last November, contending that the city should not have accepted the bond and demanding the $200,000, Burns said.

Under the settlement, the city will allow the state to sue the bonding company and collect the $200,000. If the state collects on the full amount, Burns said, the city will be reimbursed for the $85,000.

“I think that we’re very optimistic that the city is going to recoup the $85,000,” Kromer said. “With that bond, we have hopefully covered the city.”

As a result of disputes over the library construction, other lawsuits involving the city, the contractor and the architect are pending, Burns said.