Builder Beware

It’s not easy being a local contractor.

Just ask Brian McClintock, the owner of Santa Fe-based Blueline Construction. The recession hasn’t just made it more competitive to get construction contracts, he says. It’s also increased the field of companies vying under the city’s local preference ordinance.

Under that law, the City of Santa Fe deducts 10 percent from a local company’s bid price to make it more competitive.

Often, McClintock says, that 10 percent determines whether he wins a construction contract. But recently, out-of-town firms have been horning in on the action.

“A lot of out-of-state contractors were coming in and setting up temporary offices” in order to receive the local preference, McClintock tells SFR. “It just seemed like it wasn’t fair.”

He’s not the only one who thinks so.

At the July 26 meeting of the city Public Works Committee, city Purchasing Officer Robert Rodarte proposed tightening the local preference rules to only include companies that have had offices in Santa Fe County for at least six months—and that have more than half of their assets here.

“Local preference is designed to help the companies that are established here,” Rodarte tells SFR. “I want to have more of a presence with the local companies that have the majority of their business here in the Santa Fe area, versus a company that might have their offices in Dallas and have five employees here.”

Isaac “Ike” Pino, the director of the city’s Public Works Department, says the proposed rule change will likely come before the City Council at the end of the month.

There are, however, other challenges for local contractors. Green-building and insulation specialist Bill Althouse says it’s challenging for small, local contractors like himself to front the money for a job and to bond for large projects.

“If you’re a local guy working from job to job and you don’t have the ability to give $100,000 worth of work for free and wait 100 days, you’re out,” Althouse says.

Though McClintock says he hasn’t had trouble securing bonds to guarantee his company’s work, he says doing so would be much tougher if Blueline were just starting out.

“It’s getting tough,” McClintock says—and even a good relationship with his bank and bonding company doesn’t give Blueline the credit to bid on projects more than $5 million.

“Bonding capacity will always be an issue,” Pino acknowledges. “Some of your smaller companies have very low bonding thresholds, so they can’t bid a project for $10 million.”

To see how these challenges may have affected city construction contracts, SFR first examined city contracts worth more than $50,000 for the 2009-10 fiscal year. Of the 56 construction contracts, only 18 were with Santa Fe-based companies, accounting for less than 20 percent of the approximately $22 million spent by the city on building-related jobs.

#1: Triad Builders (Cortez, Colo.)

Construction project:

Canyon Road Water Treatment Plant

Brian Snyder, the director of the Sangre De Cristo Water Division, says upgrading the city’s Water Treatment Plant elicited few local bids since approximately half of the project’s contracts call for highly specialized water treatment equipment.

“Honestly, we’re lucky people in the US still manufacture this equipment,” Snyder says.

Triad received the portion of the 21-month contract dedicated to non-specialized construction; Snyder says he’s happy with the firm’s work so far.

#3: Advantage Asphalt (Santa Fe, NM)

Projects:

Santa Fe River Trail; Pueblos del Sol Park

Advantage, of course, is a local firm, and at the center of a story about an unauthorized Santa Fe County paving project at a Nambé church, which has only gained momentum since its explosion on front pages in May.

Nonetheless, don’t rule out Advantage for future city contracts.

Advantage, Rodarte says, is “doing a really good job of taking advantage of their local preference—and they perform. Whatever’s going on in other places, it’s not happening with the procurement in here.”

#7: RMCI Inc. (Albuquerque, NM)

Project:

Caja del Rio Landfill digester gas system

Kim Shanahan, the executive officer of the Santa Fe Area Home Builders Association, considers RMCI, a major state contractor and

, a usual suspect for winning city contracts. Aside from a 2008 fine paid to the state’s Construction Industries Division, RMCI’s record is clean. The other contractor on the project, COMANCO Environmental Corp., is based in Florida.

#8: AIC General Contractors (Albuquerque, NM)

Project:

Power Plant Park and Water History Museum

Albuquerque-based AIC was the main contractor for the city’s new Power Plant Park, completed in January. But a Santa Fe subcontractor, Watson Conserves, rehabilitated historic windows on the on-site building that will become the museum.

Project architect Victor Johnson says if it were up to him, he’d hire AIC again.

“A Santa Fe firm could’ve done this,” Johnson says. But, he adds, “AIC did a good job.”

#10: Sub Surface Contracting (Santa Fe, NM)

Project:

city-wide utility contract

The only other local company in the top 10, Sub Surface has an ongoing maintenance contract with the City of Santa Fe. Shanahan says he worked with Sub Surface in his early days as a contractor and tells SFR he considers “them to be a legitimate, upstanding company.”

Given Advantage Asphalt’s current problems, Shanahan says, Sub Surface is a front-runner for major paving projects.

“Sub Surface precedes Advantage Asphalt in terms of their ability to do that stuff,” Shanahan says. “Advantage Asphalt hasn’t been around that long, and they really kind of were able to grow to the extent they did because of their association with Rancho Viejo and Ike Pino.”

Pino denies he did anything to give Advantage Asphalt a leg up.

“Advantage was one of many contractors that provided a lot of services at Rancho Viejo” during the time he worked as a developer there, Pino says. But, he adds, “There is absolutely no nexus between Rancho Viejo and anything at the city for Advantage Asphalt or any

contractor.”

Santa Fe Reporter