Chicago: ‘The City That Works,’ But Won’t Pay

CHICAGO (CN) - Chicago boasts of its "Green Alleys" environmental program, but it bankrupted a construction company by paying less than the bill for work on the project, says a court complaint.

Chicago touts its Green Alleys program as an environmental initiative to replace impermeable pavements with permeable materials that allow stormwater to drain into the ground. According to the city's Green Alley Handbook, Chicago has 1,900 miles of public alleys, with 3,500 acres of paved impermeable surface, more than any other city in the world.

But plaintiffs My Baps Construction Corp. and its bankruptcy trustee, David Grochocinski, sued the city, it Departments of Procurement Services and of Transportation, and the departments' top officers, claiming that "despite properly and timely performing the work in accordance with the contracts, the city has steadfastly refused to pay My Baps approximately $6,200,000 associated with the removal and disposal of existing concrete and asphalt within the alleyways, as required by the contracts."

The Green Alleys program was begun in 2006 under Mayor Richie Daley.

"This lawsuit arises out of the defendants' refusal to pay My Baps millions of dollars for work it properly performed pursuant to contracts for alley construction within the City of Chicago," the complaint states. "In late 2006 and early 2007, the city solicited bids for its vaunted 'Green Alley' construction project. The 'General Description of Work' in the bid packages for these alley construction contracts expressly contemplated that the work would require 'removal of existing alley pavement.' Indeed, it is self-evident that construction of the new alleys cannot be done without removing the existing pavement."

The Green Alleys program is supposed to reduce local flooding, reduce the urban heat island effect, and reduce light pollution.

According to the Chicago Metropolitan Agency for Planning's website, "The City of Chicago began its Green Alley Program in the summer of 2006 ... The alleys were re-graded so that the stormwater would properly drain into the sewer system. Other green improvements were made to the lighting and the color of the surface. The older street lights were replaced with 'dark sky' street lamps which project the light directly to street level, only projecting light to the alley. Lighter colored surfaces reflect more sunlight back to the atmosphere, thereby lowering the temperature of the surface. Stormwater volume has been decreased though the program."

But My Baps and its bankruptcy trustee claim that (nonparty) Ibrahim Hadzic, a civil engineer for the city, "refused to approve the work for payment at the contract unit price per square yard as shown in the Schedule of Unit Prices for Alley Pavement Removal and Subgrade Preparation, as required by the contracts."

"Instead, Mr. Hadzic engaged in a convoluted calculation to convert the units of work performed by My Baps under Line Item 49 from square yards into cubic yards (essentially dividing the unites of work under Line Item 49 by 3, thereby artificially and improperly reducing the quantity of work performed by My Baps by two-thirds), and then pricing the work at the much lower rates that My Baps bid for 'Earth Excavation' under Line Item No. 2 of the Contracts ..." (Parentheses in complaint.)

My Baps claims that "Mr. Hadzic never explained his political and/or budgetary reasons for engaging in the foregoing conduct, but the end result was clear - Mr. Hadzic managed through his improper machinations to bring the Green Alley Project in at less than 50 percent of the amount funded for the My Baps Contract."

My Baps claims that it "fully complied with the terms and conditions" two contracts, each one worth more than $3 million, but the city refused to pay, "despite repeated demands for payment".

"The city's refusal to pay the amounts owed has bankrupted My Baps and My

Baps has ceased doing business," the complaint states.

"The city's refusal to pay the amounts owed to My Baps has shut down My Baps and threatened its existence."

My Baps appeals the chief procurement officer's decision and seeks damages for breach of contract.

It is represented by Thomas Griffin, with Walker Wilcox & Matousek.

Under Mayor Richie Daley's father, Richard Daley Sr., Chicago adopted the unofficial nickname, "The City That Works."

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