Delays may cost Hidalgo County coverage at new courthouse, insurers warn

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EDINBURG — A group of insurance companies have informed county officials that they will not renew their construction insurance policies for the new Hidalgo County courthouse after March of this year due to its completion date being more than two years behind schedule.

That warning came as part of a series of correspondence between the county’s insurance broker, Willis Towers Watson Northeast Insurance Services Inc., or WTWN, and Morganti Inc., the Houston-based construction firm tasked with building the courthouse.

The letters, which span from December 2022 through Dec. 18, 2023, were included as part of an agenda packet for the Jan. 23 Hidalgo County Commissioners’ Court meeting.

They show that WTWN had warned Morganti for more than a year that several insurers were becoming leery of continuing to provide builder’s risk and general liability coverage, as well as contractor controlled insurance.

The new Hidalgo County Courthouse glows in the South Texas sunset reflected on a window of a building across the street on Thursday, Jan. 25, 2024 in Edinburg. (Delcia Lopez| [email protected])

Builder’s risk insurance protects projects while under construction. That includes coverage for damages caused by severe weather or other acts of God, fire, theft and vandalism. A Contractor Controlled Insurance Program, or CCIP, covers worker’s compensation and third-party general liability claims.

Hidalgo County appointed WTWN to serve as the broker for the courthouse’s construction insurance. The company helped facilitate coverage policies from a variety of insurers, including Westchester Surplus Lines Insurance Company, Chubb, Colony Insurance Company, First Mercury Excess Liability, ACE Property and Casualty Insurance Company, Zurich American Insurance Company, and Liberty Mutual.

In December 2022, WTWN notified Morganti that the numerous delays in finishing the courthouse meant insurers would be unlikely to continue granting coverage extensions.

Then, last fall, WTWN notified Morganti that its insurers had had enough.

The lit windows of the new Hidalgo County Courthouse are seen Thursday, Jan. 25, 2024 in Edinburg. (Delcia Lopez | [email protected])

“The CCIP and Builders Risk policies have previously been extended six times for a duration of over two years past the original anticipated completion date. This has made discussions with carriers extremely challenging,” WTWN associate director Brian Quinn stated in an Oct. 25, 2023 letter addressed to Morganti.

“However, the carriers have agreed to offer an extension based on the understanding that THIS WILL BE THE FINAL EXTENSION GRANTED. IF THE PROJECT IS NOT COMPLETE PRIOR TO THE EXTENSION DATE BELOW, COVERAGE WILL NOT BE EXTENDED ANY FURTHER,” Quinn further stated.

That final extension date is March 15.

The insurance broker further stated that at least one company — Zurich — was reducing coverage limits on catastrophe insurance, including windstorm, flood and earthquake protection.

The new Hidalgo County Courthouse is seen on Thursday, Jan. 25, 2024 in Edinburg. (Delcia Lopez | [email protected])

Zurich’s flood protection guarantee was reduced from the full value of the courthouse project, to just $50 million.

Thus far, cost estimates put the price of the new courthouse at somewhere north of $180 million — a figure that continues to grow.

Indeed, construction insurance wasn’t the only item involving the courthouse on Tuesday’s commissioners’ court agenda.

County leaders considered and unanimously approved three separate items related to the new courthouse.

The new Hidalgo County Courthouse illuminated Wednesday evening Jan. 24, 2024 in Edinburg. (Delcia Lopez | [email protected])

In addition to approving nearly $1.03 million to pay for the increased premiums that came with WTWN’s extension, officials approved nearly $1.08 million as part of two separate payment applications submitted by Morganti, and an additional $143,805 for smaller line item repairs.

However, the particulars of the expenditures remain unclear.

That’s because county leaders held no public discussions regarding the three agenda items. Nor did the agenda packet include the backup documentation that typically accompanies a request for payment, aside from some 34 pages of correspondence between WTWN and Morganti.

In sum, county leaders approved about $2.25 million in new payments to the construction firm that, for months, had stopped work on the courthouse in the wake of the discovery of numerous construction defects.

Rows of courtrooms illuminated at the new Hidalgo County Courthouse seen at dusk Wednesday, Jan. 24, 2024 in Edinburg. (Delcia Lopez | [email protected])

Last April, The Monitor was the first to report that the county had hired a third-party engineering firm to inspect the unfinished courthouse.

That company, Wiss, Janney, Elstner Associates, or WJE, found myriad issues that it characterized as “construction defects,” including leaks in the roof, improperly sealed windows, and issues with seals between the building’s outer shell and its interior structure.

At least some of the payments the county approved on Tuesday seem earmarked for repairs related to the issues that WJE discovered, including more than $112,000 for “gap from stucco to flatwork” and $21,456 for “bent plate at parapet,” along with three other items.

But work on the courthouse was at a standstill for much of 2023. And the newspaper’s attempts to obtain public records regarding the issues there were met with pushback by the county, which claimed — in part — that the records were exempted from disclosure due to ongoing or pending litigation.

A bronze statue in the courtyard of the museum is seen in the foreground of the illuminated new Hidalgo County Courthouse Wednesday evening, Jan. 24, 2024 in Edinburg. (Delcia Lopez | [email protected])

Since then, however, the lines of communication between the county and its courthouse contractors seem to have improved.

Speaking after Tuesday’s meeting, Hidalgo County Administrator Valde Guerra said the county has held several all-hands-on-deck meetings with Morganti and other contractors working on the project.

“There’s been constant communication as of late,” Guerra said.

“Easily, within the last six, seven, eight weeks, we’ve had two major meetings and there is constant communication every single week. There are scheduled meetings every week with Jacobs, Morganti and principals involved,” he added a moment later.

The side view of the new Hidalgo County Courthouse on Thursday, Jan. 25, 2024 in Edinburg. (Delcia Lopez | [email protected])

Those meetings have involved the project architect, designers and others, Guerra said.

Asked if work on the courthouse is progressing again, Guerra replied, “Yes. Quite well.”

However, the county administrator was less clear on what that progress means for when the new courthouse will finally open.

“That is part of the dialog that … we have had with Morganti and Jacobs through them to give us an updated completion date for substantial completion,” Guerra said.