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SAN BENITO — The school district’s former contractor’s insurance company is contacting board members to clarify information surrounding its “investigation” into a $40 million bond-funded project entering the first year of a shutdown stemming from building foundation flaws.

The Berkley Insurance company is citing the Valley Morning Star’s March 26 article attributing some comments to attorney Baltazar Salazar which the company described as “incorrect” and “reflect a fundamental misunderstanding of Berkley’s obligations as surety under the terms of the performance and payment bonds at issue.”

Meanwhile, Salazar was standing behind comments he made during a March 20 school board meeting.

“I stand 100% unequivocally behind the statements I made to the community,” he said Thursday in an interview. “We’re being very transparent.”

In Tuesday’s letter to school board President Orlando Lopez, Nancy Manno, vice president of Berkley Surety, copied board members Ariel Cruz-Vela, Rudy Corona, Mario Silva, Oscar Medrano, Frutoso Gomez, Alex Reyna, board attorney Tony Torres and Salazar, a move which Salazar argued constitutes a violation of the Texas Open Meetings Act.

On Thursday, Manno did not respond to a telephone message requesting comment on Salazar’s claim.

Meanwhile, Salazar argued a board member disclosed the letter to community members, alleging a violation of the Open Meetings Act that could lead to prosecution.

The Valley Morning Star obtained the letter, which it confirmed was circulating within this politically charged community made up of two rival factions.

In the two-page letter, Manno stated Berkley is “investigating” whether it will take over the construction project after trustees voted to place contractor Davila Construction in default.

“(T)he suggestion in the article that Berkley has already elected to take over the construction project, which the article suggests Mr. Salazar advised the board, is incorrect,” she wrote.

“While taking over and completing a bonded construction project after a default is certainly an option available to a surety such as Berkley, as the district and its counsel are well aware, Berkley is still actively investigating the claim and has not yet made a final determination as to its obligations, if any, under the applicable performance bonds nor how and whether it intends to proceed,” the letter stated.

A sign displays renderings of the finished SBCISD Performing Arts Center and Natatorium Facility Tuesday, April 18, 2023, at the construction site in San Benito. (Denise Cathey/The Brownsville Herald)

“Berkley is continuing to diligently investigate the claim, including, but not limited to, recently requesting additional critical documents and information from the district, which it has not yet received. Berkley will advise the district of its determination once its investigation is complete.”

In her letter, Manno stated, “it is important to ensure the district is aware of the difference between suretyship and insurance.”

“Surety bonds, such as the ones at issue, are not insurance,” she wrote. “Relatedly, the performance bonds at issue do not double the amount of the actual construction of these two facilities’ as it was suggested that Mr. Salazar informed the board.”

“As I assume you are aware, the performance bonds and payment bonds apply to two separate and distinct obligations of the contractor and are subject to the terms of the bonds, the Texas Government Code, and, with respect to the performance bonds, the terms of the bonded contracts,” the letter stated. “Finally, pursuant to the performance bonds, agreement by the district to pay the balance of the contract price, as defined in the bonds, to Berkley is a condition precedent to any obligation under the bonds.”

During the school board’s March 20 meeting, Salazar told trustees Berkley Insurance “is actively involved in trying to take over the construction that was basically left by Davila Construction.”

In his presentation, Salazar stressed the school district was “heavily insured.”

“We have payment bonds and we have performance bonds double the amount of the actual construction of these two facilities,” he told board members. “Berkley Insurance has not denied coverage. They have not denied performance bonds and they have not denied any payment bonds. We’re doubly insured. In addition, Davila (Construction) has insurance so we’re going to tap into that, too.”

Construction is halted Tuesday, April 18, 2023, at the site of SBCISD’s future Performing Arts Center and Natatorium Facility in San Benito. (Denise Cathey/The Brownsville Herald)

In January, board members voted to place Davila Construction, the project’s San Antonio-based contractor, in default of its contract to build a $21.3 million performing arts theater and a $8.8 million aquatics center nearly a year after officials shut down construction following an architect’s finding of flaws in the two buildings’ foundations.

Now, the school district’s biggest construction project is entering the first year of a shutdown, pushing its timetable back more than a year.

In March 2023, then-Superintendent Theresa Servellon, under the past school board, ordered the construction project halted after architect Mike Allex, with McAllen-based ROFA Architects, reported finding some geopiers, or deeply anchored 2-foot-wide rock columns, misaligned with the buildings’ foundation targets.

For months, Allex and officials with Davila Construction worked to determine repair plans aimed at jump starting construction.

Since a previous school board proposed a $40 million bond issue in 2018, the construction project has become one of city’s hottest topics, a political football drawing fire from opponents.

In 2018, a previous administration pushed for the bond issue to fund construction of the $21.3 million performing arts theater, the $8.8 million aquatics center and a $5.7 million indoor practice field, which has been completed.

In a heated election, 54% of voters passed the bond issue.

In October 2021, Davila Construction launched the project to build the performing arts theater and aquatics center.

In February 2023, before officials shut down the construction project, a district report showed Davila Construction was requesting the performing arts theater’s completion date be pushed from July 21 to Dec. 28 while the aquatics center’s completion date be changed from April 14 to Sept. 19.

Officials haven’t announced a new timetable.


Insurance company taking over San Benito $40 million project