The East Hampton School District is scheduled to head to trial on May 4 to settle an ongoing battle with Sandpebble Builders, Superintendent Richard Burns told the School Board at a meeting on Wednesday, November 5.
The Southampton firm, owned by Victor Canseco, sued the East Hampton School District in 2006 for $3.75 million after the two parties had entered into an $18 million construction contract. Sandpebble claimed the district wrongfully terminated the contract after signing an $80 million contract with a different construction company for a larger, three-school renovation.
The estimated potential liability for the district, including taxes, is roughly $6 million or more, given New York State’s maximum interest rate of 9 percent per year on pending awards, according to Sandpebble’s attorney, Stephen Angel, in February. “Because they’re a school district, the rate may be lower than 9 [percent], but even if they could prove a lower rate, it’s still a substantial addition,” he said.
The district’s business administrator, Isabel Madison, said she could not comment on the interest rate or total potential liability for the district, because those figures were likely to be determined after the trial.
To date, the district has spent more than $2.7 million on legal fees, Ms. Madison said.
As for the potential liability and the district’s ability to stay under the state cap on tax levy increases—which the district reported is likely to be 1.7 percent next year—Ms. Madison said if the damages are more than 5 percent of the tax levy, the district can exclude them when calculating the district’s overall tax levy increase. The business administrator said, however, that she could not comment on the likelihood of that happening.
The final Consumer Price Index, which in part dictates the tax levy cap, will not be finalized until the end of December.
“I’m crossing my fingers, toes, everything,” Ms. Madison said about the tax cap during the meeting. If the CPI is finalized at 1.7 percent, the tax cap would be 0.23 percentage points more than last year’s.
The School Board had announced in February that the Sandpebble case would most likely enter its final deposition in March and head to trial this fall, but the date in May was the earliest date available for both parties and the court, according to Mr. Burns.
“So it looks like Sandpebble is going to court,” the superintendent said during the meeting. “It is what it is.”