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Insurer wants $9.3 million in costs in dispute over Tampa Housing Authority residential tower

Scheduled to open last fall, the residential building is still a construction site on the edge of downtown.
Published Jul. 19, 2017

TAMPA — Low-income families and renters should already be calling the Tempo at Encore home.

Instead, the troubled $26.5 million apartment tower scheduled to open last fall is still a construction site. And now it's embroiled in a bitter legal dispute over unpaid work, missing workers and who is to blame for damage from water intrusion.

The dispute turned even uglier last week when the insurance company recently fired from the project asked a federal judge to award it $9.3 million for unpaid work and other expenses. Berkley Surety also filed a $1.6 million lien on the property, which is being developed by the Tampa Housing Authority along with Banc of America Community Development Corp., the development arm of Bank of America.

In its complaint, Berkley says that its construction firm was locked out of the project for five months while storms caused water damage inside the residential tower. It is accusing the developers of deliberately withholding payments and delaying the project, which Berkley says drove up its costs.

"(The developer) engaged in a civil conspiracy designed to protect their own financial interests," its legal filing states.

Housing Authority officials say the claims are just an attempt by Berkley to recoup money after its contractor botched the job and was fired. Many of the building's windows had to be replaced because they were installed incorrectly and were prone to leaks, officials said. A separate clubhouse/office building was not built to specifications and had to be demolished and restarted.

Its contract with Berkley allows the developer to withhold payments if it needs to repair shoddy work or damage to the building.

"Whatever they're claiming is fantasy, I'm certain," said Leroy Moore, the Housing Authority's chief operating officer. "We're moving the project forward; they're defaulting on many levels. We will sue them for the cost it takes us to finish the project

As a first step, Banc of America and the Housing Authority have removed the lien on the building by setting up a bond guaranteeing the cost of the lien and any legal fees.

The fallout from Tempo has resulted in at least two other lawsuits, including the Housing Authority and its development partner suing the Siltek Group, a small South Florida general contractor, for project delays and for failing to properly staff the project.

Berkley Surety may be a tougher foe.

The Tampa firm is a subsidiary of the W.R. Berkley Corp., a publicly traded company that earns multibillion-dollar revenues from insurance business operations in the United Kingdom, continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia.

"It is our policy not to comment on claims or litigation," said Karen Horvath, a company vice president.

Tempo is part of Encore, a $450 million mixed-income housing development and urban renewal project on the edge of downtown Tampa.

Problems first became apparent in June 2016 when Siltek was fired. At the time, the project was about three-quarters complete.

The building was behind schedule and there was concern about shoddy workmanship and poor management, Housing Authority officials said at the time. Another worry: Siltek founder Rene Sierra was working as project manager even after he had pleaded guilty in a multi-million dollar kickback scheme involving affordable housing in South Florida.

The problems around the project only got more bizarre.

As underwriter, Berkley had the option to complete the project with its own contractor.

That turned out to be Tron Construction, a company established by Siltek owner Ana Silveira-Sierra less than one month after Siltek was terminated from the Tempo project and which operates out of the same Plantation office. Silveira-Sierra declined to comment.

Six months later, Housing Authority and Banc of America officials terminated their contract with Berkley, effectively firing Tron, too. The company had only 30 workers on-site when there should have been about 300, Housing Authority officials said at the time.

Letters and emails included in Berkley's complaint show how relations between the developer and its insurer soured through the summer of 2016.

Berkley attorney Ty Thompson repeatedly wrote to his counterpart Felix Rodriguez requesting that construction crews be granted access to the site.

"Tempo's inaction is unnecessarily putting the project at risk," Thompson wrote in August.

Rodriguez responded that there was nothing to stop crews from going on site.

The exchanges came during a period when Tropical Storm Colin and Hurricane Hermine deluged Tampa with rain, causing water intrusion into Tempo, the complaint states.

Meanwhile, Berkley was pressing for ongoing payments to be made.

At a developer's meeting in November, Banc of America development officer Eileen Pope promised that Berkley would "never see one dime" of the next $1.6 million installment, the complaint states.

Housing Authority officials plan this week to contract with KAST Construction to complete the seven-story building, with the work tentatively scheduled to be finished by Jan. 1.

More than 9,000 low-income families were on a waiting list for the project's 122 subsidized apartments. Its other 81 units will be rented at market rate.

"At the end of the day we will get families moved in," Moore said.

Contact Christopher O'Donnell at codonnell@tampabay.com or (813) 226-3446. Follow @codonnell_Times.

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