The Elbert Files: We expected better of UI
DAVE ELBERT Sep 20, 2018 | 3:59 pm
3 min read time627 wordsBusiness Record Insider, The Elbert Files
The University of Iowa is acting like the institutional equivalent of a deadbeat dad.
For the past two years, the school has failed to pay Modern Piping, a well-respected Cedar Rapids mechanical contractor, millions of dollars for work on two signature projects — the rebuilding of Hancher Auditorium and construction of the nationally renowned Stead Family Children’s Hospital.
As a result, attorneys for Modern Piping recently did what social services agencies do when parents fall behind on child support payments. They asked the sheriff to seize university assets that could be used to pay the $17 million still owed on a $74 million bill.
According to the Cedar Rapids Gazette, the attorneys suggested attaching the debt to bank accounts or other valuables, including the Jackson Pollock “Mural,” valued at $140 million, which the school has owned since the 1950s.
The sheriff was reportedly moving in that direction when university attorneys persuaded a judge to allow an Iowa Supreme Court appeal of the case, which UI had already lost in arbitration and district court.
The dispute attracted the attention of Republican lawmakers who plan “a full investigation” in January.
“It’s a national embarrassment,” Republican Rep. Jake Highfill of Johnston told the Gazette.
Vanessa Miller, the Gazette’s higher education reporter, has been following the story since before the 14-story Children’s Hospital opened in early 2017, more than 18 months behind schedule and roughly $100 million over budget.
An investigative piece by Miller last summer revealed that the construction process was, to put it mildly, a chaotic mess fraught with foibles and failures.
The design process, instead of taking 10 months as planned, went on for 46 months, overlapping for two years with construction.
In addition to reconfiguring the hospital from a rectangle to an elliptical shape, a so-called Press Box was added to the top floor overlooking Kinnick Stadium. On home-game days, young patients and their families watch Iowa football games and wave to fans and players in what has become a huge public relations boost for the university.
According to the Gazette, an internal audit found that a “fast-tracked” process had resulted in an unusually high number of change orders — more than 1,000 — accompanied by cost overruns, which drove the price for the hospital from roughly $274 million to as much as $370 million, possibly more when legal fees for fending off contractor and vendor lawsuits are included.
A major problem, Miller wrote, was lack of oversight. “The Board of Regents approved budget increase after budget increase for the project with little to no public discussion or tough questions, even after a scolding audit,” she wrote.
It doesn’t appear that U of I President Bruce Harreld, who came on board during construction, was much help, despite the fact that he was hired as a nonacademic, specifically because of his private business expertise.
Harreld’s only mention in Miller’s stories was in emails she found in the court record, which said Harreld at one point had agreed to a settlement with Modern Piping. That deal fell apart when the university accused the arbitration panel of being biased toward Modern Piping, a charge that was refuted by the arbitrators and the district court.
If Modern Piping wins the lawsuit, it appears unlikely that the hospital will have the cash to pay what it owes Modern Piping and others.
If that’s the case, rather than dump the debt on taxpayers or sell the Jackson Pollock, they should consider taking some of the money from the football program.
After all, by now Hawkeye football has received the equivalent of millions of dollars of free publicity from all of those heartwarming game-day broadcasts of Iowa fans in the stands and patients in the hospital waving to each other.