2012-05-10 / Front Page

County shuts down SMH project

Failure to pay permit fees prompts action


A sign adorns the front gate of the Schoolcraft Memorial Hospital construction site on U.S. 2 Tuesday. The Schoolcraft County Building Inspector, along with Manistique Public Safety officers order work on the site to stop due to unpaid building permit fees. 
Pioneer Tribune photo A sign adorns the front gate of the Schoolcraft Memorial Hospital construction site on U.S. 2 Tuesday. The Schoolcraft County Building Inspector, along with Manistique Public Safety officers order work on the site to stop due to unpaid building permit fees. Pioneer Tribune photo MANISTIQUE – Crews were cleared out and construction ceased Tuesday at the site for the new $24 million Schoolcraft Memorial Hospital. According to a county official, the site was shut down after project officials failed to pay county building permit fees.

“Well over six months have passed since this project began, and there has been no interest or inquiry by anyone affiliated with the project to even find out the cost of the fees (of a permit) involved,” Jake Rivard, Schoolcraft County building inspector explained in a letter to the editor Tuesday (page 3A). “I’m pretty certain that it’s safe to say that in order for the USDA, or any other financial institute, to provide $19 million of borrowed money to a borrower they must have had a line item for ‘permits’ in general along with many other projected costs. That question should have been asked long before this project even became a reality.”

Rivard and members of Manistique Public Safety visited and cleared the site on U.S. 2 Tuesday morning.

While building permits are normally paid for and issued before a project commences, Rivard explained that since he and the state had been working closely with hospital officials and Gilbane, Inc., the general contractor on the project, a permit wasn’t required until site plans received final approval from the state.

“I requested that the State Plan Review Division in Lansing assist me with the plan review or else I still would be reviewing these plans for compliance and the project would still be on hold do to me being tied up with the review and not able to be on site for inspections,” explained Rivard. “As clearly stated in the Michigan Building Code, as well as the State Construction Code Act, you must first apply for, and obtain, a Building Permit by submitting the required paperwork and fees as set forth by the governing agency. The question was asked to me, ‘Why now? Why didn’t you shut us down in the beginning?’ Maybe I should have … in reality, who would have thought that a new facility of this reputable nature with cost of over twenty million dollars would have tried so hard to dodge a permit fee that solely contributes the surrounding economy?”

According to SMH CEO George Montgomery, the hospital received this first invoice from the Schoolcraft County Building Department on May 1. In a letter to the editor issued Tuesday (page 3A), Montgomery wrote that the permit was not paid right away because of a question regarding the fee.

“As we do with all invoices, an inquiry was made with the building department regarding how they arrived at the fee,” explained Montgomery. “Hospital staff were informed that the fees had been doubled because a permit was not obtained prior to the start of construction. The hospital had received no prior warning that we are subject to a penalty, since all work was done openly and under the oversight of the county and state building officials.”

Montgomery noted that the fee had doubled from $21,835 to $43,670, and emphasized that the hospital never refused to pay for the permit.

“We are only asking for due process in reviewing the reason for a doubling of the fee,” he said.

According to Rivard, the fee for the permit should have never been an issue.

“It is rather clear that after six months of dodging the Building Permit Application and Fees, the CEO and Trustee/Spokesman were trying to slip one by the building department’s authority,” he explained. “In a conversation earlier last week with Mr. Root, he indicated that ‘the county should forgive the entire building permit fee’, and I believe that this has been the intention all along. That is, indeed, why there never was one applied for, although I stressed weekly to Gilbane Company that, ‘This needs to get taken care of.’”

According to County Commissioner Dan LaFoille, the issue will likely be dealt with during Thursday’s county board meeting, if not before.

“I would have liked to see this work out better than it has … but Jake (Rivard) is an expert and our county building inspector, and we have to follow his lead,” he explained. “He (Jake) didn’t make this decision on his own; he spoke with people from the state, and is doing his best to follow the process.”

During a telephone interview Tuesday, Montgomery said, while the invoice stated fees were due upon receipt, the hospital is simply inquiring about the reasoning behind the fee – especially if it means potential savings for SMH.

“The hospital has, from day one, attempted to construct this project as efficiently as possible,” he explained.

“Any savings generated through the open bid process is savings the hospital will use to buy new and replacement medical equipment for the project. This additional $21,000 is significant.”

As for the next step for SMH, Rivard explained that once a signed permit application is submitted, and all fees paid, work can continue on the project.

“It darn near killed me to send all of those hard working people (that have families to support) home on Tuesday when I delivered the ‘Stop Work’ order,” he said. “I hope they will accept my apology and there will be no hard feelings in the future. It was probably one of the worst things I had to do during my career, but I had no choice.”

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