State won't appeal veterans home judgment

Gov. Kenny Guinn said Friday there will be no appeal of the $10 million judgment in the Southern Nevada Veterans' Home case.

Instead, he said his administration will expedite a plan to pay the tab as early as a week from now.

Guinn has been pushing staff to find a way around calling a special session of the Legislature to appropriate money for that and to replenish the state's emergency bank accounts, which are nearly empty.

Legislative leadership is adamantly opposed to a special session because their incumbent members would be barred from collecting any campaign donations 15 days before the session and 30 days after it. That would put some of them at a severe disadvantage in their campaign efforts this fall.

Guinn said the answer is the state's Tort Claims Fund, which can cover two-thirds of the $9.85 million arbitration award.

Andrew Clinger, director of the department of administration, said his office is moving forward as quickly as possible because every day the state delays adds $2,497 in interest to the total owed. As of Friday, the state already owed Addison Inc. $39,958 in interest on top of the $9.85 million award.

When biannual assessments are made against state agencies this coming week, there will be $9.2 million in the Tort Claims Fund.

Expenses from the fund are projected at just $2.7 million between now and the 2007 Legislature, Guinn said, leaving $6.48 million free to pay the Veterans Home claim. Add in the $445,350 remaining in the veterans home account and the state will owe Addison just over $3 million.

That amount will be collected in a special assessment against state general fund agencies. When the 2007 Legislature convenes in February, they would pay the money back.

Attorney General George Chanos originally said he wanted to appeal because the arbitrators shouldn't have awarded attorneys' fees, which make up $5.4 million of the total judgment.

But Nevada at NRS 338.640 states that arbitrators in public works cases "shall" award reasonable costs including attorneys' fees.

Guinn said the only issue the state will contest is a $75,735 math error in the arbitration report.

And as a practical matter, any appeal would cost not only the daily interest but attorneys' fees incurred during the process. If lawmakers had waited until the end of March in the 2007 session to pay the judgment, total interest would add $724,246 to the cost.

Arbitrators ruled two weeks ago that the state was completely at fault for delays, cost over-runs and workmanship problems during construction of the veterans home in Boulder City. The case ended up in court after the state fired Addison as contractor and hired another firm to finish the job. Arbitrators awarded Addison just under $10 million in damages and costs.

With the Interim Finance Committee Contingency Fund down to $66,000 and other emergency relief funds nearly gone as well, resolving the veteran's home judgment may still not be enough to avoid a special session.

Fires this past week are expected to pretty much consume the $9.6 million in the state Disaster Relief Fund, leaving no other source to cover the rest of the fire season.

In addition, more bills for the IFC and Statutory contingency funds are expected from the Department of Corrections, Highway Patrol and other agencies hard hit by huge increases in fuel, electric and utility costs.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.