Surety Bond Required By City Keeps Construction Moving Forward

By George Economides - Publisher

July 20, 2012 – The Long Beach Business Journal has learned that EDGE Development, the Temecula-based contractor overseeing the construction of Long Beach Airport’s new passenger concourse, is shutting its doors. Long Beach city officials, however, stressed that there is no impact to the project being completed on time and within budget.

“There hasn’t been any interruption,” Long Beach Deputy City Attorney Linda Trang told the Business Journal, adding that the city requires a surety bond on all construction projects in order to protect itself. The bond is usually issued in the amount of the contract, which in this case is $24.7 million.

“In a situation like this where the current contractor cannot complete its obligations, the surety is called upon to ensure completion of the contract,” Trang explained. She added, “The new completion contractor would be subject to all of the requirements that the former contractor was subject to. So they pretty much step into the shoes of the former contractor, EDGE. . . . It’s a good story of a surety doing what they are supposed to do. That’s the reason why we go for a bond.”

Airport Director Mario Rodriguez said, “EDGE was managing subcontractors. The subcontractors are on site right now, working, and the construction has not slowed down. The subcontractors are being paid through the surety bond. . . . so Liberty Mutual is now overseeing the construction. . . . Our team is up-to-date on everything. Things are moving forward. Where in other areas this would have been a catastrophe, over here it’s just a bump in the road.”

Rodriguez also said that city councilmembers have been made aware of the situation through the city manager’s office, and that he will be going back to the city council to approve a takeover agreement between the city and the surety.

The Long Beach City Council awarded the contract for the passenger concourse portion of the airport modernization to EDGE on December 14, 2010. EDGE was the lowest bidder at $24.7 million of the 17 proposals received. As reported by the Business Journal at that time, “EDGE has the responsibility to uphold the city’s enforced project labor agreement of 30 percent local hiring, among other stipulations.” It was also noted that EDGE had received awards for its construction projects, which focus mainly on the education and government markets.

Steve Rogers, EDGE Development’s executive vice president, confirmed today that the company is closing. “EDGE is in the process of closing its business, but [we’re] going to finish all of its [the company’s] obligations.” Rogers, who would not provide further explanation, also would not disclose why the 23-year-old company is closing. The company’s Web site lists 20 projects, including the Long Beach Airport, under the heading “current projects.”