(San Benito News/Ray Quiroga)
NEWS Staff Report
San Benito CISD officials announced late last week that during a special board meeting held on Friday, Oct. 18, 2024, the district entered into a $13.3 million settlement agreement with the surety company which insured construction projects stemming from a $40 million bond issued in 2018.
“The San Benito Consolidated Independent School District Board of Trustees would like to announce a settlement of $13.3 million with Berkley Insurance and Surety for the bond portion of the Natatorium (NAT) and Performing Arts Center (PAC) construction projects,” read the district’s press release published on the SBCISD’s Facebook page.
“As a result, the San Benito Consolidated Independent School District will now have $29,306,119.67 in bond monies deposited in interest-bearing accounts specifically designated for bond construction projects. These bond monies can only be spent on bond projects and not on general operations of the San Benito Consolidated Independent School District,” the post reads.
“In addition, these monies do not include the monies spent on the completed multi-purpose facility. This settlement will give the San Benito Consolidated Independent School District Board of Trustees an opportunity to carefully study and choose their next steps forward,” according to the district.
The post goes on to read, “The board assures the community and shareholders that it will continue to hold the construction companies accountable.”
Berkley Surety is the underwriter for Davila Construction, the construction company placed in default by the San Benito CISD School Board of Trustees earlier this year for its part in the now long-halted bond projects which sit idle behind Dr. Garza Elementary School off Frontage in San Benito.
As further background, in November 2018, a majority of San Benito CISD voters (by a 54% margin) approved a $40 million bond proposal which enabled the SBCISD to construct three state-of-the-art student facilities, only one of which has been completed, an indoor multipurpose athletic center located behind San Benito High School adjacent to the Bobby Morrow Football Stadium.
In November of the following year, 2019, Davila Construction, Inc. was hired as the Construction Manager at Risk for both the Performing Arts Center (PAC) ($23.1 million), and the Natatorium/Aquatics Center (NAT) ($8.8 million). The San Benito CISD Board of Trustees later amended the contract to include $1.8 million in-site work for utilities and ground preparation. According to a SBCISD statement released when the board voted to place Davila Construction in default, officials noted that the District was protected with surety bonds from Berkley Surety. The District was protected for the full contract price in the amounts of $21.3 million, $8.8 million and $1.8 million, should Davila Construction default on the contract.
Construction of the PAC and NAT was halted in March of 2023 by order of former SBICSD Superintendent of Schools Theresa Servellon when architect Mike Allex, of ROFA Architects of McAllen, discovered that geopier rock columns where misaligned, which could cause the structures to be unsound.
In May 2019, the board majority shifted as former School Board President Ramiro Moreno lost his bid for reelection after one term in office. Servellon, who was hired during Moreno’s tenure as a replacement for Dr. Nate Carman, subsequently drew criticism for calling for the halt of construction, which the minority, at the time, led by then former board president (and now current board present) Orlando “Papas” Lopez, deemed unnecessary, as was the District’s decision to relieve project manager Joseph Palacios of his duties.
Shortly after Davila Construction was placed in default, Baltazar Salazar, the District’s attorney hired by the District to specifically advise the board on the bond-initiated construction projects, informed the board that Berkley Surety, essentially acting as Davila’s underwriter, was helming the construction projects. In April of this year, however, Berkley refuted remarks attributed to Salazar made during a March 20 school board meeting.
Salazar and Lopez, on their part, stood by their comments, with Lopez, at the time, telling the NEWS that he was repeating the information provided to him, District officials, the rest of the board, and the public during the March 20 meeting.