SBCISD legal counsel awaits update

By ALEXANDREA BAILEY
editor@sbnewspaper.com

Approximately a year and a half since work on two multi-million dollar bond projects ceased and nearly seven months since the last official update on the status of those projects, a San Benito CISD administrator said this week that the district has no official update to provide stakeholders.

In a brief emailed reply to the NEWS, San Benito CISD Director of Public Relations, Luis D. Gonzales, Jr. stated on Wednesday morning that the District is awaiting feedback back from legal counsel concerning any updates. “As of today, there has not been an updated report from the district legal counsel, Mr. Baltazar Salazar,” Gonzales wrote in the email. “The last written statement was provided to us on January 29.”
Gonzales’ email concluded by reading, “If there is an update shared, we will definitely contact the ‘San Benito News’ with the most recent information.”

Last week, a representative for Berkley Surety, 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, said the company was not involved with any soil tests at the construction site and has yet to decide as to whether it’s obligated to payout on its policy.

In a June 18 edition of a neighboring publication, Salazar, the attorney the board hired as an intermediary between all things relating to the project and the District/school board, is quoted as saying that soil tests from samples taken at the construction site on March 14 and 15 were being tested for continuity.

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 “Pappas” 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, Salazar 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.

In a leaked email signed by Berkley Surety Vice President Nancy Manno, and addressed to Board President Lopez, Manno writes that several details of an article published in a neighboring newspaper were incorrect, and “reflect a fundamental misunderstanding of Berkley’s obligations, if any, as surety under the terms of the performance and payment bonds at issue. As such, I am writing to address those misstatements to make sure there are no misunderstandings at this juncture.” The email was copied to the SBCISD Board of Trustees and the School District’s legal counsel.

“The suggestion in the article that Berkley has already elected to take over the construction project, which the article suggests Mr. Salazar advised the board, is incorrect,” Manno remarked in the email. “While taking over and completing a bonded construction project after default is certainly an option available to a surety such as Berkley, as the District and its counsel are well aware, Berkley is still investigating the claim and has not yet made a final determination as to its obligations, if any, under the applicable performance bonds, nor how or whether it intends to proceed.”

Manno continues by noting that the investigation includes the examination of specific “critical” documentation it had yet to receive from the District.

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.

In her email, Manno also explained that Berkley is not an insurer. “It is important to ensure that the District is aware of the difference between suretyship and insurance. Although Berkley maintains lines of insurance products and the word, ‘insurance’ is in its name, it’s well established under Texas law that surety bonds such as the ones at issue are not insurance,” she writes. “Relatedly, the performance bonds and payment bonds at issue do not ‘double the amount of actual construction of these two facilities (as stated in the article).”