A lawsuit is prompting a change in an agreement for a joint workforce housing project between the town of Frisco and the Colorado Department of Transportation.

A Feb. 13 lawsuit filed by the town against general contractor MW Golden Constructors alleges breaches of contract, fraud and civil theft related to the work done on a joint workforce housing project at 619 Granite Street.

The project is slated to produce 22 units, with half going to the local workforce making 80% to 100% of the area median income and half going to CDOT employees on a site that was previously a mobile home park. Frisco and CDOT signed an agreement to work together on the project in 2020 and broke ground on it in May 2023.

They planned to split the approximate $12.3 million construction costs for the project, but a situation arose where final construction costs are unknown. It prompted CDOT to request ownership of its 11 units before the agency pays the entirety of its half, which was not the original plan.

Town attorney Thad Renaud told Frisco officials at a March 11 meeting that actions taken by MW Golden Constructors have resulted in the lack of clarity around the final construction cost. Issues with the project’s cost resulted in the town taking legal action.

The lawsuit says the town and the contractor agreed that the total cost of work for the project would not exceed approximately $12.3 million. A completion date of Nov. 13, 2024 was also agreed upon. If the project was not completed by that day, MW Golden was on the hook to pay the town $1,450 for each calendar day work wasn’t completed.

The lawsuit alleges that “over the course of the project, MWG abused its position as construction manager to engage in overcharges, fraudulent billing, and improper and/or inaccurate record keeping and reporting.”

The legal documents accuse the contractor of charging it rent for equipment, owned by the contractor, which was reportedly used for other projects being worked on and not the project on Granite Street. The town claims it was also billed for materials that were not used for the project, some which were returned for refunds the contractor kept for itself, according to the lawsuit. 

The town claims it was billed for goods and services that were “falsely characterized,” according to the lawsuit, and the contractor reportedly refused or failed to document numerous items it billed the town for.

“MWG’s goal was to inflate the overall cost of the Project as close as possible to the guaranteed maximum price to maximize the fee to be paid to MWG and to divert funds to MWG and Golden’s benefit,” the lawsuit states. 

Frisco requested a jury trial.

Attorneys representing MW Golden Constructors in the matter did not immediately respond to the request for comment.

Renaud said, originally, CDOT was supposed to be transferred ownership of its units just ahead of the property’s closing because it was anticipated the final construction cost would be known by then.

“We are at that point, but we don’t know the final purchase price,” he said.

He said the change to the agreement between the two brought before council allows them to close on the project now and collect the remainder of the money from CDOT later once a price tag is solidified. He clarified CDOT has already footed much of the bill they owe the town.

“Do you think it will play out the year, year and a half?” council member Dan Kibbie asked. 

Renaud said yes, unless it is resolved earlier.

Alongside approving the amendment to the agreement at the March 11 meeting, council also approved the sale of the units to CDOT in a separate agenda item that evening.