UPDATED - APRIL 2025

PELLICANO DRIVE

The Camino Real Regional Mobility Authority (CRRMA) is a local governmental entity tasked with developing transportation projects in the El Paso region. Established in 2007, the CRRMA has been involved in over $1.4 billion worth of major transportation projects, including State Spur 601 (Inner Loop), Americas Interchange (Loop 375 at I-10), the El Paso Streetcar Project, and SunCycle – El Paso’s Bike Share Program. Current projects include the extension or upgrade of Montwood, John Hayes, and Valley Chile Road in Vinton, as well as the Wyler Tramway Project.

In 2017, El Paso County entered into an agreement with the CRRMA for the CRRMA to design and construct the Pellicano Drive Widening Project (the Project). The design was completed in 2020 and the CRRMA hired a construction contractor in March of 2020.

PROJECT SCOPE AND COST

The Project scope includes the reconstruction of the existing roadway to a 6-lane divided roadway with raised median, concrete pavement, curb and gutter, sidewalk, landscaping, safety illumination, storm drainage, signing and striping from Loop 375 (Joe Battle) to Berryville Street/Darrington Road. The Project is intended to improve safety and mobility on that heavily used roadway. The construction piece of the Project was awarded to J.A.R. Construction, Inc. (the Contractor) for approximately $22.1 million and includes federal, state, and local funding.

PROJECT STATUS

The completion date established pursuant to the contract, and subsequent change orders, was July 21, 2022. However, less than 50% of all required construction activities have been completed as of April of 2025. Major uncompleted items include the installation of concrete and asphalt, roadway base and subgrade materials, lighting, sidewalks and a shared-use path, and water/sanitary sewer/storm sewer facilities. Liquidated Damages are being assessed against for each workday after July 21, 2022, for which the Project remains uncompleted ($3,150/day).

Following the required process for federally funded projects like this one, the CRRMA issued a Notice of Default to the Contractor and issued a claim against the Contractor’s performance bond. These steps are required to properly remove a contractor from a federally funded construction project and are intended to result in the replacement of the original contractor so that construction may resume. However, this process is long and requires investigation by the contractor’s surety company (the entity that provided the referenced performance bond). Ultimately, the surety would be responsible for hiring a new construction contractor to complete the remaining work.

This is where we are in the process to restart work for the Project. However, there are a couple of complicating factors that must be noted. First, the Contractor objected to the CRRMA’s default, claiming it was improper. This objection adds time to the process, as we must defend the default. In addition, the Contractor filed for bankruptcy, which also impacts the ability to advance the Project, and extends the process and completion timeline.

Unfortunately, as these processes are ongoing, no significant construction activity will occur in the short term. However, as noted below, we are continuing to work toward resuming construction as quickly as possible. While dealing with a non-performing contractor is time-consuming, the CRRMA must continue to work within the process required of federally funded projects to get to completion.

UPDATE – OCTOBER 2024

The Contractor filed for bankruptcy in March of 2023. This action provided certain protections to the Contractor, which included the restriction on the CRRMA from pursuing the completion of the Project without court approval. As a result, the CRRMA had to request authorization from the bankruptcy court to be released from that restriction, which was granted in May of 2023. The CRRMA then restarted the effort to have the Contractor’s surety begin work on the Project. However, the CRRMA encountered several additional issues as it tried to get back to work, including significant procedural delays arising from the bankruptcy itself. For example, the Contractor originally filed under Chapter 11 of the Bankruptcy Code, which was later converted by the court to Chapter 7. The change to Chapter 7, in addition to adding time, resulted in the appointment of a trustee that was tasked with managing the remaining assets and liabilities of the Contractor. The trustee required time to become familiar with the Contractor, the Project, and several other projects with TxDOT and the City of El Paso that the Contractor was working on when it filed for bankruptcy. In addition, the original bankruptcy judge that was on this case retired during the proceedings. A new judge was appointed in October 2023 and is now shepherding this case through the process. This appointment required additional time for the new judge to become familiar with the ongoing case as well.

As noted above, the Contractor objected to the CRRMA’s default of the Contractor, claiming that the default was improper and requesting approximately $25 million in damages. As a result of this claim in the bankruptcy court, the surety company has refused to restart construction under the performance bond until the Contractor’s default claim is resolved. The CRRMA has filed motions in the bankruptcy court to expedite the judge’s ruling on the default, as a favorable ruling would remove the surety’s stated reason for not restarting the work.

In addition, the CRRMA has approached the surety company directly and requested that it use the remaining available project funds for the completion of the westbound portion of the roadway, from approximately Aircoupe to Loop 375, while the court decides the other issues in dispute. The surety has agreed in concept and the parties are working to develop the design plans necessary to begin this limited scope of work.

UPDATE – APRIL 2025

The bankruptcy judge broke this dispute into several proceedings. Hearings on the motions filed by the CRRMA were held in November and December of 2024, with another most recently held in January of 2025. The question before the Court in the January 2025 hearing was the underlying question – Was the default of the contractor proper? The Bankruptcy Judge issued a ruling on the January hearing on April 28, 2025, noting that “The public authority followed the contractual default process in all material respects, and its defaulting of the contractor was not wrongful.”

The CRRMA is now reviewing the ruling in more detail and will work with the County and TxDOT on the best way forward to restart construction on this long delayed project.

MORE INFORMATION

We hope that this background information is helpful to you. However, please let us know of any questions you may have. Send an email to [email protected] or call (915) 212-1072 for more information. Thank you.