Remodeling setbacks at former middle school explained

The affordable housing project at the former Red Oak Middle School building is facing construction delays.
In October of 2018, the Red Oak School Board approved the sale of the building to Red Oak Partners LLC for $5,000. The conversion of the building started shortly after its permanent closure at the end of the 2019-20 school year. Plans at the time called for a 21-25 unit structure, with hopes to preserve the former middle school gym.
Chele Thornton is executive director of Builder’s Development Corporation. Thornton said they were involved because due to the way Iowa structured tax credits, they had to come through a non-profit. To qualify for the funds, the project required an LLC, which was Red Oak Partners, a non-profit, which BDC filled, and Prairie Fire, who served as co-developer with BDC. Construction was handled by Prairie Fire Construction.
Thornton said almost immediately, the project ran into problems, and Thornton only recently moved into a position to be able to work through them.
“The project started in July 2020, which was right in the heart of the COVID-19 pandemic, though we were awarded the necessary tax credits in 2019. After the project moved through COVID, and we went through a couple of executive directors, I took over the role on Jan. 1 of this year, and I inherited this problem child,” Thornton said. “I immediately started auditing this project. I’m an accountant by trade, and after I went through everything, I came to the conclusion that the project should be farther along than the other projects we have done in the past.”
Thornton said after conversations with Prairie Fire Development Group, the organization overseeing the work on the project, the cause for the delays became clear.
“We had a meeting with Prairie Fire, and what it came down to was that their guy who was leading the project also had five other projects that because of COVID, had been delayed, and things just snowballed. Making things worse, the Red Oak project was the last project on their list, and they had others that were due and needed to be done because the tax credits [would] run out. He finally admitted that he couldn’t continue on the project, so Prairie Fire Construction was let go,” Thornton explained.
Making matters worse was the loss of key employees at Prairie Fire, and some instances where ego got in the way.
“We’ve done three projects with Prairie Fire and they’ve done fabulous work, but they lost one employee who couldn’t work due to COVID, and the others left because other entities were offering everyone more money to work elsewhere, and couldn’t be replaced. They instead tried to do it on their own, and I think pride gets in the way after you’ve done something for so long,” Thornton said. “Instead of asking for help, things just got out of control. There’s blame to go around, including with BDC. We had a couple of executive directors that just kind of laid down on this a little bit because they’ve done so many projects before, and it’s all gone well. I’d say this is a project where things just fell through every crack. “
After confirming that Prairie Fire Construction was unable to complete the project, Thornton said they immediately went out and sought the services of Merit Construction of Cedar Rapids, to get a complete scope on where the project stood today.
“Merit Construction representatives came out and identified what had been done, what hadn’t been done, and how much it would cost to complete the project. Unfortunately, costs for construction materials have gone through the roof. The cost of the windows alone are an additional $1 million, and we had a hard date of Oct. 31 to complete the project due to the tax credits involved,” commented Thornton.
While a lot of the remaining aspects of the project are mainly finishing work, as all the sheet rocking has been placed in the third floor, and partially in the second floor, work remained to be completed in the gymnasium and auditorium, and the project has all but exhausted its existing budget. A potential source for the remaining funding for the project was through American Rescue Plan Act funding, but Thornton said attempts to secure it ran into roadblocks from the governor’s office.
“We met all the approvals for the funding prior to it being sent for approval at the governor’s office, and the request for funding was denied by the governor. We were devastated. When we asked why, it was stated that verbiage in the act that the costs had to occur after March of 2021. Even though the project costs we are facing occurred after that date, we were told that the project started prior to that date, and we did not qualify,” stated Thornton.
An attempt to get the governor’s office to change its stance on the funding was attempted, and the request was denied a second time, leaving BDC in the tough position of using alternate options to collect the necessary funding to complete the project on time, or try for a different date.
“We’re pursuing every avenue we can think of, but we may be in a position where we have to scrap the tax credits we have now, and reapply with another entity, start all over, and finish the project, but no matter what, we are committed to finishing the project,” advised Thornton. “If you know of anyone that has funding, let us know who to contact, because we want and need to finish this project, there are people here in the town that have worked on the project that need to be paid, and frankly, it’s a mess. There’s no excuse on our part as the owners of the property, there’s no excuse on the contractors that failed us, and we may have to sue their insurance to get more money. We don’t know, but we’re going to use every avenue we can.”
Another hurdle being faced is that while communications with Rep. Cindy Axne’s office have identified federal funding sources that would have been beneficial to the project, the deadline to apply for those funds has passed. Still, Thornton said they are going to do everything they can to find the necessary funding to meet the Oct. 31 deadline, rather than be forced to scrap the project and try again.
“We’ve got people who leased the units and have been ready to move in for a long while, and we absolutely want to get this project done for them in October, if we can, because they’ve been waiting long enough.”