Spokane Valley agrees to $11.75 million settlement with contractors who built sinking City Hall
![Spokane Valley City Manager John Hohman talks about structural issues at City Hall on Feb. 18, 2020. (KATHY PLONKA/THE SPOKESMAN-REVIEW)](https://thumb.spokesman.com/uO6q6eDqVn9RLDznlEJuDvMVKgE=/600x0/media.spokesman.com/graphics/2018/07/sr-loader.png)
A nearly four-year legal battle is coming to a close after the Spokane Valley City Council approved a settlement agreement Tuesday with the contractors who built the suburb’s defective City Hall.
The council agreed to accept a total of $11.75 million from Meridian Construction for the repairs needed to correct defects in the $14 million building, the investigations that revealed the shortcomings and the resulting legal costs.
“We are thankful to recoup taxpayers’ dollars and to see this process come to a close,” Mayor Pam Haley said in a written statement. “As this settlement not only reimburses the money spent on critical repairs but also ensures that we can address all remaining work needed for our City Hall.”
City officials found structural problems with the building shortly after it opened in 2017.
Damage began to appear on the curved northeast wall of the building, serving as an indicator of the structure’s internal issues.
Under further inspection, city consultants found the wall was sinking because the soil underneath the foundation hadn’t been properly compacted. The rest of the building is under a separate foundation that has not had issues.
Consultants also found other defects like improper or missing welding, missing spray-in insulation and materials not installed correctly or to manufacturers’ specifications.
The city entered into a pair of contracts for the investigation and repair of City Hall in 2023: a $355,000 agreement with the construction management and engineering firm CBRE/Heery, and a design and build deal not to exceed $4 million with Garco Construction.
Prior to those agreements, the city had spent $800,000 on repairs.
In April 2020, Spokane Valley sued Meridian Construction, Architects West, Allwest Testing & Engineering and Eight31 Consulting, to recoup some of the inspection and repair costs, accusing the companies of negligence and alleging they breached their contracts and warranties.
The city previously received settlements totaling $2.185 million with Architects West and project management firms Allwest Testing & Engineering in May 2023 and Eight31 in November . The additional settlement agreed to Tuesday effectively ends Spokane Valley’s legal efforts regarding City Hall, said Jill Smith, a spokeswoman for the city.
Meridian Construction disputed the city’s claims, but their insurer “made the business decision to settle” on mutually agreeable terms, said John Black, an attorney with the Spokane firm Dunn & Black, which represented the company in the lawsuit.
City Manager John Hohman told the council the settlements effectively return the city’s initial investment in the building.
The city spent around $6 million for the repairs and legal battle, he said, but it allowed it to provide thorough evidence of its claims in the lawsuit.
“We do believe that the path that we chose to self fund those initial phases really helped us get across the finish line with a sufficient settlement on this,” Hohman said. “So what we’re able to do is to come in and tear apart, piece by piece, portions of this building, document all that, and put those addendums together that were then used in the potential court case, in the mediation.”
Garco Construction has completed their initial repairs, and the city is evaluating what remediation work may remain, Smith said.