Dayton terminated contracts with demolition contractor 3 years ago. Now he’s doing work for the city again

Aug 10, 2017

Demolition contractor Steve Rauch is again doing work for the city of Dayton after a dispute in 2014 that resulted in the city terminating four of his contracts for problems that included allegations Rauch’s workers used improper fill material after demolitions, city records show.

Rauch was awarded a $267,320 contract in May 2016 to demolish nuisance residential properties through 2017, city records reviewed by the newspaper show. He has also bid on other contracts this year.

It’s not clear if any work Rauch did for the city was the subject of a raid by state and federal agents of Rauch’s business properties last December. No charges have been filed, and Rauch said in an interview this week he doesn’t know what the search of his property was about.

RELATED: Questions surround raids on businessman’s properties

“The thing of it is there’s no indictments, there’s no criminal charges, there’s no charges whatsoever,” he said.

Rauch had contracted with the city of Dayton for millions of dollars in demolition work prior to the roughly two-year hiatus from doing city work. He denied the stoppage was in any way involuntary, saying his company was simply too busy to do work at the rates the city was paying him.

“It wasn’t a forced termination,” he said this week. “It was agreed upon and we didn’t want to do any more work.”

But a Dayton Daily News examination of city records show Dayton terminated four contracts totaling $1.4 million with Rauch’s company — SRI — in 2014 after city officials said his workers “used improper fill at numerous demolition sites,” according to a November 2014 letter to Rauch’s attorney from the city.

Have a tip for the I-Team? Call reporter Josh Sweigart at (937) 328-0374 or email Josh.Sweigart@coxinc.com. Follow Josh on Twitter and follow the I-Team on Facebook.

“Not only did SRI repeatedly breach the contracts by purposefully using improper fill on the demolition sites and failing to fully excavate the sites and remove the foundations, but SRI repeatedly failed to perform the work in a timely manner,” says the letter from Assistant City Attorney John Musto.

The letter, which is revealed publicly here for the first time, alleges only a violation of contract terms, and did not refer the matter for prosecution.

READ THE DOCUMENTS:

The city agreed to pay SRI $492,920 for work SRI completed on the contracts after Rauch filed a lawsuit in Montgomery County Common Pleas Court seeking $637,035.

Nuisance abatement

The contracts were for the demolition of dozens of properties across Dayton through the city’s nuisance abatement program. This is the same program his current contract is under.

After the city paid him for the work his company had already done, Rauch said the city last year offered a contract at a higher rate.

The nuisance abatement program is seen as a means for cleaning up neighborhoods hard-hit by abandoned properties.

After demolitions, companies must use what is often referred to as “clean fill” in the holes often left by those demolitions. Asked about allegations that his company used improper fill material, Rauch said, “I don’t have any comment on that.”

Dayton city officials have not responded to questions submitted July 24 asking if Rauch was at any point barred from doing work for the city after the contracts were terminated.

FBI raid

Rauch’s company has done work for municipalities throughout the region and has been in business for more than four decades. Stamped on its website are the words: GET THE JOB DONE RIGHT.

But the company has also been the subject of some controversy. The focus of the December 2016 raid on his business properties was not revealed, but it came after West Carrollton officials discovered 30 tons of improper material in a city-owned property.

RELATED: Rauch 1 of 4 companies allowed to dump at site of dumping probe

After West Carrollton initially denied a request by this newspaper for information on which companies had access to the city dump site, citing a sealed search warrant, the city later revealed that SRI was one of four companies given access to dump fill material there.

SRI also runs a licensed Construction and Demolition Debris landfill on Soldiers Home-West Carrollton Road. The property was one of the locations included in the December search.

West Carrollton officials have never said who they believe to be responsible for the dumping. The city spent $53,996 on cleanup and new security at the city-owned site at 4000 Hydraulic Road.

West Carrollton officials referred all questions about the illegal dumping probe to the U.S. Secret Service, which would not comment.

The Secret Service manages the Southern District of Ohio Financial and Electronic Crimes Task Force, which includes hundreds of area agencies. The task force executed search warrants at Rauch’s business properties in Dayton and Jefferson Twp. in December.

West Carrollton wants to turn the Hydraulic Road property into a park, and has since re-opened the site to dumping by different companies than were previously authorized.

To raise the land height, the city permitted the companies to dump “clean hard fill,” defined by the Ohio EPA as “material (that) is not contaminated by solid wastes, infectious wastes, hazardous wastes, or construction and demolition debris (C&DD). If these types of waste are commingled with clean hard fill, all of the materials must be handled and disposed of as solid waste, infectious waste, hazardous waste, or C&DD.”

Rauch workers told to stop work

City of Dayton records reviewed by the newspaper show the dispute with Rauch in 2014 came after SRI fell behind schedule on contracts that called for the demolition of properties under the nuisance abatement program.

According to those records, the demolitions were to be completed by November 2013, yet SRI didn’t start the work on 12 properties until February 2014.

On Feb. 21, city workers discovered improper fill at “numerous demolition sites, including re-bar, wood, crushed concrete, bricks, steel, terrazzo, large pieces of asphalt and other unapproved materials,” according to city records.

This followed letters from the city demanding that Rauch complete behind-schedule demolitions of the 12 properties.

When the improper fill was discovered, the city told Rauch to stop work. But on Feb. 28, workers were discovered at one of the properties, according to city records that say the foreman disregarded the city’s demand to stop the work.

“A call was immediately placed to Steve Rauch,” says a timeline included in city records. “He admitted that he personally directed his workers to place back fill and to ignore the orders from the city. After a lengthy conversation with Mr. Rauch, the workers and equipment were pulled from the job,” the timeline states.

The contracts were terminated “for cause” in March 2014. Rauch filed a lawsuit, and the city paid the company $492,920 for the work that had been completed.

Dayton nuisance demolition program records show Rauch received $1 million through the program in 2013, $541,731 in 2014 and nothing in 2015.

The city’s dispute with Rauch over the housing demolitions happened around the same time an effort to turn the former Dayton Daily News building into student housing ran into problems. Rauch ultimately sued the developer for not paying for the demolition and took possession of the property in a settlement.

RELATED: Arcade developers, 2 others want to transform former newspaper site

The city paid Rauch $295,000 to fill and seed the hole left at the site, and then purchased the property — not including the historic newspaper building — for $450,000.

MORE FROM THIS REPORTER

Multi-state companies major players in Ohio’s budding medical pot trade

A sneak peak at Dayton’s $64M downtown library

Amid panhandlng problem, group is on front lines fighting homelessness

Feds won’t charge Beavercreek officer in Walmart shooting

Dayton group home owner could lose license over forgery conviction