The city of Sandy Springs may sue the Perimeter Center Improvement Districts and a company that once ran the city government over paperwork errors forcing a repayment of $2.8 million in federal streetscape funds.

The City Council voted unanimously to authorize legal action against the PCIDs and the company CH2M Hill at its Aug. 16 meeting after discussing the dispute in an executive session. City Attorney Wendell Willard said in an interview he is hopeful the leverage will help negotiate an agreement, especially with the PCIDs, without going to court.

“If [we] can’t get them to step forward and honor their obligation under contract, we may have to take legal action,” Willard said. “We’ve had a good relationship and hope it can continue.”

PCIDs spokesperson Tammy Thompson declined to comment and CH2M did not immediately respond to an email.

The dispute involves a sidewalks and streetscape beautification project along Peachtree-Dunwoody Road between I-285 and Abernathy Road carried out around 2008 and 2009, Willard said.

The PCIDs commissioned the project using federal grant money provided through the Georgia Department of Transportation, with the city acting as a fiscal agent required under the grant policy. The PCIDs are two jointly operated self-taxing business districts, one in Fulton County and one in DeKalb. The grant—and the possible lawsuit—specifically involves the Fulton PCID.

Years later, in 2014, the Federal Highway Administration audited the grant for compliance with its terms. According to a written statement from the city, the audit found “non-compliance” in the project’s paperwork, including “lack of information in the files related to materials and testing information; missing sediment and erosion control reports; and failure to include Buy America requirements [a mandate to use American-made products] in the Project contract.”

The federal government demanded its nearly $2.8 million in grant money back and sought reimbursement from GDOT, which in turn demanded the money from the city. Willard said that, rather than hitting the city with one huge bill, GDOT has agreed to deduct the money from the city’s annual allotment of state road-paving funds.

Meanwhile, the city argues that PCIDs is on the hook for the funding under the terms of the project agreement. The city and the PCIDs have discussed the dispute for some time without resolution, Willard said.

“They’re sort of crossing their arms [and] haven’t done a lot,” he said.

Willard said the city also believes that CH2M was responsible for vetting the project’s compliance. At the time, CH2M managed the city’s public works and administrative services under Sandy Springs’ model of outsourcing nearly all government departments to private contractors.

“And on the other side of the coin, what was the obligation of the city?” Willard said of CH2M. “We think they have some responsibility.”

In 2011, Sandy Springs left its single-contractor government deal with CH2M, saying it was costing far too much money, in favor of bidding various departments out to several contractors.

City Manager John McDonough has ordered city staff to audit other similar city contracts and agreements to see if any are vulnerable to this type of paperwork and bidding error, Willard said, adding that he has not heard of any further situations.