The City of Knoxville has informed the contractor on the First Creek Drainage Improvements Project that it is considering declaring the company in default of its agreement with the city.

The move is a potential first step toward terminating the contract, though the city is not asking for that at this time. It has instead requested a meeting with the contractor, DH Contracting, LLC and The Cincinnati Insurance Company within the next 15 days, "to discuss methods of performing the Agreement."

The insurance company is the surety for DH Contracting, which had to have a performance bond as part of its contract with the city. That means the insurance company would have to make arrangements to finish the project if DH Contracting is found to be in default or otherwise unable to complete the work.

The First Creek Drainage Improvements Project, Phase II, is part of the city effort to alleviate flooding along First Creek in North Knoxville.

The city's law department delivered a letter Friday to DH Excavating LLC and The Cincinnati Insurance Company requesting the meeting. The city contends that D.H. Excavating has failed to make adequate progress on the project.

The work - which includes the construction of two new bridges and the widening of a 1,853-foot-long section of the creek's channel – was originally supposed to complete in November.

But the work stalled due to a legal dispute between DH Excavating, LLC and Bell & Associates Construction, LP, the bridge subcontractor hired to build the new bridges at Fairmont Boulevard and Emoriland Boulevard. The dispute between DH Excavating and Bell Construction is currently being litigated in Knox County Chancery Court and DH Excavating informed the city last month that it would take over the bridge construction.

The city has extended the completion date to mid-January, due to unexpected issues with the excavation of subsurface rock and high water due to rainfall that occurred during construction.

The city, however, is not satisfied with the progress DH Excavating has made since taking over the bridge work in September and informed DH Excavating and The Cincinnati Insurance Company that "the City is considering declaring DH Excavating in default of the Agreement."

The insurance company has 15 days to conduct an investigation and report back how it intends to complete the project.

The city requires performance bonds for public construction projects to protect it in the event a contractor cannot perform his or her contract with Knoxville.