HomeMy WebLinkAbout04-09-07-Meeting Monday Mayor:
Stan Harpstead 1245 W.Highway 96
'A,RZE1\UHILLS Arden Hills,Minnesota
Council Members: 55112
David Grant Arden Hills City Council 651.634.5120
www.ci.arden-hills.mn.us
Holden
David McClung
Fran Holmes
MEETING
MONDAY ORIGINAL
April 9, 2007
City Vision
A strong community that values our unique environment, our fiscal soundness, and our tradition
as a desirable place in which to live, work, and play.
Meeting Convenes 6: 15 p.m.
At Arden Hills City Hall
AGENDA
Call to Order
1. APPROVAL OF AGENDA
2. MEETING AGENDA:
MOTION TO ADJOURN TO CLOSED SESSION-
1. Status Discussion Regarding Rochon Corporation/City Hall Arbitration/Mediation Case—
Pursuant to MS 13D.05 SUBD 3.b
3. ADJOURNMENT
A quorum of the City Council will be present at this
meeting.
•
MATERIALS FOR CLOSED MEETING
CITY HALL ARBITRATION
• 6:15 P.M.
MONDAY, APRIL 9, 2007
Materials considered confidential, attorney-client privilege
•
•
TAL DEN HILLS
MEMORANDUM
DATE: February 13, 2007
TO: Michelle Wolfe, City Administrator
FROM: Dave Scherbel, Building Official 9--)) .
Jeff Coleman, Attorney
SUBJECT: Confidential; City hall update
CC: Karen Barton; Community Development Director
Jerry Filla; City Attorney
• CONFIDENTIAL ATTORNEY CLIENT PRIVILEDGE,
ATTORNEY WORK PRODUCT
Request
In preparation for the upcoming mediation, staff with input from legal counsel is providing an
update regarding the City Hall Arbitration proceedings. Note that much of the information in this
memo was provided by legal counsel and thus is protected by attorney client privilege. Also
certain information constitutes attorney work product. This memo is prepared to update the
counsel regarding ongoing litigation and strategy.
Background
Following is a summary of costs the City has spent to date on City Hall repair and the arbitration
proceedings. ( In statement of claims, see attached)
1) Insurance deductibles $11,500.00
2) Landscaping overpayment $22,778.15
3) Mechanical repairs/commissioning $28,922.31
4) Miscellaneous costs for repairs/services $12,773.43
5) Professional fees $173,709.57 (see attached)
6) Repairs completed $22,593.00
• 8) Engineering/Investigation services $108,440.78 (see attached)
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• Memo to Michelle Wolfe 2
February 13th
City hall arbitration
9) In progress engineering(bid specs) $13,500.00
Total above $394,217.24
The City has scheduled a third mediation attempt for the 30th of April. We expect to spend
approximately $20,000 in expenses for the next mediation session, based on past mediation and
preliminary estimates.
If the mediation is unsuccessful, the City is also scheduled for Arbitration the last week of May
and the first two weeks in June. The City can expect to spend an additional $100,000 to $140,000
on arbitration, attorney and professional witness fee. These figures do not include staff time.
The City currently has a claim against Rochon for defective work in the amount of
$2,124,836.25. This claim amount assumes a total tear off and replacement of all exterior stone
and re-flashing/reconstruction of the cavity wall system to correct the insulation system, building
paper and relief angles. Our expert WJE does not believe that this work is necessary for long
term serviceability. However the work performed by Rochon (specifically one vs. two layers of
building paper, steel vs. galvanized angles and regular vs. tongue and groove insulation)
represent a failure to comply with the contract documents and thus a breach of contract.
Independent of the results of mediation or arbitration, the City has to do certain repairs regardless
of the outcome. Below is a list of minimum repairs, listed in priority, for Arden Hills City Hall.
Also included are cost estimates for that repair. Estimates are based on quotes obtained from
Advanced Masonry Restoration and Building Restoration Corp. Quotes have been adjusted per
Wiss, Janey, and Elstner specifications. The quotes were intended for budget purposes only and
may change once the actual scope of work is determined.
1)Replace chimney stone and flashing $105,000 to $125,000
2) Replace/repair thru wall flashing $100,000 to $120,000
3) Replace/Reset parapet cap stone $100,000 to $160,000
4)Replace/repair window head flashing $80,000 to $150,000
Total of repairs $385,000 to
$555,000
Analysis
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. Memo to Michelle Wolfe 3
February 13th
City hall arbitration
Based on current estimates, the City can expect to spend at a minimum $385,000 to $555,000 for
repairs. These repairs are needed regardless of the mediation/arbitration proceedings. At this
cost, the City would be settling for minimum repairs with possibly aesthetic and durability
concerns. We would not get two layers of building paper or galvanized angles as originally
specified. Our goal is a building that does not leak upon normal rainfall. Also the building repairs
will be spotty in nature and may lead to color variations in the stone (between old and new).As
stated previously, the City can expect to spend around $20,000 in the next mediation. In the last
mediation, the City was asked "off the record" if they would consider around $400,000 to settle.
But that offer also pre-supposed a payment to Rochon of approximately $95,000 for a net of
$305,000.
To date the City has spent $123,300.00 on legal and arbitration fees. The City can expect to pay
$120,000 to $160,000 for additional legal fees if it goes through the arbitration proceedings.
It is very hard to speculate on what the City may be awarded if it goes through arbitration.
Our legal counsel feels that whatever we may be awarded will most likely be shared between the
Architect, Architectural Alliance, and the general contractor, Rochon. The ratio may be between
60/40 to 75/25, with the general contractor being the first ratio. Our attorney believes that legal
fees spent in the past will not be considered in the settlement.
Breaking down the City's most current statement of claims dated 2/13/07. (See attached)
1) Insurance costs are related to Five Sons Landscaping. They have since gone out of business
and did not have adequate insurance coverage.
2) Landscaping. Again, that company has gone out of business, did not have adequate insurance
coverage, and very tough to recover any costs.
3) The mechanical contractor has indicated that they would be willing to settle for a majority of
the $29,000, maybe around $21,000.
4) The miscellaneous costs will be difficult to recover and costly to argue each individual point.
5) In terms of professional fees, $42,530.00 is for a bill that the City received from Architectural
Alliance. Any amount we recover would most likely go to Architectural Alliance. In addition,
while our attorney will try to argue that the legal fees should be included, he admits it generally
is not.
6) The $22,593.00 in repairs already completed will most likely not be reimbursed fully.
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• Memo to Michelle Wolfe 4
February 13th
City hall arbitration
7) In a likely scenario for arbitration, the City will most likely not be awarded costs for a
complete tear off and repair of$1,813,413.00. Any amount that we receive will most likely be
divided between the Architect and Contractor.
8) There is a good chance for some of the costs for special inspections and investigation to be
recovered, but probably not in full, and also likely shared between Contractor and Architect.
Without considering# 7, (the City's claim of$1,813,415.00 for entire replacement of the exterior
stone), the City has a poor chance of recovering almost $240,000, of the remaining $380,717 in
items 1 — 8. This leaves $140,717, minus the $69,296 already owed Rochon from the original
contract. Leaving the City $71,421, plus what ever the City is awarded for the actual repairs left
to do.
The City has included a complete tear off of the exterior of the building at a cost of
$1,813,415.00. Rochon has provided estimates for repair work ranging from $655,453 to
$358,496. Our legal counsel feels that an arbitration award of around one million would be a
very best case scenario, with an award around $800,000 more likely as our top figure. Again, that
• amount most likely will be divided between the Architect and Contractor. If that division were
75/25, the City would receive $600,000, and still facing an uphill court battle to get the
remainder ($200,000) from Architectural Alliance. That division may also be 60/40 with
$480,000 going to the City and the remainder to acquire from the Architect.
Summary
Staff believes that an award for total replacement cost to be highly unlikely. An award for repair
of the buildins known to be defective is y. The City has received quotes from our contractors
from $988,800 to $571,782. Rochon has provided quotes from $655,453 to $358,496.
Based upon these estimates, a top figure award around $600,000 seems most likely. With a 75/25
split, the City would receive $450,000, and an uphill court battle with the Architect for the
remainder of the $150,000. Add to that figure the $71,421 (best estimate for the remainder of the
statement of claims)brings a total of$521,421 the City would receive.
If the City were to go thru arbitration, it can expect to spend approximately $140,000 with no
guarantee on award amounts.
Based upon the figures above, realizing that no award amounts are guaranteed, it seems
reasonable for the City to look at a mediation figure of somewhere around$400,000 net.
• Council Action Requested
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Memo to Michelle Wolfe 5
411 February 13th
City hall arbitration
1. Discuss any questions or concerns you have with the information provided in this
report.
2. Authorize staff and legal counsel to accept a settlement of no less than $400,000 (net)
in mediation.
We encourage your questions. To the extent you can forward your questions to us prior to the
meeting, we can answer them immediately or be prepared to answer them on April 9 during the
closed meeting.
•
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• Memo to Michelle Wolfe 6
February 13th
City hall arbitration
�. EN HILL S
February 13, 2007
City of Arden Hills
Statement of Claims
1) Insurance costs $11,500.00
ID 2) Landscaping $22,778.15
3) Mechanical costs $28,922.31
4) Miscellaneous Costs $12,773.43
5) Professional Services $173,709.57
6) Repairs Completed $22,593.00
7) Repairs to be completed $1,813,415.00
8) Special Inspection Services $108,440.79
Total of above $2,194,132.25
Balance owed from City hall construction $69,296.00
Balance of claim due $2,124,836.25
•
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emo.DOC
Memo to Michelle Wolfe 7
February 13th
City hall arbitration
February 13, 2007
Professional Services
1. Attorney $114,750.09
2. Mediation $879.48
3. Arbitration $8,550.00
4. Architectural Alliance $42,530.00
5. Landscaping Services $7,000.00
Total of above $173,709.57
1. Attorney's fees are for work completed on City hall construction issues.
2. Mediation fee's incurred by the city to date.
3. Arbitration fee's incurred by the City to date.
4. Architectural Alliance, are additional fee's the Architect has billed the City for their time
in trying to resolve and follow up on many construction issues not completed correctly.
5. Landscaping services are fees charged by the Landscape Architect and Architect. Related
to resolving the landscaping issues installed incorrectly.
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Memo to Michelle Wolfe 8
0 February 13th
City hall arbitration
February 13, 2007
Special Inspection Services
1. McCalla (struct) 8/01/01 $200.00
2. Core drill rental 8/21/01 $125.68
3. Inspec 10/4/01 $1,430.00
4. Inspec 8/31/03 $875.98
5. AET 11/25/03 $6,091.52
6. Inspec 11/25/03 $130.00
7. AET 12/30/03 $1,850.96
8. Air Tech 12/30/03 $1,565.00
9. AET 3/09/04 $1,405.00
10. AET 7/27/04 $550.00
11. AET 8/13/04 $409.80
12. Inspec 8/23/04 $130.00
13. Inspec 10/29/04 $130.00
411 14. Inspec 11/26/04 $390.00
15. Rentals $130.27
16. BRC 8/4/05 $340.00
17. WJE 1/18/06 $6,500.00
18. KA 1/27/06 $7,146.00
19. WJE 2/27/06 $19,866.75
20. WJE 3/17/06 $9,110.91
21. BRC 3/23/06 $4,675.00
22. WJE 5/15/06 $25,294.00
23. BRC 8/14/06 $1,460.00
24. WJE 7/30/06 $8,412.35
25. WJE 9/18/06 $4,469.57
26. WJE 10/19/06 $950.00
27. WJE 12/14/06 $3,125.00
28. WJE 1/17/07 $1,677.00
Total of above $108,440.79
1. Mc Calla bill dated 8/01/01 was required by the waterproofing manufacturer to verify
that the leaking in the basement did not come from structural cracks.
•
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• Memo to Michelle Wolfe 9
February 13th
City hall arbitration
2. Staff rented a drill 8/21/01 to do a core drill thru the floor to help determine if the water
infiltration was coming up thru the floor.
3. Inspec bill 10/4/01 was for investigative reporting on foundation waterproofing.
4. Inspec bill dated 8/31/03 was for follow up investigation on thru wall flashing at the top
of the foundation wall.
5. AET bill dated 11/25/03 was for mold investigation report for the lower level..
6. Inspec bill dated 11/25/03 was for follow up investigation on thru wall flashing at the top
of the foundation wall.
7. AET bill dated 12/30/03 was for mold investigation report for the lobby ceiling.
8. Air Tech bill was for indoor air testing for quality/mold.
9. AET bills dated 3/9 for follow up investigation of mold mildew in the building.
10. AET bills dated 7/12 for follow up investigation of mold mildew in the building.
11. AET bills dated 8/13/04 for follow up investigation of mold mildew in the building.
12. Inspec's bills dated 8/23/04 was for consultation of continued water infiltration issues.
13. Inspec's bills dated 10/29/04 was for consultation of continued water infiltration issues.
14. Inspec's bills dated 11/26/04 was for consultation of continued water infiltration issues.
15. Rentals was for a lift to repair lobby ceiling.
16. BRC bill dated 8/4/05 was to investigate the parapet caps for proper sealant and
installation.
17. WJE bill dated 1/18/06 was to do background research on the water infiltration problems
at City Hall.
18. KA bill dated 1/27/06 was to build a heated enclosure for the water testing.
19. WJE bill dated 2/27/06 was for water testing,phase 2
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• Memo to Michelle Wolfe 10
February 13th
City hall arbitration
20. WJE bill dated 3/17/06 was for water testing phase 2
21. BRC bill dated 3/23/06 was for removal of the stone for testing
22. WJE for additional testing recently completed& in progress
23. BRC bill dated 8/14//06 was for removal of the stone for testing
24. WJE bill dated 7/30/06 was for water testing,
25. WJE bill dated 9/18/06 was for water testing, investigation
26. WJE bill dated 10/19/06 was for water testing, investigation
27. WJE bill dated 12/14/06 was for arbitration related services
28. WJE bill dated 1/17/07 was for chimney repair design
•
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