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MInutes 08-22-89 MINUTES OF THE SPECIAL CITY COMMISSION MEETING HELD IN COMMISSION CHAMBERS, CITY HALL, BOYNTON BEACH, FLORIDA, ON TUESDAY, AUGUST 22, 1989 PRESENT Gene Moore, Mayor Robert Olenik, Jr., Vice Mayor Ezell Hester, Jr., Commissioner Arline Weiner, Commissioner Lee Wische, Commissioner George Hunt, Interim City Manager Betty Boroni, City Clerk Raymond Rea, City Attorney Mayor Moore called the meeting to order at 5:00 P.M. Advertisement for City Manager Discussion took place relative to the advertisement to be run for the City Manager's po§ition. Interim City Manager Hunt remarked the ad had been sent out for publication in professional journals and would be run as often as possible for the money that had been allocated. Mr. Hunt was instructed to furnish the Commission with copies of the applications as soon as they are received. At the end of thirty days they will evaluate the response. Chapel Hill Median Repair Mayor Moore addressed comments to Commissioner Weiner rela- tive to repair of a road median in Chapel Hill. The Mayor didn't approve of the way the matter was being handled. Commissioner Weiner stated she had conveyed the ihformation to the City Manager to investigate whose responsibility the median is and she stated she had not guaranteed anything to the residents of the subdivision. Seppala and Aho Construction Project Mr. Mortimer Offutt, Site Superintendent addressed the Commission regarding the status of the construction. He explained the Contract was signed in October, 1987. They received notice to proceed on October 20, 1987. A building permit was not received until January 11, 1988. They did perform some construction during that time, however, it was not possible to obtain inspections because the electrical department and others wouldn't inspect as there was no approved set of plans and specifications. Mr. Offutt stated they notified the City of that fact and requested an exten- sion of time. Mr. Offutt indicated Seppala and Aho was hampered by the lack of a set of plans and specifications for the existing~ buildings. As they demolished some areas they uncovere~ unanticipated circumstances that caused severe and numerous problems. They requested extensions of time for these. MINUTES - SPECIAL CITY COMMISSION BOYNTON BEACH, FLORIDA AUGUST 22, 1989 Seppala and A_ho currently had 118 outstanding field orders received from the architect to clarify the drawings and to direct them on how to proceed on changes. They have responded to 115 with proposals for prices, etc. They have been acting on field orders as a directive to proceed, as long as they have an agreement in principle by all parties as to price. Mr. Offutt indicated they had requested 141 change orders, 30 of which were incorporated into field orders and would therefore be voided. The remaining 107 requests for change orders were submitted to the architect and owner. To date the architect has approved 63 of the 113 submitted field orders. Mr. Offutt remarked the owner had paid for 49 field orders and 14 requests for change orders. Discussion took place on the difference between field orders, oral change orders and formal change orders. Mr. Offutt stated they were not supposed to perform any work until they had received written change orders. However, because of the delay that~it would cause they have proceeded prior to that. He stated they had paid their subcontractors $200,000 more than they had received from the City. Elaboration took place on problems encountered with soil conditions under the Police Dept. Mr. Offutt stated when they came to a virtual standstill at the Police Dept. all parties were advised of the problem and they needed direc- tion to proceed. He indicated they were attempting to acce- lerate the construction schedule in an effort to complete the project by the end of October, hopefully. Mr. Offutt stated Seppala and Aho was looking for a reduc- tion in their retainage. Their Contract calls for a reduc- tion once substantial completion has been attained. He felt it had been agreed by everybody that substantial completion had been attained and they were now entitled to a reduction of the retainage, less three times the value of any work that is not complete. Because of the performance bond, he felt the City would be safe in paying them. Although the contractor had requested multiple time extensions, he remarked they have not received any time extensions. He elaborated on being "under the gun" to complete the project and the fact that the original completion date had passed, due to unanticipated problems encountered. He felt the contractor was entitled to those time extensions under the circumstances. Basically, Mr. Offutt did feel the City had impeded the contractor from completing the project in a timely manner. Discussion took place dealing with a problem encountered in the Police Dept. when concealed ceilings were discovered. The contractor had no choice but to remove the ceilings. He 2 MINUTES - SPECIAL CITY COMMISSION BOYNTON BEACH, FLORIDA AUGUST 22, 1989 felt they should have received instant authorization to proceed from the City, but they did not. They received a field order to proceed, but not a change order. Mr. Offutt indicated all orders that have gone through have been either field orders or oral change orders and this is abnormal. Conversation took place relative to the membrane topping to be applied to the parking garage, which was called for in the original drawings. He stated this had been deleted from the Contract and another material was specified for applica- tion. Now he understood the City was desirous of going back to the original topping. The cost was discussed. Mr. Offutt indicated that since he has been on the project, he had interposed objections to directions given to change the original plans and specifications and had been overruled. Mr. Offutt enumerated specific figures on the project and estimated it would take at least another $300,000 to $400,000, to complete the project, including delay damages. He elaborated on sequencing of construction and the inability of the contractor to work on certain rooms once the areas became occupied. Vice Mayor Olenik made comments about inacceptability of work performed in the Fire Dept.'s bathrooms. Mr. Offutt responded on complications encountered in that area. Mr. Offutt stated to date you couldn't get a C.O. on that place, not because the contractor hadn't completed the work but because some of the work doesn't meet code. He didn't feel that was the contractor's responsibility. Vice Mayor Olenik asked why it wouldn't be the contractor's respon- sibility? Extensive conversation took place relative to responsibility. Interim City Manager Hunt remarked that he had met with Mr. Offutt on Friday afternoon, August 18, 1989. He observed that many of the things coming up at the present time, never came up at that meeting. Some of the things Mr. Offutt was saying diametrically opposed things said pre- viously. Discussion took place as to when Mr. Offutt began working on this construction project. Mr. Offutt stated he arrived near the end of May, possibly June 1, 1989. He had worked for Seppala and Aho prior to that time. He was not present at the pre-construction and pre-bid meetings, nor was he present for the first 18 months of the project. 5~. Hunt remarked on a crucial point omitted in today's discussion which happened at the pre-bid and pre- construction conference. At that time, John Seppala and Ed A2no were fully aware that the City needed complex phasing MINUTES - SPECIAL CITY COMMISSION BOYNTON BEACH, FLORIDA AUGUST 22, 1989 and working around employees. They agreed to that complex phasing, it was included in their bid for the project and they submitted schedules which the City agreed to. Further discussion took place dealing with phasing and extensions. Mr. Offutt stated that when the contractor is entitled to a time extension and the City doesn't issue a time extension and requires the contractor to finish under the original completion date, the contractor is entitled to damages for that and they intend to seek those damages. Discussion took place dealing with the list of 20 change orders which the Commission had approved and which total $222,063.83. Mr. Hunt indicated the statement made by Mr. Offutt previously that every change order made was done on oral field orders, was not correct. Bill DeBeck, Project Manager stated most of the contractor's work was done before they got the written change orders. He received written field orders before he did the work. Mr. Offutt stated a field order specifically prohibits the contractor from proceeding with the work if there is a change in the cost or if there is a time extension required. Mr. Offutt remarked that since the beginning of this job, the City and architect have agreed that a field order is a directive to proceed. Mayor Moore understood if any change order was made, par- ticularly if it involved an overrun, it was to be generated through the contracting party or the City Commission. Mr. ~unt stated when the original budget for this program was set up, there was a contingency factor, because they realized there would be things that would happen in the field that would grind the project to a halt, if they had to wait two or four weeks to bring it back to the Commission. Uiscussion took place. Mr. Offutt commented that if they don't receive a change order they can't pay their sub- contractors. He felt change orders approved by the archi- tect, should be processed, not held up. Mayor Moore asked if the Commission was advised of change orders before the work was done or did they come to the Commission after the fact? Mr. Hunt responded they pri- marily came to the Commission afterwards. Mr. Hunt remarked that almost none of the change orders approved to date, have been approved at the price the contractor originally sub- mitted. They all have been negotiated and reduced, once time and materials were accurately described. Mr. Offutt responded on factors involved. 4 MINUTES - SPECIAL CITY COMMISSION BOYNTON BEACH, FLORIDA AUGUST 22, 1989 Mr. Hunt stated the City's position is that total overruns on the project to fruition will total $367,168.24. Conversation took place on why the architect indicates approximately $400,000. Mr. Hunt said Mr. Of~utt was sent here after the company fired Mr. Aho because they knew they were in trouble and were late. Mr. Hunt felt a great deal of the discussion taking place was a smokescreen. When the parties sit down at a negotiating table and, if necessary, with an arbitrator, he was sure the "smoke" would disappear. Mr. Offutt stated it was the City that initiated his assign- ment to the job, by sending the contractor a nefarious letter saying they were late on the project and to this date the City is entitled to $150,000 in liquidated damages. He elaborated. Mayor Moore felt the Commission should take the position that it doesn't know where it stands. There are varying estimates on overruns on the project. He demanded the new Internal Auditor be allowed to look into this extensively. Mr. Hunt commented he would welcome Mr. Rubin's assistance. Mayor Moore apologized to Mr. Offutt publicly, because the Mayor didn't know where the City stands. Commissioner Weiner felt that many of these problems were encountered because we were dealing with an old building and new construction. Bill DeBeck commented he too would welcome Mr. Rubin's assistance. The records are up-to-date and complete. He didn't feel there was any complex question here, but rather it was all in black and white. Discussion took place on the anticipated completion date for various areas. Mayor Moore referred to numerous Seppala and Aho memorandums to the architect, where they repeatedly requested authoriza- tion to complete the project. The contractor had indicated these were never answered. Mr. DeBeck stated they were responded to verbally. Mr. DeBeck remarked that a construction meeting is held every Tuesday where items are discussed at length. The contractor, architect, representatives of the Building Dept. and Mr. DeBeck attend these meetings. At the meetings most questions are ironed out in order to not produce a flurry of paperwork. Discussion took place regarding documentaton, and issuance of field orders and change orders. Conversation took place regarding the practicality of bringing change orders to the Commission for approval prior to the work and holding work up. The Mayor felt the Commission should be making the decisions, not someone in the field. MINUTES - SPECIAL CITY COI~MISSION BOYNTON BEACH, FLORIDA AUGUST 22, 1989 He thought any more change orders that would involve an expenditure of taxpayer money should come to the Commission prior to completion of work. Vice Mayor Olenik stated he would like Mr. Offutt to provide justification of $1,000,000 worth of change orders. He wanted the information in his mailbox by 5:00 P.M. the next day. If the contractor can justify $1,000,000, he wanted to see it. Mr. Offutt said the information was in front of the Commission, in black and white. He referred to documen- tation from the contractor and he noted specifics. Reference was made to damages. Vice Mayor Olenik noted the various dates that different areas were supposed to be complete. He asked if there were additional days the contractor is requesting approval of, above and beyond what he was aware of? Mr. DeBeck answered affirmatively and it was noted some of these days are under dispute. Mr. Jordan Miller provided the Commission with written information describing exactly what a field order is. The Vice Mayor read the information outloud to the Commission. Discussion took place on the process. Commissioner Wische wanted to know what the bottom line is. How much is it going to cost to complete the project? He felt the Internal Auditor's assistance was needed. Mr. Hunt stated the original contract cost was $8,521,714.00. If you add approximately $370,000 in change orders, you would have the total. He suggested anything Mr. Offutt claims in excess of that would be offset by claims for damages that the City makes and anything that remains in dispute is not something that Mr. Rubin would be able to make a decision on, but an arbitrator would have to decide. The consensus of the Commission was that Mr. Rubin would investigate the facts and report back to the Commission. Mr. Hunt repeated his prior statement that Mr. Offutt's sta- tements tonight were different from statements made in the City Manager's office on August 18, 1989. He took his remarks "with a big grain of salt." Mr. Offutt responded to the remark and some disagreement took place. The Commission agreed Mr. Rubin should isolate himself to this project. He is to report back to the Commission as early as possible. 6 MINUTES - SPECIAL CITY COMMISSION BOYNTON BEACH, FLORIDA AUGUS~ 22, 1989 Mr. DeBeck felt Mr. Rubin should take the phasing into con- sideration when doing his investigation as well as examining the dollars. Mayor Moore stated Mr. Rubin was not going to render a legal opinion. He is a highly qualified Internal Auditor and would know how to proceed. ADJOURNMENT The meeting properly adjourned at 6:08~. / / .-. Mayor ~'/ ~ O~Vic~e yor Comm~ s ioner 'Commissioner Commissioner ATTEST: Ci~ Clerk Recording Secretary (Two Tapes)