EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: April 4, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Humza Javed, Public Works Director
John D. Le, City Attorney
SUBJECT: Bay Road Improvements Phase II/III, Project No. CIP-ST-05A-130 Settlement Agreement
Recommendation
By motion, approve and authorize the City Manager to execute a settlement agreement, in a form approved by the City Attorney, with A. Teichert & Son, Inc. dba Teichert Construction (“Teichert”) to resolve all claims in connection with the East Palo Alto Bay Road Improvements Phase II/III Project (No. CIP-ST-05A-130) (“Project”) in the amount of $1,100,000.00, among other terms.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 5: Improve Communication and Enhance Community Engagement Priority No. 6: Create a Healthy and Safe Community
Background
The Project included bicycle and pedestrian access improvements, multi-modal transportation benefits, improved public access to the Bay Trail and to the Cooley Landing Park and Education Center, as well as underground utility improvements. The installation of these improvements was delayed by groundwater as well as conflicting underground utilities.
The Project was completed just over a year ago, on March 3, 2022. Following completion of the Project, contractor Teichert submitted a claim, dated June 30, 2022 (“Claim”), demanding additional compensation for its work on the Project. The Claim alleged entitlement to damages based on alleged differing site conditions, delay, and lost efficiency, and for payments due under the contract including unpaid progress payments, retention, and interest penalties, collectively totaling $7,127,151.14 (not included attorney fees). The City responded to the Claim and engaged in dispute resolution as required under Public Contract Code section 9204.
City staff were able to resolve some of the issues in the Claim before the mediation, including undisputed amounts; and (2) monies owed pursuant to applicable law. However, certain claim components known, pertaining to installation of the storm drain system, remained in dispute.
Analysis
City representatives and Teichert representatives were unable to fully resolve the matters in dispute during the informal “meet and confer” sessions, pursuant to Public Contract Code section 9204. The parties engaged in formal mediation to attempt to resolve the remaining dispute.
The mediation was conducted via videoconference on March 8, 2023. Aided by the mediator, the parties were able to reach a proposed final settlement, subject to Council approval, pursuant to which Teichert will execute a full and final release of its Claim (and any other potential claims related to the Project) in exchange for a settlement payment of $1,100,000.000. Neither party admitted wrongdoing or changed their litigation positions.
Rather, the parties agreed to resolve the matter to avoid the time, cost, and risk of litigation.
Fiscal Impact
The EDA grant funds are available to fund the proposed settlement, which will be processed as change orders to the existing agreement. There is an additional City match required per the terms of the grant in the amount of $220,000 which was previously appropriated by the City Council via the budget process.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.
Environmental
The action being considered by the City Council is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4) because it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.
Attachments
1. Settlement Agreement