That the City Council:
A.  Approve and authorize the City Manager to execute a settlement agreement between Clay and Joanne Morgan and the City of La Habra in the amount of $94,073.57 to settle any and all claims in connection with the repairs and remaining work at their property on Bishop Drive; and,

B.  Approve and authorize staff to issue a check in the amount of $94,073.57 from the General Capital Improvement Fund to Clay and Joanne Morgan.

On November 20, 2023, the City of La Habra ("City") terminated a Public Works Agreement with AID Builders, Inc., ("AID"), the firm originally contracted to perform the East Bishop Drive Storm Drain Improvements, City Project No. 1-D-16 ("Project"), and awarded an emergency contract to Mike Bubalo Construction Co., Inc. ("Bubalo") to secure the Project site. The termination of the agreement with AID was a result of poor performance and poor quality work that was deemed non-compliant with the Project contract documents, plans, and specifications. Furthermore, AID failed to secure the project job site and protect adjacent properties from potential damage, including the property owned by Clay and Joanne Morgan ("Morgan Family"). Since October 2023, the City Attorney's office has been in regular communication and in negotiation with AID's bonding company to recover damages caused by their client's failure to perform, per the Project's agreement.  

Subsequently, on December 4, 2023, the City Council awarded a contract to Bubalo to complete the East Bishop Drive Storm Drain Improvements. Major construction work has been successfully completed, including renovations to five of the seven neighboring properties. However, one of the adjacent properties located at 431 East Bishop Drive owned by the Morgan Family, was more significantly impacted by the construction project. The Morgan Family sustained initial damage to their property by AID including damage to their landscape and irrigation systems, damage to their driveway and concrete walkways, damage to their custom built-in backyard barbecue area, two mature trees, and other landscaping and property. The total cost for the initial damages is estimated at $13,075.00.

Over the course of the project, The Morgan Family's property sustained further damage as a result of extensive channel reconstruction work performed by the City's contractor. The additional damage that is now necessary to restore includes, among other things, full removal and replacement of the concrete driveway; removal and replacement of damaged concrete from the house to the newly installed fence line; the installation of drainage; replacement of a damaged fence and gate; replacement of decorative gravel and concrete patio pads; landscaping including tree trimming, removal and replacement of dead plants, replacing damaged landscape lighting, repair and replacement of damaged irrigation, and replacing five damaged exterior pots with new trees. 
 
The City has two options to restore damage caused to this property as the project is nearing completion. The first is to direct the City's contractor (Bubalo) to complete the work necessary to fully restore the property. The second is to agree to a settlement with the Morgan Family so they can retain their own contractors to complete the work. In evaluating this option, the Morgan Family obtained quotes from two contractors, whose proposals resulted in a total cost of $80,998.57 for the remaining work. City staff also requested Bubalo to submit a pricing proposal for the additional work necessary to restore the Morgan Family's property since much of this work had not been anticipated as part of the original storm channel project contract. The initial Bubalo quote for a portion of the restoration work was $75,415.85; however, this amount was subsequently negotiated down by staff to $54,419.15. Staff then requested Bubalo to include pricing for the necessary concrete restoration of the driveway, quoted at $76,125.00, and the driveway apron and sidewalk, which was quoted at $11,345.00. The final Bubalo price quote, which includes prevailing wage values as required by law, for the full restoration work at this property totaled $141,889.15.

City staff compared the two cost proposals, and the City Attorney's office has assisted with the drafting and review of the proposed settlement agreement; therefore staff recommends that the City Council approve the proposed settlement agreement with the Morgan Family in the amount of $94,073.57, as it will provide a $60,891.58 cost savings to the City, and the City will no longer be responsible to complete any further restoration at the Morgan Family's property.

If approved, staff will appropriate $94,073.57 from the General Capital Improvement Fund to cover the cost of the settlement agreement and issue a check to Clay and Joanne Morgan in the amount of $94,073.57 to settle any and all claims in connection with the repairs and remaining work at the Morgan Family's property. The City will continue to pursue reimbursement for any eligible excess costs or damages caused by this project from AID Builder's bonding company and/or insurance companies.

SD 1.3 Adequate Storm Drainage Infrastructure
SD 1.7 Drainage Channels
SD 1.8 Deficient Areas

City Council Goals and Objectives:
Goal 3 - Maintenance and Improvement of City Infrastructure
Objective D - Maintain storm drain pipelines