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AGENDA ITEM REVIEW FORM |
9.3.
Regular City Council Meeting
- Meeting Date:
- 06/24/2015
- Department Head:
- Glenn Gimbut
- Submitted By:
- Glenn Gimbut, City Attorney, Attorney's Office
Action Requested:
Motion
ITEM:
Discussion and possible action to hold an executive session pursuant to A.R.S. §§38-431.03.A.3 and 38-431.03.A.4 for legal advice and to consider the City's position and instruct its attorneys with respect to contracts with Sun City Development for work performed at the Municipal Court. (Glenn Gimbut)
SUMMARY:
This is with respect to the item that came before Council at its meeting of June 10, 2015. At that time Council voted to have a discussion in executive session on June 24, 2015.
The summary from the June 10, 2015 Meeting was as follows:
The staff at the Municipal Court ordered and authorized construction work at the Municipal Court with Sun City Development, Inc. dba New Star Electric and RC Development for what has been called the Court remodeling project or maintenance. The work involved was “construction “ as defined by ARS §34-101. No written contract was entered into before work was performed. No bids were solicited or received. Attached are the invoices presented for payment. The amount requested by the contractor appears to be in excess of $21,000.00. No building permit or permits were ever applied for or issued, prior to work being performed, but permit(s) have now been applied for, and inspection by Building Safety indicates that work was performed in an satisfactory manner in compliance with the building codes. Construction work on a building is governed by the provisions of Title 34 of the Arizona Revised Statutes. Construction work on a building is work that must be performed by a licensed contractor. Work that has a value of more than $20,000 on a public building is governed by ARS §34-201.C and must go through formal bidding including advertised sealed bids with bid bonds, performance bonding, and payment bonding. Council does not have the legal power to waive bidding requirements if the work in question is governed by Title 34.
With respect to the requests by Sun City Development, Inc. for work on the Court building, the City Code requires all contracts to be authorized in advance by the Purchasing Agent. This did not occur. The City Code requirements for purchases above $5,000 were not met. The procedure for waiving competitive bids as contained at §36.01(H) should only be used when the reason for waiving bids is in the fiduciary interests of the public treasury. The facts of this matter are such that the Office of City Attorney cannot recommend use of this procedure.
The contractor, on the other hand, has relied on the representations of the Court to do work, and has performed the work. The City has received a benefit. As a result, the contractor may have a claim in equity under the theory of quantum meruit.
The City is not without its defenses, and the Office of City Attorney is not representing that the City could not prevail in the event of litigation. It is recommending that because the contractor has performed work and a benefit has been received, that the matter should be settled.
It is also recommended that approval for payment be made conditioned upon the contractor agreeing that the sum is payment in full for any and all claims against the City of San Luis of whatsoever kind or nature as of June 10, 2015, and that no further claims for work prior to that date will be honored or paid. It is recommended that the contractor execute an appropriate settlement and release agreement. It is suggested that this be handled as a settlement of claims for a fixed sum.
The summary from the June 10, 2015 Meeting was as follows:
The staff at the Municipal Court ordered and authorized construction work at the Municipal Court with Sun City Development, Inc. dba New Star Electric and RC Development for what has been called the Court remodeling project or maintenance. The work involved was “construction “ as defined by ARS §34-101. No written contract was entered into before work was performed. No bids were solicited or received. Attached are the invoices presented for payment. The amount requested by the contractor appears to be in excess of $21,000.00. No building permit or permits were ever applied for or issued, prior to work being performed, but permit(s) have now been applied for, and inspection by Building Safety indicates that work was performed in an satisfactory manner in compliance with the building codes. Construction work on a building is governed by the provisions of Title 34 of the Arizona Revised Statutes. Construction work on a building is work that must be performed by a licensed contractor. Work that has a value of more than $20,000 on a public building is governed by ARS §34-201.C and must go through formal bidding including advertised sealed bids with bid bonds, performance bonding, and payment bonding. Council does not have the legal power to waive bidding requirements if the work in question is governed by Title 34.
With respect to the requests by Sun City Development, Inc. for work on the Court building, the City Code requires all contracts to be authorized in advance by the Purchasing Agent. This did not occur. The City Code requirements for purchases above $5,000 were not met. The procedure for waiving competitive bids as contained at §36.01(H) should only be used when the reason for waiving bids is in the fiduciary interests of the public treasury. The facts of this matter are such that the Office of City Attorney cannot recommend use of this procedure.
The contractor, on the other hand, has relied on the representations of the Court to do work, and has performed the work. The City has received a benefit. As a result, the contractor may have a claim in equity under the theory of quantum meruit.
The City is not without its defenses, and the Office of City Attorney is not representing that the City could not prevail in the event of litigation. It is recommending that because the contractor has performed work and a benefit has been received, that the matter should be settled.
It is also recommended that approval for payment be made conditioned upon the contractor agreeing that the sum is payment in full for any and all claims against the City of San Luis of whatsoever kind or nature as of June 10, 2015, and that no further claims for work prior to that date will be honored or paid. It is recommended that the contractor execute an appropriate settlement and release agreement. It is suggested that this be handled as a settlement of claims for a fixed sum.
RECOMMENDATION / SUGGESTED MOTION:
I HEREBY MOVE TO GO INTO EXECUTIVE SESSION.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- None
- CITY/STATE/FEDERAL FUNDS:
- 0
- TOTAL:
- 0
- BUDGETED:
- 0
- AVAILABLE TO TRANSFER:
- 0
- ACCOUNT #/REMAINING BALANCE:
- 0
FISCAL IMPACT STATEMENT:
None
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- Yes
- CITY/STATE/FEDERAL FUNDS:
- City
- TOTAL:
- To Be Determined
- BUDGETED:
- 0
- AVAILABLE TO TRANSFER:
- 24,024.00
- ACCOUNT #/REMAINING BALANCE:
- 260-261-90005
FISCAL IMPACT STATEMENT:
See Summary.