Adopt Resolution #17-10-274 Accepting Quotes and Awarding Contract for Improvement Project #17-13, Potassium Street Cul-De-Sac Improvements

Purpose:
The purpose of this case is to adopt Resolution #17-10-274 accepting quotes and awarding a contract for Improvement Project #17-13, Potassium Street Cul-De-Sac Improvements.

Background:
The segment of Potassium Street north of old Nowthen Boulevard is a gravel road with no outlet which the City has maintained for decades, including the turn-around area on 15641 Potassium Street.  This property was recently purchased by Ron and Shannon Schmitz. 

The Schmitz’s contend the public has no right to use their property as a turn-around and, consequently, posted no trespassing signs on both sides of Potassium Street near the south edge of the property.  These signs caused Ace Solid Waste to inform its customers along Potassium Street that they would no longer serve their properties since they could not safely turn their trucks around at the north end of Potassium Street.  The City's position is that this is a public turn-around.

The Schmitz’s acknowledge that a 33-foot easement exists on the west side of the property, but the City contends that a 66-foot easement exists as conveyed by a previous Deed transfer to the public. The Schmitz’s dispute that the additional 33-foot easement exists.

The City Attorney contends that the City has other protections above and beyond the existing easements due to the length of time that the City has maintained this road for public use.

Previous estimated costs to construct the temporary cul-de-sac totaled $32,200.  As was discussed at the September 12, 2017, Council Work Session, the Schmitz’s offered to pay up to $3,000 towards project costs.  Then on September 22 the Schmitz’s submitted a counter-offer to pay a maximum of $8,050 of the project costs, contingent on the following conditions being met;

• The City obtaining other necessary easements from neighbors.
• The City releasing its claims of recorded easements, unrecorded easements, usage via MN Statute 160.05, and any other unrecorded or claimed recorded easements.
• Any encumbrances, liens, etc., of any nature, aside from the one construction easement, whether known or unknown.
• A settlement agreement reflecting these conditions, drafted by the City at its expense, and subject to review and approval by the Schmitz’s attorney.
• The City would be responsible for the legal fees in drafting the necessary easement for the construction.
• The project must be complete by December 31, 2017, otherwise the Schmitz’s obligation is reduced by $1,000 for each month thereafter that the project is under construction.
• The Schmitz’s are entitled to see the winning contractor's bid
• If the total bid cost is less than the estimated $32,200, the Schmitz’s total obligation will be reduced to 25% of the lower bid.

Staff is not fully supportive of all these conditions, but is hopeful a settlement can be reached.  Therefore, the recommendation to Council is to authorize staff to enter into a settlement agreement with the Schmitz's, that, in consideration of an $8,050, the City will proceed with the project, retain any necessary easements upon the Schmitz's property, and negotiate a reasonable time for completion, subject to the review and approval of the City Attorney.

To ensure the project can be completed by December 31, 2017, Hakanson Anderson revised the final plans by moving the cul-de-sac 25-feet south to avoid impacts to an existing power pole.  Having to remove the power pole could delay construction for months and increase construction costs by $2,500 or more.
 
Staff solicited quotes based on the revised plans, but no quotes were received by the submittal deadline of noon Thursday, October 5, 2017.  On October 12, 2017, Staff requested quotes from four local contractors based on the same plans but with extended due dates for quote submittals and substantial completion of construction.  On October 16, Staff received one quote from Dave Perkins Contracting, Inc. in the amount of $34,877.
 
Other project costs include Hakanson Anderson’s fees for preparation of final plans and specifications ($3,800) and construction staking ($1,000), the City’s cost to supply the aggregate surfacing ($2,400), and easement acquisition/recording fees ($3,500).
 
Therefore, total project costs are estimated to be around $45,600.
 
Staff contacted the other property owners on the north end of Potassium Street to discuss the identified easements on their properties as needed to construct the improvements. The property owners south of the Schmitz’s are unwilling to grant an easement on their property, even if compensated for it.  Easements on this property are not absolutely necessary to construct the temporary cul-de-sac improvements since the drainage swale east of Potassium Street can be omitted at this time.
 
The other property owner west of Potassium Street, Shadetree Communities, initially said they would only be willing to provide temporary easements for up to 18 months.  But upon further discussions, Shadetree indicated they may be willing to provide the needed roadway easement, along with financial compensation, and a provision that the easement would be vacated at the time the property is re-platted to allow Potassium Street to be connected to Radium Street to the north, or to some other public street.
 
At the time this case was published, Staff was still waiting for a formal response from Shadetree Communities regarding Staff’s proposed easement language, which is included in the attached easement figure for parcel 23-32-25-21-0002.  This is the same figure that was provided to Shadetree for their review and comment.  If Shadetree is not willing to grant the required easements, the project cannot be constructed as proposed.
 
The quote received from Dave Perkins Contracting is valid through November 8, 2017.  After this date, Staff would need to reach out to see if they are still willing to honor their quote.

Notifications were not required for this case.

Observations:
Copies of the final construction plans and easement exhibits are attached for reference.

Alternatives:
Alternative #1 – Motion to adopt Resolution #17-10-274 accepting quotes and awarding a contract to Dave Perkins Contracting, Inc. in the amount of $34,877 for Improvement Project #17-13, Potassium Street Cul-De-Sac Improvements.

Alternative #2 – Motion of other, which could include directing Staff to work with the City Attorney to seek declaratory judgment from Anoka County District Court.

Based on the latest quote received, if Council approves of the Schmitz’s counter-offer the Schmitz’s would pay $8,050 and the City would pay the remaining costs, currently estimated at $37,550.  City funds are proposed to be paid from Public Improvement Revolving Funds.

To ensure that maintenance, service and emergency response vehicles are able to turn around at the north end of Potassium Street within the near future, Staff recommends alternative #1.  If Council selects alternative #1, Staff will work to reduce project costs as much as practical.
 
Approving alternative #1 would also allow this matter to be resolved without incurring additional legal fees as required to seek a declaratory judgement though Anoka County District Court.  However, anticipated legal fees associated with seeking a declaratory judgement on this matter could be much less that the cost to construct the temporary cul-de-sac.

Motion to:

1).  Adopt Resolution #17-10-274 accepting quotes and awarding a contract to Dave Perkins Contracting, Inc. in the amount of $34,877 for Improvement Project #17-13, Potassium Street Cul-De-Sac Improvements, contingent upon staff obtaining an easement, for the proposed cul-de-sac, from Shade Tree Communities LLC, in an amount not-to-exceed $1 per square foot. and,

2.)  Authorize staff to enter into a settlement agreement with the Schmitz's, that, in consideration of an $8,050, the City will proceed with the project, retain any necessary easements upon the Schmitz's property, and negotiate a reasonable time for completion, subject to the review and approval of the City Attorney.