HomeMy WebLinkAbout5F Chard Settlement Report
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: SEPTEMBER 5, 2017
AGENDA #: 5F
PREPARED BY: SARAH SCHWARZHOFF, CITY ATTORNEY
PRESENTED BY: SARAH SCHWARZHOFF, CITY ATTORNEY
AGENDA ITEM: CONSIDER APPROVAL OF SETTLEMENT WITH CHARD TILING &
EXCAVATING RELATING TO COUNTY HIGHWAY 12 PROJECT
DISCUSSION: History
In 2010 the County led a joint project to reconstruct a portion of County
Highway 12 between County Highway 17 and Trunk Highway 13. The
project was accomplished in four phases. The County hired Chard Tiling &
Excavating to complete the project.
As part of the project Chard installed water services for the City. After the
project was complete a number of the water services installed by Chard
failed. For a number of years Chard repaired the failed services as part of
the warranty it offered under the project.
In 2015 Chard informed the City it would no longer repair the failures
under the warranty. Chard based its claim on an expert report it had
obtained which stated that the cause of the failures was poor soils. In
response, the City hired an expert to review the report. The City’s expert
concluded that the failures were due to poor workmanship on the services.
In order to avoid litigation, the parties participated in mediation in the Fall of
2016. Although a number of counteroffers were exchanged, no settlement
was reached.
Current Circumstances
In August of this year, City staff renewed negotiations with Chard. Most
recently, Chard offered the following settlement:
• The County will close the project
• Chard will provide the City with a two year warranty from the date
the project is closed to cover the water service connections in the
project area
• The City will keep the retainage on the project (approximately
$18,000) to be used to cover warranty repairs over the next two
years. After the warranty period expires the City keeps any
remaining retainage.
City staff and the City attorney have reviewed the current offer and believe
it is a reasonable offer based on the various risks of litigation. City staff
recommends the Council approve this settlement offer.
2
If the Council approves the settlement, an agreement will be drafted to
memorialize the terms. The agreement will be subject to City attorney
approval.
ISSUES: City staff and the City attorney have carefully analyzed the various risks
and benefits to entering into this settlement. However, because this matter
is litigation related we have not provided a detailed analysis in this report. If
the Council desires to discuss this analysis, a closed session should be
scheduled.
It has been the staff’s intention to allow as much time to pass as possible in
hopes that we would have a better understanding of the number of
services which would fail. The failure rate has abated considerably
although there is no guarantee whether this will continue.
FINANCIAL
IMPACT:
This settlement will provide coverage for the failure of any additional flares
over the next two years. Any failures after that time will be the
responsibility of the City.
ALTERNATIVES: 1. Motion and second to approve the settlement as proposed above as
part of the consent agenda.
2. Motion and second to remove this item from the consent agenda for
discussion in executive session.
RECOMMENDED
MOTION:
Alternative #1
ATTACHMENTS: None