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CONSIDER LIQUIDATED DAMAGES CLAIM AGAINST EBERT CONSTRUCTION CO. RE: CONSTRUCTION OF FIRE STATION H By: William K. Goodrich, City Attorney and Dean Kapler, Fire Chief Background: On September 20, 2001 the City Attorney and Fire Chief met with representatives of Ebert Construction Company ("Ebert") and SEH Architects ("SEH") in an informal mediation session. The purpose of which was to attempt to settle the liquidated damages issue without going through the expense of formal mediation and/or arbitration as called for in the contract between the parties. Briefly, the facts of the claim are as follows: Ebert had 240 days from April 17, 2000 to construct the Fire Station. This would mean a completion date of December 14, 2000. SEH contends that Ebert did not achieve substantial completion, as defined by the contract until March 12, 2001. Ehert asserts this was done by January 31, 2001. Ebert argues various things, but primarily that SEH gave it time extensions, both orally and written as a result of change orders approved during the contract. SEH initially took the position that Ebert was late by 87 days (December 14, 2000 to March 12, 2000). At $500.00/day this equates to total liquidated damages of $43,500.00. Unfortunately, in the City Attorney's preparation for the mediation he discovered 15 days extension which SEH approved in writing and Ebert presented another writing signed by SEH which grants another 12 day extension. SEH argues that possible extenuating circumstances could defeat this additional 12 days. Nevertheless, Ebert puts forth a reasonable argument that it was granted in writing a 27 day extension. Accepting this as true, the arguable days are down to 60 or $30,000.00. Ebert, of course, disputes this amount. Staff recommends a deduct of $17,000.from the Ebert final payment as a final settlement of this claim. The rationale behind this recommendation is that in a contested arbitration, the City's legal fees, architect fees and in house time will cost the City close to $10,000.00. Our experience is that the arbitrator will give neither side everything it wants and try to compromise the amount, which could be say $15,000.00 to the City. Assuming that to be true, the City will need to spend $10,000.00 to get $15,000.00. Therefore, a $17,000.00 cash settlement as a deduct from the Ebert contract seems to be the most cost effective way to settle this matter. Ebert will accept this deduct amount. Enclosure: City Attorney's background letter dated August 10, 2001. Recommendation: Staff recommends agreeing upon $17,000.00 in liquidated damages as a deduct fi:om the Ebert contract.