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liquidated damages of $43,500.00. Unfortunately, in the City Attorney's preparation for the mediation he discovered a 15-day extension, which SEH approved in writing, and Ebert presented another writing signed by SEH, which granted another 12-day extension. 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 $30,0000. Ebert disputes this amount. Staff recommended a deduct of $17,000 from Ebert's 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. Staff's experience is that the arbitrator will give neither side everything it wants and try to compromise the amount, which could be $15,000 to the City. Assuming that to be true, the City will need to spend $10,000 to get $15,000. Therefore, a $1%000 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. Councilmember Hendriksen inquired as to the number of days that are undisputed. City Attorney Goodrich replied 60 days, noting that Ebert feels that they are only responsible for 17 days or $8,500. He stated that he was more than 50 percent convinced that Ebert would win on the additional 12 days. Based on what he observed through all the records he felt that SEH should give the City some relief on the $15,000 owed to them. Motion by Mayor Gamec, seconded by Councilmember Anderson, to recommend that the City Council settle the City's liquidated damages claim against Ebert Construction Company for the construction of Fire Station II for the amount of $17,000, which is equal to 34 days at $500 per day and that the proper City officers, under direction of the City Attorney, are directed to execute the necessary documents for this purpose. Further discussion: Councilmember Zimmerman stated that the time flame was missed so badly that he did not think splitting the amount was is in the best interest of the citizens of Ramsey. He stated that if the arbitrator decides that Ebert Construction is entitled to that amount then it is a different matter. The closing date was missed by at least 72 days. Councilmember Kurak inquired as to where the funds would come from to defend the case. City Attorney Goodrich replied the general fund. Councilmember Kurak inquired if there were any change orders made. City Attorney Goodrich replied that there were 53 different changes, but not all change orders. Director of Public Works/Fire Chief Kapler reviewed some examples of the change orders. Councilmember Zimmerman inquired if the changes were made before the project started. Director of Public Works/Fire Chief Kapler replied that the changes were made during the construction process. City Attorney Goodrich stated that the one thing that Ebert has complained about is the exhaust system. Ebert claims that it took SEH three months to address the exhaust system. SEH would say that they delays began because Ebert did not get the steel ordered on time. Mr. Goodrich stated that there are so many issues involved in the case, which is why he is concerned that defending the case could cost a lot of money. Councilmember Anderson stated that her recollection is that the law does not like penalty clauses, which this appears to be. Of course the City wanted the project done on time, but there was not an urgency to complete the Finance Committee/October 9, 2001 Page 2 of 4