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HomeMy WebLinkAbout5.F.4. Accept Shakopee Library Project-Res. No. 6490 s.F.4. CITY OF SHAKOPEE CONSENT Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Library Proj ect Closeout DATE: September 12, 2006 INTRODUCTION: The Council is asked to adopt a Resolution releasing a final retainage in the amount of $25,987.55 to Western Surety, the bonding company that is the assignee for Westra Contracting, and accepting the project as complete. BACKGROUND: The Shakopee Public Library construction project was substantially completed in the Fall of2003. However, the 5% retainage being held by the City had not been released, owing to some incomplete work, and the complication created by Westra's filing for bankruptcy in the State of Minnesota. Since then, some of the work (primarily relating to HV AC issues ) has been completed through efforts ofthe City, and paid to the contractors doing that work. Those costs have been paid from the retainage amount. In addition, we are aware ofa couple of subcontractors who were not paid by Westra during the contract phase more than three years ago. However, in researching, they have no recourse available through the City, in that they did not file their claims in time to resolve the issue with the .bonding company within the time frame required by law. Otherwise, forms attesting to payment have been received from 30 ofthe 32 subcontractors of which we are aware. The bonding company for Westra, Western Surety, has requested that the final retainage be released to them. I have reviewed this with Jim Strommen with the City Attorney's office, who indicates that he is comfortable with the City releasing the retainage, assuming that all contractual, State Law, and ordinance requirements have met regarding releases by subcontractors. To the best of our knowledge, they are. Western in turn has given an indemnity agreement to the City. If there are any additional claims for payments from subcontractors, the City will notifyW estern of those claims, and they will need to take the appropriate action. Based on the information that we have available at this time, final closeout can be made. BUDGET IMPACT: The amount of the final retainage is $25,987.55. Finance Director Voxland has provided that amount. RELATIONSHIP TO VISIONING: This is item F - Housekeeping. RECOMMENDATION: I recommend that the City Council adopt a resolution accepting work on the Shakopee Public Library contract, and to issue release of retain age to the bonding company. ACTION REQUIRED: If the Council concurs, it should, by motion, adopt the following resolution: RESOLUTION NO. 6490 A RESOLUTION ACCEPTING WORK. ON THE CONSTRUCTION OF THE SHAKOPEE PUBLIC LIBRARY BUILDING, AND ORDERING RELEASE OF RETAINAGE AS FINAL PAYMENT /lMQ~~ Mark McNeill City Administrator MM:th RESOLUTION NO. 6490 A RESOLUTION ACCEPTING WORK ON THE CONSTRUCTION OF THE SHAKOPEE PUBLIC LIBRARY BUILDING, AND ORDERING RELEASE OF RETAINAGEAS FINAL PAYMENT WHEREAS, pursuant to Resolution No. 5703, adopted May 7,2002, a contract was awarded to Westra Construction, Inc., for construction of the new Shakopee Public Library building; and, WHEREAS, Westra Construction, Inc., has completed work on said project; and, WHEREAS, due to the bankruptcy status of Westra Construction, Inc" Western Surety, has taken over financial responsibility for the closeout ofthis project; and, WHEREAS, Western Surety has. requested the release of final payment in the amount of$25,987;55; and WHEREAS, Western Surety has provided the City with an indemnity agreement relating to the final payout of subcontractors who may make claim on this project. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, thatthe work completed under said contract is hereby accepted and approved; and BE IT FURTHER RESOLVED that the City Clerk and Mayor are hereby directed to release retainage in the amount of$25,987.55 as a final paymentfor said contract to Western Surety, in exchange. for the receipt of an indemnity for subcontractors of said Shakopee Public Library construction project. Adopted in-adjourned regular session of the City of Shakopee,Minnesota, held this 19th day of September, 2006. Mayor of the City of Shako pee ATTEST: City Clerk CrivelloCarlson&Mentkowskis.c. Attorneys at Law 710 North Plankinton Avenue Milwaukee, Wisconsin 53203 Internet: www.milwlaw.com E-Mail: ccm@milwlaw.com FAX (414) 271-4438 Telephone (414) 271-7722 September 5,2006 VIA FACSIMILE & US l\tlAIL Mark McNeill City Administrator Shakopee 129 Holmes Street South Shakopee, MN 55379-1351 Re: Release of Retain age for Shakopee Library Project Dear Mark: Thank you for your letter dated July 26, 2006 and the attached materials. It is my understanding that Shakopee will release the final retainage in the amount of $25,987.55 to Western Surety. I have enclosed a Hold Harmless and Indemnity statement from Western Surety as discussed with you, Jim Strommen and me. You will see that Western Surety as assignee of Westra's receivables for bonded projects is indemnifying and holding Shakopee harmless in the event that Westra hereafter asserts a right to these proceeds. It is my understanding that the enclosed form provides the basis for the release of proceeds. Sincerely, '" INDEMNITY AND HOLD HARMLESS AGREEMENT Western Surety Company issued a Performance Bond and Payment Bond, 929221041, for the project known as the Shakopee library Project. Western Surety's principal was Westra Construction, Inc. The General Agreement of Indemnity (GAl), between Western Surety Company and Westra Construction, Inc. provided that Western Surety received an immediate assignment of the right to collect project proceeds from obligees upon the occurrence of an event of default under the GAL Westra Construction, Ine. defaulted in its surety arrangement with Western Surety by failing to pay obligations due to subcontractors and suppliers on various bonded projects. The obligee with regard to the bonds for the Shakopee library Project is the City of Shakopee. Upon receipt of the funds remaining in the contract, Western Surety agrees to the extent of the payment made hereto to indemnify and hold the City of Shakopee harmless from and against any claim by Westra Construction, Inc., it successors and assigns, which hereafter claims the right to receive the proceeds described herein. Western Surety further agrees to the extent of the payment made hereto to defend and hold the City of Shakopee harmless in the event that a claim is made to these funds provided that the City of Shakopee furnish Western Surety with timely notice of any such claim and further that the City of Shakopee does not settle any such claim without affording Western Surety the reasonable opportunity to resolve each claim directly. Dated this1!l-day of August 2006.