HomeMy WebLinkAboutItem 10 - Palace Theatre Electrical ContractITEM 't /0
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: ROGER NELSON, CITY MANAGERd4'
MEETING DATE: OCTOBER 17, 2000
SUBJECT: PALACE THEATRE ELECTRICAL CONTRACT
RECOMMENDATION:
Staff recommends the City Council terminate the Palace Theatre Electrical Contract with
Prewitt Electric, authorize the City Manager to negotiate with Amwest Surety Insurance and
Dennis Electric for a new contract for electrical services plus the cost of new payment and
performance bonds, authorize staff to execute said contracts, and take any other action
necessary.
FUNDING SOURCE:
Funds are available in Account 816-48840-101-01 Buildings, for $5,000,000.
BACKGROUND INFORMATION:
Daedalus Development Corp. (Owners Representative) has been negotiating with Amwest
Surety Insurance, bonding agency for Palace Theatre electrical contractor, since June 12,
2000. These negotiations became necessary when Prewitt Electric declared bankruptcy
and pulled off the Palace Theatre job. During this period, construction has proceeded
without delay. The project is now at a point where the lack of an electrical contractor will
delay its projected completion.
Daedalus has contacted the second low bidder, Humphrey and Associates and the third
low bidder Amber Electric. They were unable to take the job stating that they no longer had
the manpower available to meet the terms of their bid. Daedalus then contacted Dennis
Electric regarding the contract. Dennis Electric has provided a bid for the job and is willing
to assume the role of electrical contractor if terms can be met. The current quote from
Dennis Electric to finish the Palace Theatre is $381,826.
Prewitt was paid a total of $103,915 before pulling off the job. Their original contract was
for $373,239. Amwest Surety has offered to return $56,275 to the City to close out the
Prewitt Electric contract. This lump sum payment does not include payments that will be
made by the bonding agency to cover liens on the project (from Prewitt's contract) which
amount to over $43,000.
Palace Contracts Dennis
1 October 12, 2000 (5:08PM)
Staff feels that Prewitt Electric probably underbid the job at $373,239, as evidenced by
their financial problems. Staffs representative, Daedalus Development Corp., feels that the
Dennis' bid is appropriate for the work to be completed.
Staff has met with the City Attorney and the Risk Management Department concerning this
issue. It is their opinion that it is in the best interest of the project to negotiate an offer from
the bonding agency and accept a lump sum payment. Right now their offer stands at
$56,275. While we will try to negotiate a higher settlement amount, it is clear to us that a
settlement is necessary in order to complete the electrical work and to keep this project on
schedule. Taking this approach will add $56,000 or so to the budget for electrical work.
This amount will be taken from the project contingency budget which has a balance of over
$250,000.
Enclosed is a memo from Daedalus Development that further explains this situation.
HTH/sdk
Palace Contracts Dennis 2 October 12, 2000 (5:08PM)
October 11, 2000
Tommy Hardy
City of Grapevine
200 South Main Street
Grapevine, Texas 76051
RE: Palace Theater
Dear Tommy:
It was the decision from yesterday's meeting with city's outside attorney, risk management, and the
construction management team that we would be better off to accept the bonding company's offer of
payment even though it leaves a deficit compared with the original contract amount approved by city
council than not accept this offer and still be dealing with the bond company through -out the project.
In brief the numbers are:
Dennis Electric's quote $381,826
Bond company lump sum payment ($ 56,27Q*
Adjusted contract pay-off amount $325,551
Amount paid to Prewitt $103,915
Total electrical contract work $429,466
Original contract amount approved by council X73,239)
Increase in electrical contract work $ 56,227
In addition the bonding company is paying for the liens on the project which amount to $43,448.
This is not shown in the numbers above because it does not increase our cost since we have
already paid for this amount previously to Prewitt.
As stated in the meeting, if Prewitt had not bid the project and we would have accepted Humphrey's
proposal which was already $33,406 higher than Prewitt's bid. We understand that this can go
before council on Tuesday the 17`" of October. The project needs this decision in order to have an
electrical contractor on site so as not to impede the progress of the job. Please contact me if further
documentation or explanation is required.
Sincerely,
Patrick Murphy
Project Manager
cc: Fran McCarthy
709 C West Magnolia Avenue Fort Worth, Texas 76104
817-927-5000 fax 817-923-9718
pct -13-00 10:59am From -Boyle & Lowry 9725507105 ?-B93 F -M
DRAr I
CITY OF GRAPEVINE RESOLUTION NO.
WEMREAS, the Palace Theatre Project (the "Project") commenced construction
on approximately the day of , 2000; and
VIIIEREAS, the City of Grapevine (the "City"), through the Grapevine Heritage
Foundation, (both hereinafter referred to as "City") let and entered into all of the
contracts, including a Contract with Daedalus Development Corporation ("C.M.") as
Construction Manager; and
WHEREAS, the C,M. recommended entering into a Contract (the "Contract")
for the providing of electrical service with Prewitt Electrical Contractors, Inc.,
("Prewitt") in the principal amount of $378,827 on or about February 14, 2000, as the
lowest responsible bidder after the City advertised for and received competitive bids;
and
WTIERFAS, Prewitt provided statutory Performance and Payment Bonds in the
amount of 100% of the Contract price; and
RFAS, the principal amount of the Contract was increased in the amount
of $18,270 by Change Order No. Y on or about March 9, 2000; and
WHEREAS, Prewitt has been paid the total sum of $103,915; and
R , Prewitt walked off and abandoned the Project Site on or about the
day of , 2000 and has filed for protection under the Federal
Bankruptcy Laws; and
WREPCEAS, the City and its representatives have been in contact with the
surety, Amwest Surety Insurance Company (".Amwest") and its representative, Horizon
Business Enterprises, Inc.; and
RFAS, the City and its representatives and Amwest and its
representatives have met on numerous occasions and discussed the various
alternatives available to complete the electrical work under the Contract let to Prewitt;
and
WHEREAS, after considering all of the alternati7es available, the City and its
representatives recommend that the Contract with Prewitt be terminated; that the
Surety Company's offer of $56,275.00 pursuant to the Performance Bond, Bond No.
Oct -13-00 11403m From -Boyle & Lowry
9726507105 T-893 P 005/006 F-095
---7- and the payment to all materialmen and subcontractors who have filed
against the Payment Bond, Bond No. :L15000938, aPProxiinately $43,448.00, be
��ccepted; and
WHEREAS, it is critical that a Contract be approved to complete the electrical
work, and it is necessary due to Possible damage to the project at
contractor be retained immediately to that
an electrical
Preserve the Palace Theatre; and
WMRFAS, it is recomended that the
bidding requirements and yn enter into City waive all notice and competitive
a contract with Dennis Electric ("Dennis") in an
amount not to exceed $381,826, or with another reliable contractor in the not to exceed
amount; and
WIMR&A-S, the City is to Pursue all lawful claims for damages against Prewitt
and any other party,
NOW, THEREFORE, BE IT RESOLVE.By THE CITy COUNCIL 0
TBE D
CITY OF GRAPENTE-jE; I
S29t-041' That all matters stated in the Preamble are found to be e and
correct and are incorporated into the body of this true
entirety. resolution as if copied in their
Section 2: That the City shall:
(a) Terminate the Prewitt Contract.
('b) FOr3na11Y notify the Surety and accept the Suretys offer of $56,275 as
Payment in full on the Performance bond, with the acknowledgment of
the Surety to Pay pursuant to the Payment Bond all timely filed claims
for labor and material in the approximate amount of $43,448.
(c) Enter into a Contract with Dennis in an amount not to exceed $381,826
to complete the electrical work on the Palace Project, provided Dennis
provide Performance and Payment security in the amount Of 100% of the
Principal amount Of the Contract and agree to Provide maintenance
security, with all security being satisfactory to the City Manager and City
Attorney, or to enter into a Contract with a responsible electrical
contractor in cal
security. an amount not to exceed $381,826 and the requisite
(d) That the City is directed to pursue Prewitt or any other Party responsible
N
E
Oct -13-00 11 -.00am From -Boyle & Lowry 972650TI05 T-893 P-006/006 F-095
a—
DRAFT
for any damages City suffers as a result of the termination of the Prewitt
agreement.
That this resolution shall take effect from and after its passage.
City Secretary, Linda Huff
City Attorney, John F. Boyle, Jr,
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Mayor, William D. Tate