December 8, 2022 |
The Saratoga Town Council voted Tuesday night to hold the contractor on the Spring Avenue waterline and repaving project responsible for late fees and penalties through the winter after falling behind the contracted deadlines.
The contractor, Lewis & Lewis, had asked the town to amend the contract to avoid the charges known as liquidated damages. The contractor missed their substantial and final completion dates on October 15th and 31st, respectively. With winter setting in and the ground frosting, the contractor wanted to shut down the project for winter and return in the spring.
The contract between the Town of Saratoga and the contractor states that liquidated damages, or LD’s, of $1,000 per day would occur if the contractor failed to meet the substantial completion date. Missing the Halloween deadline added another $750 to the daily LD’s. In total, liquidated damages of $1,750 a day have been assessed since the end of October.
The contract stipulates the LD’s were to continue even if weather conditions made it impossible for the contractor to continue working. The recent below freezing temperatures have made dirt work and paving difficult. Making the problem worse, the plant where Lewis & Lewis was expecting to receive asphalt shut down for the season. So now, even the temporary pavement L&L had promised put down for winter is no longer an option. Instead, the contractor will use recycled asphalt pavement, or RAP. They would reheat the road surface removed earlier in the project and use it for temporary blacktop.
Once it became clear the project would not be completed before winter, the contractor approached the town with a request to alter their contract. During Tuesday’s Saratoga town council meeting, Lewis & Lewis’s construction manager, Caleb Tygum, asked the town not to charge LD’s for the entire winter.
Pictured above: Spring Avenue bore pit. Photo by Bigfoot 99.
Tygum offered the town three options for how his company could handle the winter shutdown. No matter which option the town chooses, the contractor will leave on December 15th.
If the town agrees to amend the contract and allow Lewis & Lewis the winter shut down without LD’s, then Option 1 would come into play. In Option 1, the contractor would use recycled road surface to temporarily pave Spring Avenue and parts of South River Street, allowing for traffic to pass during the winter. Tygum told the council his company would pay the town back for any repair work done on the incomplete water lines, and if possible, help.
If the town chooses not to accept the terms laid out in Option 1, Tygum hopes they will agree to a compromise. Option 2 involves the town considering the job mostly finished, granting Lewis & Lewis substantial completion status, and eliminating $1,000 worth of daily LD’s throughout the winter.
As the contract stipulates, the project was supposed to have hit substantial completion by October 15th. Tygum asked the town to consider that goal met.
Even if the town agrees to provide a substantial completion certificate, the contractor has still missed the final completion date. Meaning LD’s of $750 a day would continue until the project is finished. In this scenario, the roads would remain unpaved, but would be open to traffic.
Option 3 is the nuclear option. If the town refuses to compromise on liquidated damages, Lewis & Lewis would keep the unpaved roads completely closed until they return next spring. Tygum said this is to prevent accident liability and avoid any delays when restarting the project next year.
In an email presented to the town council, Lewis & Lewis’s construction manager said his company intends to return to the job March 2oth and be completed by the end of April. Tygum reassured the town that no matter which option they chose, his crew would return in the spring.
Ray Martin, an attorney specializing in construction law, was brought in by the town to review the contract. He started by suggesting the town immediately reject Option 2, granting the contractor a certificate of substantial completion. Martin said the contract clearly states when substantial completion has occurred.
Martin suggested the town chose Option 1, to stop the liquidated damages until Lewis & Lewis come back next year. The attorney said the contract protects the town financially, even if the LD’s aren’t assessed.
The town is within its legal rights to hold Lewis & Lewis to the letter of the contract. However, Martin said his experience shows companies consider how a town has treated past contractors. If they think the town is difficult to work with, bids for future projects may be higher or non-existent.
Councilman Jon Nelson made it clear he did not agree with the construction law attorney. He expressed his exasperation with what he said is a council that is too risk averse.
Nelson said the contract clearly states the consequences should Lewis & Lewis fail to meet their deadline. When the project was first discussed in early summer, Nelson said the contractor assured the town the job would be finished on time.
Lewis & Lewis’ construction manager, Caleb Tygum, said the job was going as planned until his crew hit ground water in the bore pit. Located by town hall, the bore pit allowed the contractor to thread pipe beneath First Street without having to close the major artery through town. Attempts to dry the pit delayed the project by several weeks. Tygum said the unexpected ground water should have triggered an alteration to the contract, known as a change in condition. Councilman Nelson didn’t agree.
Councilman Ron Hutchins talked about trust. The contractor must trust the town not to be punitive with the liquidated damages. Councilman Hutchins said the contract will ensure everyone stays honest.
Impact Joint Powers Board Chairman Richard Raymer, said his board would like to see the contract upheld. He mentioned that he, personally, thinks Lewis & Lewis are doing a good job, but the contract is meant to protect the town from incurring unforeseen costs during the winter.
Mayor Creed James asked the incoming council members who were present for their thoughts. Mayor-elect, Chuck Davis, said he leaned toward upholding the contract.
Councilwoman D’Ron Campbell offered a motion to approve Option 1, allowing the contractor to leave for winter and halt the LD’s. Councilman Hutchins said he was going to vote against amending the contract, but the advice of the attorneys had changed his mind. He seconded Councilwoman Campbell’s motion. Mayor James asked the assistant town clerk, Brenda Mistelske, to poll the council.
Council members Nelson and Kathy Beck voted against the motion. Campbell and Hutchins voted for it. In the event of a tie, the mayor makes the final vote. James voted not to accept Option #1.
As a result, liquidated damages will continue to be charged during the winter shutdown. However, this vote does not mean the council has officially approved Option 3. The final decision will, most likely, be left for the incoming council to make.
