HomeMy WebLinkAboutWarner Avenue Gravity Sewer Line Project - WAGS - AppropriatCouncil/Agency Meeting Held:
Deferred/Continued to:
Appr ed ❑ Conditionally Approved ❑ Denied
SA>j� Ci Cle k' Signat e
Council Meeting Date: April 4, 2011
Department ID Number: CA 11-002
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Jennifer McGrath, City Attorney
PREPARED BY: Jennifer McGrath, City Attorney
SUBJECT: Appropriate $160,000 from the Sewer Fund to be used for legal and
consulting fees in connection with Warner Avenue Gravity Sewer Line
Project (WAGS); and Mission Clay v. Vadnais, City of HB, Orange
County Case No. 30-2008 00113320
Statement of Issue:
Whether the City Council should appropriate $160,000 from the Sewer Fund, to be used for
additional legal and consulting fees in order to recover sewer funds previously expended for
Warner Avenue Gravity Sewer Line Project ("WAGS"). This amount is in addition to $250,000
previously appropriated by the City Council on April 6, 2009.
Financial Impact: If the Council approves this action, the estimated unrestricted net
assets of the Sewer Service Fund (511) will be reduced to $13,828,000 at September 30,
2011.
Funding Source: Unrestricted net assets in the Sewer Service Fund (511) totaling
$160,000. Budget to be appropriated in business unit 51185101.
Recommended Action: Motion to:
Appropriate $160,000 from the Sewer Fund, to be used for the employment of an in-house
contract attorney and the continued employment of the law firm of Gibbs, Giden, Locher
Turner & Senet and the engineering firm of Lyman Henn, Inc., and other related expenses in
connection with the recovery of Sewer Funds previously expended for WAGS.
Alternative Action(s): Provide alternative direction to the City Attorney regarding the
recovery of the Sewer Funds expended on WAGS, as well as the defense of Vadnais
Corporation's claims for additional compensation on WAGS.
HB -29- Item 3. - 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 4/4/2011 DEPARTMENT ID NUMBER: CA 11-002
Analysis: The City retained Bureau Veritas to design a new, 24-inch Gravity Sewer Line
to be installed in Warner Avenue from Bolsa Chica Beach to the new Lift Station D near Los
Patos and Warner. In order to ensure the line maintained a downhill grade so that the
sewage would flow by way of gravity, it was necessary to install the clay pipe through micro -
tunneling. The City contracted with Vadnais, to install the line. After construction began, it
was discovered that the line began to float upwards, eliminating the required downhill grade.
In late 2008, the project was terminated and the new pump station was connected to the
existing sewer line.
The City has paid Vadnais $3,100,000 for the original project. Vadnais claims it is owed
almost $354,000 for work done to restore the connection from the pump station to the
existing pipeline. In addition, approximately $275,000 was spent on the sewer line design.
The total authorized construction budget was approximately $7,700,000. The litigation began
when Mission Clay, the pipe supplier, sued Vadnais and the City for unpaid pipe. The City
and Vadnais sued each other, the City then sued the design engineer, Bureau Veritas, which
in turn, sued its sub -contractors, Leighton Engineering and Jacobs Engineering. An early
formal mediation was unsuccessful. Settlement will be attempted again after expert
depositions are taken.
The case is set for trial for October 2011. Because of the recent addition of new parties to
the lawsuit, the case is expected to be reset for trial for early 2012. The City Attorney has
been using the law firm of Gibbs, Giden, Locher, Turner & Senet to assist City staff attorneys
in prosecuting the City's case. Because the case has now been set for trial, the amount of
labor required to continue the case has increased substantially because of the need to
prepare for and attend months of deposition testimony and to formally prepare the trial
documents.
In an effort to significantly reduce future costs, the City Attorney has reallocated a portion of
the funds appropriated for the Gibbs, Giden law firm to hire Ed Bertrand, an experienced
construction law attorney recently with a large local municipal law firm, as a contract attorney
for the duration of the litigation to perform the most labor-intensive work at a substantially
reduced rate. The City Attorney also expects to retain additional consulting and testifying
expert witnesses and anticipates new additional costs incident to the trial phase of litigation,
such as court fees and court reporter fees. Insufficient funds are in the City Attorney's
account to address these substantial expenses. Consequently, City Council funds are
required to provide sufficient funds.
Environmental Status: N/A
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
Item 3. - 2 HB -0-