News

Palo Alto ends legal feud with Mitchell Park Library contractor

City reaches settlement with Flintco Pacific over long delayed library project

Days after Palo Alto celebrated the grand opening of its new Mitchell Park Library and Community Center, the city has reached a settlement with the contractor that officials blame for the years of delays and myriad of mistakes that plagued the high-profile project.

The settlement, which City Manager James Keene announced Monday night, brings to an end years of acrimonious wrangling and accusation between the city and Flintco Pacific.

The city has consistently accused Flintco of mismanaging its subcontractors, submitting faulty work and inflating costs by submitting repeated change orders.

Flintco alleged that the city breached its contract and that the plans for the library were "filled with errors, omissions, conflicts, ambiguities, lack of coordination and noncompliance with applicable code requirements."

The city fired Flintco in January and the two sides have each filed claims against each other.

The comprehensive agreement settles all these claims. Under the terms, Flintco will pay all of the costs incurred by the replacement contractor, Big D, for completing construction, estimated to be more than $2 million. The city will also recover about $700,000 from Flintco, which includes a waiver of about $150,000 in change orders.

The city will also release the roughly $4 million of the contract balance that has been withheld since March, when Palo Alto entered an agreement with a surety to complete the project after Flintco's termination. The city will also hold back $100,000 until all work related to the building's LEED Platinum certification is complete.

The settlement also specifies that the city will rescind the notice of termination it issued to Flintco, while the company will indemnify the city against all potential claims brought by subcontractors on the roughly $45 million project. Flintco and the surety will remain responsible for warranty claims and latent defect claims.

The announcement by Keene came nine days after the city officially celebrated the opening of Mitchell Park Library and Community Center, which is by far the biggest branch in the city's library system and one of the largest capital projects in the city's history. Funded by a $76 million bond that voters approved in 2008, the library was initially scheduled to be completed in spring 2012.

In announcing the settlement, Keene called the city's agreement with Flintco the "closing chapter" in the high-profile construction project. The city, he said is "avoiding years of arguing and wrangling and legal costs." The settlement document will be released to the public and the council later this week, he said.

"We're putting this behind us," Keene said. "This was a long journey."

Mayor Nancy Shepherd, chairing her final meeting, also praised the new agreement. She noted the many hours that the council has spent in closed session.

"This is an incredible gift to next year's council," Shepherd said.

Related content:

Palo Alto seeks $9.4M from Mitchell Park Library contractor

Mitchell Park Library contractor fires back at the city

Palo Alto fires Mitchell Park Library contractor

Comments

3 people like this
Posted by sounds good
a resident of College Terrace
on Dec 15, 2014 at 7:58 pm

Congrats: this sounds like a fair and reasonable agreement that will allow both Flintco and City of Palo Alto to move on.


15 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Dec 15, 2014 at 8:19 pm

And without the matter going to trial, all of the failures on the part of the City relative to the change orders and poor initial planning will never be reviewed in public.

The big loosers--the taxpayers who will be paying for the City's failures for decades!


12 people like this
Posted by Ex 28 year city employee
a resident of another community
on Dec 15, 2014 at 9:30 pm

Sounds like Flintco won. Not surprise.


16 people like this
Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Dec 15, 2014 at 9:37 pm

Funny how this is settled just before new City Council members are seated. I'm guessing someone didn't want the new members to dig into this.


10 people like this
Posted by Bye Bye Nancy
a resident of Charleston Meadows
on Dec 15, 2014 at 10:51 pm

I watched the City Council meeting tonight - Nancy Shepherd was rude to other council members and unprofessional in making faces and comments about other council members to her friend, Mark Berman, sitting next to her. [Portion removed.]

Overall, two-thirds of the council added no value this evening.

Attending a few Council meetings should be required before being allowed to vote in an election - it's eye-opening.


11 people like this
Posted by Audit of Public Works Contracting Processes
a resident of Another Palo Alto neighborhood
on Dec 16, 2014 at 9:19 am

Now that it won't interfere with the pending lawsuit, it is high time to have a thorough audit of Public Works contracting processes, and their management oversight of them.


10 people like this
Posted by Henry
a resident of Downtown North
on Dec 16, 2014 at 10:08 am

Why isn't a multi-million dollar legal settlement something that Council needs to approve before it is finalized? If it hasn't been presented to Council yet, then who on staff has that much authority? City Manager can't spend more than tens of thousands without Council approval. How can he can settle multi million dollar lawsuits?


10 people like this
Posted by curmudgeon
a resident of Downtown North
on Dec 16, 2014 at 10:21 am

A friend told me the inside scoop. The judge looked at the architect's rendering of the building and asked the city how it could tell that the contractor had made mistakes, because any random pile of construction materials would look exactly like the drawing from some viewpoint. The city had no convincing response, and had to drop its suit.


11 people like this
Posted by Cynthia
a resident of Crescent Park
on Dec 16, 2014 at 10:27 am

To add to the comments of "Bye Bye Nancy," I totally concur!

We are a non profit who has GIVEN the City money and still she took no interest when we tried to brief her on our cause and, as was pointed out, was rude and unfriendly on all interactions with us. Our group made a point to get out and vote in November to make sure she was no longer the face of Palo Alto.

Liz Kniss isn't much better, sadly. How wonderful it would be if we could vote on who our mayor was. Qualities should include being gracious and courteous, for sure!!


11 people like this
Posted by Stewart
a resident of Mountain View
on Dec 16, 2014 at 10:33 am

So the lawyers stepped in and cleaned up the mess made by Palo Alto's project managers and advisors.


8 people like this
Posted by Midtown
a resident of Midtown
on Dec 16, 2014 at 11:12 am

That was slick, millions squandered and we will never know the true story. Give the managers a raise.


3 people like this
Posted by Continually amazed
a resident of Downtown North
on Dec 16, 2014 at 11:46 am

I am continually amazed at the negativity displayed in these postings - such a shame really. My only positive spin is that it is likely not to last for long...

Web Link


3 people like this
Posted by Positivety
a resident of Fairmeadow
on Dec 16, 2014 at 11:58 am

Maybe the new city council will help us all live longer...


2 people like this
Posted by finite ending
a resident of Midtown
on Dec 16, 2014 at 12:01 pm

Unlike others very negative comments above, I am delighted that this legal battle is finished, all the while such battles continue the meter is running on the legal taxi service. Unlike the ongoing legal stuff with the school district, at least the city finalized the legal bills for the library. It also seems like they got the contractor to pay the bills of the company who finished the work as well.


9 people like this
Posted by curmudgeon
a resident of Downtown North
on Dec 16, 2014 at 12:08 pm

"I am continually amazed at the negativity displayed in these postings - such a shame really."

Negativity about negativity is not a positivity.

We don't make up the situations we comment on. We just work with what we get.


7 people like this
Posted by Citizen
a resident of South of Midtown
on Dec 16, 2014 at 1:30 pm

Let's all remember this debacle the next time the city asks for a building bond. $45M and 2.5 years late for a library? Gotta say this is a huge waste of taxpayer $$. I have to imagine the City went with the low cost bidder. You get what you pay for.


1 person likes this
Posted by Hulkamania
a resident of Duveneck/St. Francis
on Dec 16, 2014 at 1:30 pm

Hulkamania is a registered user.

The City should have contacted Adam Carolla of Catch A Contractor to clean up this mess. With Adam on the job it would have been fixed in an hour.


9 people like this
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Dec 16, 2014 at 2:13 pm

$700,000 on cost-overuns of $24,000,000 and Keene's patting himself on the back??? Give him another raise.

Jaime Rodriquez has submitted 2 RFPs containing more than 160 pages of boilerplate about contracts to change the timing of the Town & Country light and each time gives companies 2 weeks to respond. No one bid on the first one which I skimmed because I'd like to know what's planned and there's no textual project description. I read the 2d 173 page RFP and it's the same.

If I were a contractor I'd stay far far away. As a taxpayer, I know I'll never approve another bond issue while we have the current crew in place.

10 YEARS to fix a traffic light? Yea, I'm negative and frustrated at having to go miles out of my way to avoid Embarcadero and sitting at green lights and the because the next poorly timed light is red.


9 people like this
Posted by Paco
a resident of Old Palo Alto
on Dec 16, 2014 at 5:32 pm

What a pity! Keene is just trying to clean up his senior management friends mess using residents tax money before new council members arrive. Sounds like FlintCo got the better of this deal thanks to poor city management. We need a new city manager and the dismantling of Keene's "shadow organization" of senior managers hired from his personal Rolodex. How does the city manager discipline a manager that is a personal friend ? When is city council going to wake up and correct this nonsense?


6 people like this
Posted by Timing
a resident of Southgate
on Dec 16, 2014 at 6:28 pm

Call me cynical, but I was suspicious when the city file∂ suit against Flintco shortly before the election. Now the election's over an∂ the suit is settled. Hmmm.


7 people like this
Posted by Rick
a resident of Professorville
on Dec 16, 2014 at 9:04 pm

Regarding the traffic light issues at Town and Country. Jaime Rodriguez, the chief Transportation Dept official, needs to be investigated. The entire Transportation Dept needs to be investigated. Rodriguez is so busy with his other businesses, that he doesn't have time to be effective in his city job. He owns Traffic Patterns, LLC www.trafficpatterns.net
Traffic Patterns designs road patterns. He also owns American Asphalt.
His outside jobs are a conflict of interest. At a minimum, it has the appearance of a conflict of interest. The City of Palo Alto shouldn't tolerate that.


Like this comment
Posted by Corruption at City Hall
a resident of Old Palo Alto
on Dec 16, 2014 at 9:12 pm

[Post removed.]


5 people like this
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Dec 16, 2014 at 10:20 pm

Rick, I totally agree. Maybe if we all contact the new city council to push for it? Maybe Palo Alto Forward? Who can make it happen?


3 people like this
Posted by Lynn Ware
a resident of Palo Verde
on Dec 17, 2014 at 10:21 am

I don't know any of the details around the conflict, but I love the new library and community center and look forward to enjoying all of the resources available to Palo Alto residents. The digital library assets are incredible! I feel blessed to live here. Thank you, City of Palo Alto, for going the course and completing this project.


Posted by Name hidden
a resident of Greater Miranda

on Dec 17, 2014 at 12:40 pm

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


Like this comment
Posted by mc
a resident of Barron Park
on Dec 17, 2014 at 12:52 pm

[Post removed.]


3 people like this
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Dec 18, 2014 at 10:27 am

Love how the outgoing City Council is rushing to settle its construction-related lawsuits to avoid review. This time we're paying $570,000.

Web Link


1 person likes this
Posted by Not "curmudgeon"
a resident of Crescent Park
on Dec 18, 2014 at 11:00 am

@ curmudgeon,

You and your "insider" friend are incorrect.

This early in a case a Judge would have never looked at any documents other than the various parties legal pleadings.

The Judge would have sent this to an mediator in attempt to negotiate a solution before filling the court's docket.

In this case, the mediator was likely able to negotiate a settlement that was acceptable to the City and the contractors insurance/bonding company.

Since the cost of the litigation would have been borne by the contractor (or more precisely...the contractor's bonding and insurance companies), it was less costly to settle the case rather than spend millions on attorney fees. Given the number of Persons Most Knowledgeable (PMK) and experts that would need to be deposed in a case like this...there is no reason to believe that it would have taken less than $2M to get to the point where the case could get close to trial.

Also remember, that the jury pool would come from Santa Clara County...not a good thing base on all the horrible press the project contractor received over the years. The contractor's insurance/bonding/attorneys are also aware of this and would have found this another compelling reason to settle without a trial.

My guess is that the mediator laid this out to the Contractor's insurance/bonding company. Furthermore, the mediator would have told the contractor that their case is horrible...especially since there was ample evidence of the construction delays/defects that are solely attributable to the contractor.

In my experience, this was a huge win for the City of Palo Alto and a huge black eye for the contractor. The City gets its cash NOW...and the contractor publicly accepted blame and wrote a big check.

Also, I think this was stand up thing for the current Council to approve so that the incoming Council would not be distracted with a mess that developed under the prior Council.


1 person likes this
Posted by Al
a resident of Another Palo Alto neighborhood
on Dec 18, 2014 at 1:48 pm

To Nut , I belive you have it incorrect. I know that the design of the outside walls could not hold the facade for the building. This is not the contractors fault. Also, city of PA had put in more than 300 change orders during the construction. This was the first from the "ground up" building that PA had done in over 30 years. All other city buildings had been remodel.
Flintco has a great rating as contractor. I belive both sides settle because of a long costly trail and with the new council, PA wanted this "elephant" behind them.


Like this comment
Posted by Facts
a resident of Another Palo Alto neighborhood
on Dec 18, 2014 at 2:17 pm

@JoAnn and Al,
Your link is to an article about a settlement by the school district, PAUSD, with their construction contractor. The school district is a completely different government agency and the city council does not govern PAUSD in any way. As the article explains, the agreement covers the successful completion of the project by the replacement contractor and Flintco has waived change order claims.
"Under the terms, Flintco will pay all of the costs incurred by the replacement contractor, Big D, for completing construction, estimated to be more than $2 million. The city will also recover about $700,000 from Flintco, which includes a waiver of about $150,000 in change orders."


1 person likes this
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Dec 18, 2014 at 3:13 pm

Facts, does that mean that even though the taxpayers are paying for school district construction that there is no city oversight? I really don't know so that's a sincere question. Who does handle it for PAUSD? Is there duplicative staff? A VP of School Public Works?

All I know is having read a few of the RFP's and having followed the library construction issues over the years and having read the incredibly vague T&C light RFP I'm wondering who handles contract reviews, specs, etc.

The Library came in at almost TWICE its original cost. And it's taken us a long long long time to synchronize problematic traffic lights,


Sorry, but further commenting on this topic has been closed.

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