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.