HomeMy WebLinkAboutReso 2003-126 - Westside Interceptor ProjectRESOLUTION NO. 2003-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
REDDING DECLARING KENKO CONSTRUCTION, INC. IN
DEFAULT OF AND CANCELING THE PUBLIC WORKS
CONTRACT FOR PHASE I PARALLEL WESTSIDE
INTERCEPTOR PROJECT, JOB NO. 2076
WHEREAS, the City of Redding ("the City") competitively bid the construction of the
Phase I Parallel Westside Interceptor Project, Bid Schedule No. 3414, Job No. 2076 ("the Project");
and
WHEREAS, McGrand & Associates dba Kenko, Inc. ("Kenko") was the low bidder at
$15,477,000.00 for the Project; and
WHEREAS, on February 6, 2001, the City Council of the City of Redding awarded the
public works construction contract for the Project to Kenko ("the Contract"); and
WHEREAS, on March 13, 2001, Hartford Accident & Indemnity Company ("Surety"),
issued a performance bond ("the Bond") in the mount orS 15,477,000, on the Project naming Kenko
as principal and the City as beneficiary; and
WHEREAS, the completion date for the Project, including any and all change orders and
related time extensions, was December 26, 2002; and
WHEREAS, on December 27, 2002, the Citybegan assessing liquidated damages at the rate
of $1,100 per day, as provided by the Contract, because the Project was not complete; and
WHEREAS, as of August 5, 2003, the Project is still incomplete and more than twenty
punchlist items remain to be completed; and
WHEREAS, City staff has tried repeatedly to gain cooperation and compliance from Kenko
in order that the Project could be completed without resorting to declaring Kenko in default of the
Contract and making a claim on the Bond; and
WHEREAS, Kenko has failed to meet any of the Project completion deadlines and has given
no indication whatsoever that it will complete the remaining punchlist work in the near future; and
WHEREAS, Kenko closed its construction office in Redding, Califomia, on February 28,
2003; and
WHEREAS, in March of 2003, only Kenko' s project engineer remained on the Project; and
and
WHEREAS, Kenko has not performed any work on the Project since early June of 2003;
WHEREAS, as a result of Kenko's repeated failures to complete the Project in a timely
manner, the City Engineer notified Kenko on June 20, 2003, that it must complete the Project on or
before July 14, 2003, or face declaration of a default and performance bond claim; and
WHEREAS, Kenko did not perform any work after receipt of that June 20, 2003,
notification or remobilize its forces; and
WHEREAS, on July 14, 2003, Kenko requested that it be allowed to use Granite
Construction to perform the remaining punchlist work; and
WHEREAS, on July 15, 2003, the City Engineer notified Kenko that it would agree to allow
Granite Construction to perform the remaining punchlist work provided certain conditions, such as
providing a valid contract with Granite Construction and completion of all punchlist work by August
4, 2003, be met; and
WHEREAS, on July 25, 2003, Kenko informed the City that Granite Construction was no
longer interested in performing the work; and
WHEREAS, Kenko has also failed to pay its subcontractors and at least twenty-five
subcontractors have filed stop notices for nonpayment; and
WHEREAS, Surety notified the City on July 17, 2003, that for some time it has been
providing Kenko with financial assistance to enable Kenko to perform and complete the Project and
pay amounts due Kenko's subcontractors, suppliers and laborers on the Project. As a result, Surety
requested the City pay all future contract payments directly to Surety; and
WHEREAS, section 6-4 of the Standard Specifications for Public Works Construction
("Greenbook"), which is a part of the Contract, provides that the City Council may cancel the
Contract when, in its opinion, the contractor is not complying in good faith, has become insolvent,
or has assigned or subcontracted any part of the work without the Council's consent; and
WHEREAS, section 6-4 of the Greenbook states that if the City Council declares the
Contract canceled for any of the aforementioned reasons, written notice to that effect shall be served
upon the Surety, and the Surety then has five days to assume control and perform the work as
successor to the contractor;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF REDDING
RESOLVES AND DECLARES that:
Kenko is in default of the Contract because it is not complying with the Contract in
good faith;
2. Kenko is in default of the Contract because it has become insolvent;
3. The Contract is canceled; and
Written notice of this Resolution shall be served upon the Surety, with a demand to,
within five days, assume control and perform the work as successor to Kenko in
conformance with section 6-4 of the Greenbook.
I HEREBY CERTIFY that the foregoing resolution was introduced, read and adopted at
a spec±almeeting of the City Council of the City of Redding on the 5th day of August, 2003, by
the following vote:
AYES: COUNCIL MEMBER: Kight, Mathena, Pohlmeyer and Cibula
NOES: COUNCIL MEMBER: None
ABSENT: COUNCIL MEMBER: Stegall
MA~ Ht. C//BU~ ~r
Attest:
Connie Strohm~
Form Approved:
Brad L. Fuller, City Attorney'~''~