5.7 EMRUSR 08-13-2024 - Laserfiche WebLink

Home Browse Search

Ji Elk River amft . Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Mark Hanson —General Manager MEETING DATE: AGENDA ITEM NUMBER: August 13, 2024 5.7 SUBJECT: Field Services Building Project Closeout ACTION REQUESTED: Provide Direction on Desired Outcomes BACKGROUND: Our $12.3 million Field Services Building construction contract is nearing final closeout. Only a few punch list items remain (estimated at roughly $5000 in total value). As such, ERMU staff and legal counsel have started initial project closeout conversations with the contractor, RJM Construction LLC. Currently, ERMU is retaining $250,000 from RJM's final invoice. There are several issues that factor into the retainage amount: the variability in the concrete floor thickness and rebar placement (—$120,000), the default of the steel contractor (—$37,000), and the failure of RJM to submit complete closeout documentation (—$123,000). Additional details are provided below: • Concrete Floor (Ultra Concrete, Inc.): Staff estimated the floor scans show eight areas with rebar significantly outside of the specified tolerances. Future potential repairs are estimated at $15,000 each for a total of $120,000. A specialist has been retained to review the concrete floor and estimate future costs. An expert will help remove the uncertainty, be an accepted basis to contest RJM's position, and allow ERMU to move forward with a legal claim if an agreement cannot be reached. Steel Contractor (Thornberg Erecting and Steel Services, Inc.): RJM obtained a judgment against Thornberg in the amount of $492,021.96. Unfortunately, Thornberg has since gone out of business and only $37,138 has been recovered to date. Staff's position is the $37,138 should go to ERMU and an additional settlement term should be RJM's assignment to ERMU of all its rights to future recoveries associated with the judgment. RJM has stated their legal costs far exceed the $37,138 recovered. Their plan is to keep any recovered amounts to offset their legal costs until they have recovered their costs. • 1% Administrative Retainage: No state agency or local unit of government can make final payment to a contractor (or subcontractors) until the Minnesota Department of Revenue has certified that they fulfilled their Minnesota withholding tax requirements. RJM has a few missing Lien Waivers and IC-134 forms that are needed. MN Statute 337.10 allows us to withhold up to one percent ($123,238) of the contract value until all Page 1 of 2 99