CC Minutes - 09/12/01 Work Session

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City Manager Jim Johnson noted that the Broadway Place contract was also an AIA (American Institute of Architects) contract. Mr. Meisner said "that only made it worse." The City had not changed its approach since that incident. The City "was losing," and that was not acceptable to him. It made him distrust the concept of the City as a project manager, and he was becoming increasingly interested in Mr. Rayor's suggestion that such activities be contracted out. Mr. Rayor referred to the example contract included in the meeting packet and determined from staff that Section 2.1.7.5 mandated that if an architect's estimates were incorrect, the architect must continue to work at his or her own expense to make the project on budget. He termed that fair and said that cost estimating was done to give owners reasonable assurance of the price to expect when they go into the bidding process, because the owner relied on the architect's expertise. Mr. Rayor said that his problem with the library project centered around the fact that the architect firm did not take responsibility for the problem, blaming a subcontractor and hurting that subcontractor's reputation. City staff had repeated the contractor's statements, and he believed the City could be sued as a result, given that its contract was not with the subcontractor but with the contractor. Mr. Rayor was aware of a number of agencies that had written speciality clauses for AIA contracts. He asked staff to find out what speciality clauses the other agencies using AIA contracts employed. He thought that the council could then hold a second work session to discuss how other agencies "got around this problem." Mr. Johnson asked Mr. Rayor what problem he was referring to. Mr. Rayor said that some of the problems centered around the fact the contract was an architect's document and there may be some "slight, bilateral giving that the agencies equalize" by changing the contract. Using the library contract as an example, Mr. Pap~ asked if one option for the City would be to sue to recover its fee to the architect. Mr. Klein said the City's options were limited by the contract. He pointed out that the City was not obliged to sign a contract with terms it did not like, but the same was true of the other party; the question was, what could the City and the other partner to the contract agree to? Mr. Klein said a contract must be something both sides can live with. Under the library contract, the architect had to provide additional services free of charge to do what the firm contracted with the City to do, which was to design a building at a certain price. Mr. Pap~ asked if the architect would have had to do more if the City had asked it to return with a building that was in the original price parameters. Mr. Johnson said that the architect would have had to do a substantial amount more of work. The council had that choice; rather than do only that, the council decided to add more money to the project. Mr. Pap~ determined from legal counsel Jeff Matthews of the City Attorney's Office that the contract contained arbitration provisions to resolve differences between the City and architect. Mr. Pap~ asked if the City Attorney's Office had looked for claims to bring against the architect. Mr. Johnson said yes; subsequently, the City Attorney's Office had recommended to him that it was in the City's best interest not to proceed to arbitration. He had concurred with the recommendation, which he had shared with the council. Mr. Pap~ stated for the record that he had not agreed with that recommendation as he believed that the City had a credibility problem with the public. It had gone to the public with a library project at a certain cost and then the costs ballooned by 20 percent. He said that made the council and City look bad to the public. MINUTES--Eugene City Council September 12, 2001 Page 3 Work Session