1995-074E:\WPDOCS\ORD\TAKE.OVR
AN ORDINANCE OF THE CITY OF DENTON, TEXAS RATIFYING THE ACTION OF
THE CITY MANAGER IN EXECUTING A TAKEOVER AGREEMENT BETWEEN THE CITY
OF DENTON AND INTERNATIONAL FIDELITY INSURANCE COMPANY RELATING TO
COMPLETION OF THE CONSTRUCTION OF THE BR3INCH LIBRARY; AND PROVIDING
AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the action of the City Manager in executing
a Takeover Agreement between the City of Denton and International
Fidelity Insurance Company relating to ~pmpletion of the con-
struction of the branch library on the /~'~-'day of April, 1995 is
hereby ratified.
SECTION II. That this ordinance shall become effective
immediately upon its passage and approval.
PASSED AND APPROVED this the /~day of ~ , 1995.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
MICHAEL A. BUCEK, ACTING CITY ATTORNEY
TAKEOVER AGREEMENT
This Agreement entered into as of this /~4~day of April, 1995 by
and between the City of Denton, Texas (hereinafter "the City");
AND
INTERNATIONAL FIDELITY INSURANCE COMPANY, a corporation
of the State of New Jersey having its principal place of business
located at One Newark Center, 20th Floor, Newark, New Jersey 07102
(hereinafter "the Surety").
W I T N E S S E T H:
WHEREAS, M.K. Construction Company (hereinafter "M.K.")
entered into a certain contract (hereinafter "the contract") with
the City dated February 1, 1994 which provided for the
construction of Denton Branch Library, Bid %1572, including
Alternates 4, 7A, 7B, 9, and 10, in accordance with drawings and
specifications prepared by Hidell Architects; and
WHEREAS, the Surety furnished its Performance and Payment
Bonds No.915089-94, each in the penal sum of $820,500 (the
"bonds"); and
WHEREAS, M.K. has failed and refused to comply with all
material terms and conditions of the contract; and
WHEREAS, on January 30, 1995, the City declared M.K. to be
in default and subsequently gave notice of same to the Surety and
made demand upon the Surety to complete the contract in accordance
with the bonds; and
WHEREAS, the Surety has advised the City that it intends to
retain various subcontractors of M.K. to complete the contract in
accordance with its obligations under the bonds; and
WHEREAS, the Surety has advised the City that it intends to
utilize a full time site representative who has no former
association with M.K. in completing the contract. The Surety also
intends to utilize Syd Alvani, employee of M.K., as an information
resource who will visit the project site from time to time as
needed, as well as Mac Koshnoodi, owner of M.K., as an
information resource who will be allowed four (4) jobsite visits
upon twenty-four (24) hours prior notice to the City. Should Mr.
Koshnoodi be needed more than four (4) times at the project site,
all subsequent visits will require a twenty-four (24) hour notice
and written permission from the City; and
WHEREAS, the City has advised the Surety that it does not
object to the Surety retaining various subcontractors of M.K. to
complete the contract; and
WHEREAS, the parties wish to clarify their rights and
responsibilities pursuant to the completion of the contract in
accordance with the original terms and conditions thereof.
NOW THEREFORE, in consideration of the mutual promises made
by the parties hereinafter contained, the parties do hereby agree
as follows:
1. Completion of Contract. The Surety does hereby agree to
complete the contract work in accordance with the original
contractual specifications. The parties hereby agree that such
work consists substantially of but is not necessarily limited to
the items set forth in the attached Exhibit A, which is hereby
made a part hereof.
2. Payment of Contract Proceeds to the Surety. The City
agrees to pay to the Surety the entire outstanding unpaid balance
of the contract price, in accordance with the terms and conditions
of the contract, which the parties do hereby agree consists of
$264,223.
(a) This Agreement shall waive and release the City's right
to liquidated damages, if any, as against Surety and M.K. for any
and all delays in the completion of the contract work incurred up
to and including one hundred ten (110) calendar days from the
execution of this Agreement. The City also waives and releases
any liquidated or other damages for delay against Surety incurred
after the newly established completion date (110 calendar days
from the execution of this Agreement) which are caused by the City
and/or its architect or other representatives of the City. The
Surety agrees to reimburse the City for the following items: 1)
Security fence erected around the project site in the amount of
$1,514.70, 2) Material used to keep moisture out of the building
in the amount of $632.20, 3) Storage fees for the Worden library
furniture at a maximum limit of $1,742.28 per month beginning
March 10, 1995, and the M.J. Industries steel library shelving at
a flat rate of $1,150.00 for the first month beginning March 3,
1995 and a maximum limit of $510.91 per month thereafter (a copy
of the basis for the maximum limits to be charged is included as
Exhibit B), and 4) Additional architectural fees incurred solely
as a result of the termination of M.K., not to exceed the amount
of $10,000 beginning January 31, 1995. Said architectural fees
will be for the time spent by Hidell Architects outside the scope
of its original contract with the City.
(b) The Surety must be provided with support documentation
(invoices) for the first three (3) items above. Although item 3
above indicates the maximum limits for storage cost, attempts are
being made by Surety's consultant to reduce the cost for storage.
Any such savings will inure solely to the benefit of Surety.
The fourth item, architectural fees, must be supported with
timesheets and descriptions of work along with support for any
reimbursable expenses, i.e., transportation expense to and from
project site, long distance communications, postage expense, and
expense of reproductions of drawings, specifications and other
documents.
(c) The Surety shall not be paid any amount in excess of its
total expenditures necessarily made in completing the work and
discharging its liabilities under its payment bond.
(d) The Surety agrees to indemnify and hold the City
harmless from any claims made by M.K. arising out of payments made
by the City to the Surety of any funds which may become due as a
result of the completion of the contract.
3. No Waiver by Surety. The parties acknowledge that the
Surety's covenants and obligations of performance under this
Agreement are being made pursuant to its obligations under its
bonds and all payments by Surety for labor or material or for
performance of the contract are in performance of Surety's
obligations under such bonds and are to be credited against the
penalty of such bonds, less credits for receipt of contract
proceeds from the City. Nothing contained in this Agreement shall
waive, limit, alter or amend any of Surety's rights, defenses or
liabilities under such performance and payment bonds nor the
rights, defenses or liability of its principal, M.K.
4. NO Waiver of Penal Sum. The City agrees that the
Surety, by execution of this Takeover Agreement does not in any
way waive the penal limits of the bonds and that in the event it
becomes necessary for the Surety to expend its own funds under its
bonds, it shall not be obligated to expend funds in excess of the
penal limits of the bonds.
5. NO Third-Party Beneficiaries. The parties do not intend
by any provision of this Agreement to create any third-party
beneficiaries nor to confer any benefit upon or enforceable rights
under it or otherwise upon anyone other than the parties.
Specifically, the parties acknowledge that nothing in this
Agreement shall extend or increase the rights of any claimant
under the above-mentioned bonds.
6. Proqress Payment. Applications for monthly progress
payments will be processed in accordance with the procedures set
forth in the contract modified as follows: (1) the City's
Architect, Hidell Architects (hereinafter referred to as
"Architect"), will confer at the end of each month with Gary
Bierhalter of Meridian Consulting Group (hereinafter "Consultant")
for the purpose of agreeing upon the percentages of the work
required under the contract, as modified by this Takeover
Agreement, which was completed during that month; (2) thereupon,
Consultant will prepare and send to the Architect on behalf of the
Surety a certified Application for Payment, in the form required
by the contract, which will incorporate and apply the percentages
of work completed as agreed upon by the Architect and Consultant;
(3) within seven (7) days after the receipt of the certified
Application for Payment, the Architect shall either (a) issue and
send to the City his approval and Certificate of Payment to the
Consultant, or (b) shall notify the City and the Consultant in
writing of the Architect's reasons for withholding such approval
and certification; and (4) the City will make payment to the
Surety of the amount approved by the Architect in the
Certification of Payment within thirty {30) days after receipt by
the Architect from the Consultant of the certified Application for
Payment.
7. Administration. The City will administer the various
subcontractors of M.K. and others that may be designated by the
Surety to complete portions of work on the same basis and to the
same extent as the City was required, by the contract, to
administer the contract with M.K.
8. Authorized Siqnatories on Payment Applications. The
Surety hereby designates and authorizes the following persons to
sign on its behalf any payment requisition or other document
required or to be requested by the City in connection with this
Takeover Agreement or the contract:
Gary Bierhalter
9. ~. Construction permit fees have been waived
for this project; should payment of fees be required, the City
agrees to make payment of such fees.
10. Submittals and Shop Drawinqs. The Architect will make
available to Consultant a copy of all approved submittals and shop
drawings.
11. Subcontractor of Surety. For purposes of this
Agreement, the various subcontractors of M.K. shall be considered
subcontractors of the Surety. The Surety reserves the right to
replace any subcontractor at its sole option and discretion and
subject to the approval of the City, which approval shall not be
unreasonably withheld. Ail approvals required herein shall be
confirmed in writing.
12. No Payment by City Without Surety's Consent. The City
further agrees that it will not acknowledge or honor any claims or
charges against the contract funds by any creditors or transferees
of or any other parties making claim to any such proceeds or
balances without the prior written consent of Surety or by order
of a court of competent jurisdiction after due notice to Surety.
Surety will indemnify and hold City harmless with respect to any
loss, claim, liability or expense, including reasonable attorneys'
fees, arising from or related to the City's compliance with this
paragraph, up to the amount paid by the City to Surety hereunder.
13. Successors and Assiqns. This Agreement shall extend to
and bind the parties and their successors and assigns.
14. everabili . The unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision hereof.
15. Preamble . The Preamble to this Agreement is
incorporated herein as part of the terms and provisions of this
Agreement.
ATTEST: CITY OF DENTON
ATTEST: INTERNATIONAL FIDELITY
INSURANCE COMPANY
~.?- ARL~E F~NDE~ :OGDA M ~. CLARKE,
' ~T~Y ~LIC ~ NEW jEB~
~ ~ ~ ~y 28, 1~8 VIC E PRES IDENT
The project has been approved by %heArchitect to be approw~ately
71% co~ple=e. The work that remains consists of the following=
The building's roof is in its final s~ages of being complete~ at ~his
"t/~. The roofing tri~work r-~ins to be installed. The brick
~asonry lacks some punch list wor~ and .cleaning. A small amount of
rough-inwork for the electrical and mechan/cal remains. All of ~he
major pieces of electrical equipment are on site, but none have been
ins~alle~bythe electrical subcontractor. There does remai~-a
substantial ~mount of plumbing (installation of fixtures) and HVAC
work {Lnstallation of grilles and registers, installation .of hoods
an~ fans, completing condensation lines, ~nor duct work, start up,
cleaning and testing and bala~cing). The bulk of the remaining work
to com~le~ consists of all the finish work i~side the building
(i.e., wood doors and frames,, aluminum entrances and fronts,
installation of ~rdw-~e, drywall an~ ceiling tile, installation of
all flooring, pa/nting, chalkboards and tackboards, toilet partitions
an~ accessories, a~d installation'of signs, lockers, and all special
e~uipment~. In a~ition, there remains the landscaping and all the
concrete pavinc/~f the park£ng lot an~ sidewalks.
i
~ following list Of deficiencies compiled by the City of Denton are
included as work remaining:
1. Dress the per4~eter foot/~gs to be aesthetically acceptable.
2. Thru-wall flashing at upper w~n~ws needs corrective wor~.
3..~ansion Joint at SW cor~er of building needs to be provided.
4. Slope of ~rain plum~ing in restrooms needs to be correctod.
5. Roof ~rain in SW corner must be correcte~ so there will be no
interference withdrywall.
6. All rain damaged drywall and insulation will be replaced.
The following items will be checked for conformance to
specifica~ion~:
Con~ensing lines~ HVAC freon lines, HVAC sizing, sprinkler system,
roof overflow drains, slab elevation for north window~, door frame at
SWcor~eran~pl~--h~ng clean outs.
EXHIBIT B
Cultural Surroundings Facsimile Sheet
STORAGE FEES FOR TIlE WORDEN LIBRARY FURNITURE
· Storage fees are aSSessed ~ 1-3/4% ~ month
· Storage co~ are accrued from the ship date for the ItJmiture whic,~ Is 3-10.95
DESCRIPTION TOTAL UNIT ~ INTEREST MONTHLY STORAGE FEE
· PER MONTH
WORDEN 99.559.00 1-3/4% 1.747_28/montfl
STORAGE ~-t:t:S FOR THE M.! INDU.STRJE$ STEEL LIBRARY SHELVING
· ' 8forage fees am assessed at '1-~/4~, per nmr~ for every additlotral rnor~ '
.. · Sti:,'age cost am ac~-ded from the.~hip date fer the shetving which i~ 3-3-95
DESCRIIrlION TOTAL UNIT COST INTEREST % MONITILY STORAGE
FIRSTMONTH · .' ' FI.ATP, ATE '1,150.00
MJ I~E$ 290195.00 1-3/4% 510.91/eaoh additional montt~
Please advise me as soon as possible of a ship date for the furniture and sheiving. I will need
several wee~ lead lime to arrangecl tn~16 for shipment of the goods.
INTERNATIONAL FIDELITY INSURANCE COMPANY
February 24, 1995 _
Via Federal Express FEEl 2 7 1995
Micnae A. Bucek, Acting city C orne OIlY ENTON
City of Denton, Texas LEGAL DEPT.
Municipal Building
215 East McKinney
Denton, Texas 76201
Re: Principal: M.K. Construction Co., Inc.
Obligee: City of Denton
Bond No.: 915089-94
Project: Denton Public Library
Dear Mr. Bucek:
This letter is written in response to your February 13, 1995
letter regarding the captioned project. It is my unde_standing
that pursuant to the terms contained in the letters of
February 1, 1995 and February 9, 1995 to the attention of Surety
Bond Connection from R.H. Smith Company, Inc.("the Roofing
Contractor"), the Roofing Contractor is agreeable to completing
its subcontract regarding the Denton Public Library with M.K.
Construction Company, Inc. ("M.K.") for the amount of $8,913.00.
There is a pending Change Order request in the amount of $1,900.00
to rework the flashings because of windows possibly being in the
wrong location. This proposed Change Order is subject to 1)
Architect concurrence and authorization to proceed and 2)
Submittal of a detailed estimate by the Roofing Contractor to
International Fidelity Insurance Company ("International") of all
material cost and labor cost including overhead and profit for the
$1,900.00. Upon receipt, International shall review and issue a
Change Order, if approved, for an agreed upon amount.
Additionally, you have advised me that the City Attorney's office
and the City Manager's office of the City of Denton ("the City")
are agreeable to recommending to the City Council at its next
meeting that the City authorize the Roofing Subcontract be
completed while International is determining whether or not to
proceed with the completion of M.K. 's overall contract with the
City, if International will consent to such action. I further
understand that the payment for work completed by the Roofing
Contractor will be issued from funds being retained by the City
under the above-referenced contract. International agrees with
this scenario subject to the items numbered below being complied
with by the City and/or Roofing Contractor, whichever is
applicable, and the signature of the Roofing Contractor's Agent,
the City Agent noted below, and International's consultant:
ONE NEWARK CENTER, 20th FLOOR · NEWARK, NEW JERSEY 07102 · 201-624-7200
Michael Bucek
February 24, 1995
Pace 2
1. Roofing Contractor fully warrants its work as origmnally
required by the contract between M.K. and the Roofing
Contractor. The warranty is as required by the
Specifications.
2. No payment will be made to the Roofing Contractor until the
roofing work is complete. The City's Architect must certify
to the City, with a copy to International, that all the work
required by the above-referenced contract relating to roofingS'
has been completed by the Roofing Contractor before any
is made. Tho City z!sc a~rces~%'
payment
(excluding
retainage)
to rclcaec funds rs~rsscnti.n~ t_hc same ~crccnt ccmDlatc ts ~
3. Certification by the City's Architect does not relieve Roofing
Contractor from performing repair work on work completed by
Roofing Contractor that does not conform with the plans and
specifications set forth in the above-referenced contract.
4. That the penal sum of the Performance Bond shall be reduced
dollar for dollar for all amounts paid by the City to the
Roofing Contractor from and after February 23, 1995.
5. International's consent to this work shall not be deemed an
admission by International of liability for (a) completion of
the (1) Roofing Subcontract, (2) any subcontract on this
project, and/or (3) the contract between M.K. and the City
referenced above or (b) any claim against International or
M.K. by reason of or pertaining to the bonds issued by
International to M.K. on behalf of the City.
6. The execution of this Agreement by International shall not
constitute a waiver of any claim, defense or remedy available
to International or M.K., at law or in equity, that
International or M.K. may have against the City, Roofing
Contractor, the City's Architect or any of M.K.'s
subcontractors or agents or subcontractors of any cf the
foregoing, all such claims, defenses and remedies oeing
expressly reserved.
This work shall not be considered a takeover by International of
the project. It is hereby understood by the parties to this
Agreement, that this action is taken only in an attempt to
Michael Bucek
February 24, 1995
Paae 3
mitigate damages to the City and International which may result to
the interior of the library.
Please have two copies of this letter duplicated so that three
duplicate originals of this agreement can be executed and each
party supplied a copy of same.
Very truly yours, ?
./- , //
By: / /' /
'Fr~ank :'3. Ta~nzola
Assis'tant Claims Coun~
/
~tOy~ V.-~Ha'r~ell, C:y Manager
RH SMITH COMPANY, INC.
cc: Gary Bierhalter