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Home My WebLink About2009-06-08 09-207 ORDERCOUNCIL ACTION Item No. _:5-9 207 Date: June 8, 2009 Item/ Subject: ORDER, Authorizing the Execution of a Construction Contract with RMT for Remediation of Penobscot River Coal Tar Responsible Department: Legal Commentary: In November 2002, the City of Bangor filed suit against Citizens Communications Company (Citizens) in the United States District Court for the District of Maine alleging that Citizens contributed to pollution of the Penobscot River. In February 2007, the City Council approved a settlement agreement with Citizens. The settlement agreement provided that Citizens Communications Company pay to the City the sum of $7.625 million to be held in escrow and that the City take responsibility for the remediation of the coal tar contamination. RMT has been the City consultant throughout the litigation and during the City's negotiations with DEP for the remediation of the coal tar contamination. This Order will authorize the execution of a construction contract with RMT pursuant to the terms as outlined on Exhibit A. At the time the Council agenda was prepared, the City was still in negotiations over the final terms of the contract with RMT. As a result, this Order will need to be amended by substitution to add Exhibit A. Manager's Comments: Recommend approval. -0 c Q Associated Information: Budget Approval: Legal Approval: Introduced for X Passage First Reading Referral Department Head City Manager ff"T'Lon n�, m ' /'d i Page 1 of _ 9 Assigned to Councilor - Blanchette June 8, 2009 �k Dia �Cos.r� � M _\ o CITY OF BANGOR �RAiED.ff � rte► (TITLE.) ORDER, Authorizing the Execution of a Construction Contract with RMT for Remediation of Penobscot River Coal Tar WHEREAS, in November 2002, the City of Bangor filed suit against Citizens Communications Company in the United States District Court for the District of Maine (styled City of Bangor, Maine v. Citizens Communications Company, et al., Civil Action 02 -183 -B -S) alleging that Citizens contributed to pollution of the Penobscot River; and WHEREAS, in February 2007, the City Council approved a settlement agreement with Citizens Communications Company; and WHEREAS, the settlement agreement provided that Citizens Communication Company pay to the City of Bangor the sum of $7.625 million to be held in escrow under certain terms and conditions and that the City of Bangor be responsible for the remediation of the coal tar contamination in the Penobscot River; and WHEREAS, RMT has served as a consultant to the City of Bangor throughout the litigation and during the City's negotiations with the Maine Department of Environmental Protection regarding the remediation of the coal tar contamination in the Penobscot River; and WHEREAS, RMT has designed the remediation for the coal tar contamination and has the ability to construct the remediation; NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR THAT the City Manager is hereby authorized, on behalf of the City of Bangor, to execute a contract with RMT for the construction of the remediation of the coal tar contamination of the Penobscto River. Said contract will include terms and conditions included in Exhibit A attached and will be in a final form as approved by the City Solicitor or Assistant City Solicitor. IN CITY COUNCIL June 8, 2009 Motion Made and221--conded for Passage. Motion Made and Seconded to Amend by Substitution Passed _ Motion Made and Seconded for Passage As Amended Passed as Amended TY CLERK __# 09-207 (TITLEJAUTHORTZTNG TAF EXECUTION OF A CONSTRUCTION CONTRACT WITH FOR REMEDIATION OF PENOBSCOT RIVER COAL TAR _ Assigned to Councilor_ �. v 9.207 EXHIBIT A (Incentive Fee Approach) Contract Price: • The total amount payable by the City will be RMT's "Actual Costs" plus the "Incentive Fee" (as defined below). • Actual Costs shall be those reasonable and necessary costs incurred by RMT or its subcontractors for the project, net of all salvage and recoveries for non - capital equipment and materials. Further, for purposes of calculating Actual Costs, only 20% of capital equipment items such as the hydraulic drives, spreaders, and grapples, and each of their associated assemblies and controls, will be charged to the project, provided RMT shall retain ownership of said equipment after project completion. • The Incentive Fee shall be 8% of the Actual Costs up to $6,863,512.00 (the "Estimated Actual Costs" or "EAC"), plus 50% of any amount by which the Actual Costs are less than the EAC, less 50% of any amount by which the Actual Costs exceed the EAC (but in no event will the Incentive Fee be less than zeroj. • The City will receive a discount on the amount otherwise owed RMT equal to 25% of the amount by which the Actual costs are less than the EAC, up to a maximum discount of the lesser of 50% of premium costs actually incurred by the city to insure against post -construction remedy failure or $250,000. RMT Responsibilities • RMT will perform the remedial construction on a cost-plus/incentive basis. • RMT's guarantees/warranties will be limited to construction of the planned design in accordance with appropriate professional standards. • Uninsured material events, force majeure events, wind and weather events, owner caused delays, and other third -parties not under contract with RMT will increase the Base Actual Costs on a 1 -to -1 basis. Insurance • The City will be responsible for securing insurance for post construction remedy failure on such terms as it desires. The City will be responsible for any SIR or deductibles. • RMT's total liability shall not exceed the limits of available insurance. RMT will make available the highest limits it currently has for project -specific operations for relevant insurance (i.e., CGL, E&O, COPs, Excess, etc) and will make its undertakings (including indemnity obligations) "insured contracts" under the relevant liability policies. To the extent the City wishes RMT to carry higher limits than it currently has under existing policies, the premium costs will be above the Fixed Price Amount. Neither party to this Agreement shall be liable to the other party for any special, indirect, punitive, or consequential damages. • Subject to the obligation to make its undertakings "insured contracts," any guaranty or warranty by RMT will be limited to terms of RMT's insurance. Major Assumptions • The project's start date and finish date are contingent upon regulatory approvals. • The Actual Cost does not include on-going maintenance, repairs, performance issues, or post -construction catastrophic failures. • For a construction start date of Sept 2, 2009, RMT will need to order certain long lead items by June 9, 2009. Any delay, including regulatory approvals, in this date will either cause the start date to be delayed or additional costs. In the event RMT incurs costs prior to the execution of a definitive agreement and the project does not proceed as contemplated by this term sheet, the City will reimburse RMT for the net costs after salvage or recoveries, provided that any equipment (capital or otherwise) shall belong to the City. • The City will perform on-going maintenance of the cap after construction. • All reasonable and necessary construction costs after the maximum established percentage overrun (i.e., that point where the Incentive Fee would be zero) will be paid solely by City. RMT will continue to bill at its reduced multiplier of 2.25 and all third -party contracted labor costs will be billed at 1.25%. All equipment, material and subcontract expenses will be billed at cost with no mark-up. • Residual, noncapital equipment and material will belong to the City. • Neither party will be bound until both the City Council and RMT's Executive Committees and RMT's parent company's Executive Risk and Review Committee approve a definitive agreement. Payment Terms • Invoices will be submitted monthly by RMT, and shall be due and payable within thirty days Other City Agreements The City will execute the necessary document(s) with RMT to provide for acquisition of lead items as described in paragraph 3 of "Major Assumptions", as described above, said document(s) to be in a final form as approved by the City Solicitor or Assistant City Solicitor. The City will execute the necessary document(s) to secure insurance for post construction remedy failure, said document(s) to be in a final form as approved by the City Solicitor or Assistant City Solicitor.