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11-01-79SpMtg NOVEMBEK 1, 1979 A special meeting of the City Council of the City of Delray Beach, Florida, was held in the Council Chambers at 12:00 noon, Thursday, November 1, 1979, with Mayor Leon M. Weekes, presiding and City Manager J. Eldon Mariott, City Attorney Roger Saberson, and Council members Charlotte G. Durante, James H. Scheifley, and Willard V. Young, present. Council member Malcolm T. Bird was absent. Mayor Weekes announced that the meeting has been called for the purpose of (1) opening bids received by the City for the $4,000,000.00 Water and Sewer Revenue Bonds, Series 1979 and the sale of same; (2) discussing settlement of ongoing litigation - Bumby and Stimpson vs City of Delray Beach; and (3) considering the appointment of Mr. Herbert A. Thiele as Assistant City Attorney. 1. ~4r. Stan Ross with the firm of Dean Witter Reynolds, Inc., the City's financial consultants, reported that they have one bid. The bid was opened and Mr. Thomas E. Weber, Finance Director, read the bid as follows: ~illiam R. Hough & Co. and John Nuveen & Co. & Associates. AMOU~T - $3,960,000.00 NET Interest Cost - 7.5621 Their bid deposit in the amount of $80,000.00 was enclosed. Mr. Ross stated that it may or may not be a legal bid. That will have to be checked out with the attorneys because the net interest cost is above the 7½% rate allowed by the State. The City Attorney and the financial consultants left the Chambers at this time so that the City Attorney could call the City's bond lawyers in New York to discuss the bid. Mayor Weekes declared a recess at 12:05 P.M. The meeting reconvened at 12:25 P.M. The City Attorney and financial consultants returned to the Chambers at this time. The City Attorney reported that they have talked to the bond lawyers in New York and they have advised that the bid exceeds the legal rate of interest and that Council should make a motion rejecting the bid because it exceeds the rate of interest and is not in conformance with the notice of sale. Mr. Scheifley moved that Council reject the bid, seconded by Mr. Young. Said motion passed unanimously. The City Attorney reported further that he has asked the bond lawyers and Mr. Ross has asked representatives of Dean Witter Reynolds to get in contact with the Governor's office to see if they can be on the November 6th agenda for the Governor and the Cabinet to see if they can obtain a waiver of the interest rate limitation. Mr. Ross stated that regardless as to whether or not they get the approval of the Governor's office, they should readvertise. He recommends that they get the rate raised if they can and~in the meantime prepare to readvertise the bonds. If they can get on the November 6th agenda as an emergency, they would have to work this out with the bond attorneys as to whether they would have to wait until November 6th to readvertise. The City Manager stated that potential bidders will be aware that the City is seeking this relief through the Governor's office and he asked ~r. Ross if he thinks something special needs to be done to let them know that the City is going ahead in good faith in their adver- tising for new bids. 328 Mr. Scheifley asked the City Attorney what action is re- quired by Council if they decide to take the advice and go ahead and readvertise. The City Attorney replied that the only action needed now is for Council to indicate to his office that it wants him to proceed and have the matter put on the agenda for the Governor and Cabinet's meeting if possible and then any other action that's necessary, they will bring up under formal proceedings. Mayor Weekes asked Mr. Ross if the City could negotiate for the sale of bonds at 7½% now? Mr. Ross replied that, in his opinion, legally the City could do this; the City Attorney confirmed this. Mr. Ross further stated that once the City puts this up for bids, it should go through some kind of a selection procedure as far as determining who to negotiate with. As far as he's concerned a decision to negotiate mau~ not be the best thing to do. Mr. Ross left the Council Chambers at this time. Mayor Weekes announced that they will take item 3. now and go back to item 1. when Mr. Ross returns to the Council Chambers. 3. The City Attorney reported that he is asking that Council give consideration to appointing Mr. Thiele as Assistant City Attorney. He has been working in the City Attorney's office for nearly a year, he has been doing excellent work and the City Attorney would like for Council to confer the status on him of Assistant City Attorney. Upon question by Mr. Sheifley, the City Attorney replied that the reason it originally came up was that he made a request to have Mr. Thiele attend a seminar. At that time, the City Manager raised the question as to whether or not it would 'be appropriate to have the City pay his expenses since Mr. Thiele was not of official status with the City. The City Attorney reported further that the only difference financially would be that when Mr. Thiele becomes Assistant City Attorney, he would become eligible for City paid health insurance which amounts to approximately $31.00 a month. Mr. Young moved that Mr. Herbert A. Theile be appointed as Assistant City Attorney, seconded by Mr. Scheifley. Said motion passed unanimously. 1. Mr. Ross returned to the Council Chambers. He reported that he has just spoken with Mr. Hough who asked him to convey to Council that his firm would be willing to negotiate for the purchase of the bonds subject to the approval of the higher rate of interest by the State Board of Administration. Mr. Ross stated that they have passed the deadline for material to go to the Cabinet. What they are going to try to do this afternoon is to go to them and ask for an emergency since they have the information in Tallahassee which they could take over to them. So, he feels that there's some fair prospect of getting it on the agenda. The City Attorney advised that Council make a motion to advertise for additional bids and to authorize the City and Mr. Ross on the City's behalf to ask that this matter be brought before the Governor and the Cabinet on November 6th or as soon thereafter as possible to increase the rate of interest that the City can pay on the bonds. Mr. Scheifley moved that the City and the City Attorney and the City's bond counsel be authorized to consult with the Governor's office concerning the rate of interest on the proposed bond issue and have discussions with them and also to authorize the Administration to readvertise for bids for the proposed bond issue and the City is specifically seeking from the Governor and Cabinet a variance on the interest rate, seconded by Mrs. Durante. Said motion passed unanimously. - 2 - 11/1/79 2. The City Attorney introduced to Council Mr. Sid Stubbs. Mr. Stubbs is with the firm of Jones, Paine and Foster in West Palm Beach -and is acting as the City's defense counsel in the case of Bumby and Stimpson vs City of Delray Beach. The City Attorney passed out to Council copies of a letter from Mr. Stubbs with an attached copy of a proposed stipulation between the City and Bumby and Stimpson. The City Attorney further reported that this case goes back to the time when the City authorized the firm of Bumby and Stimpson to do a sewer project in the Tropic Isle area which was in 1977. The project took approximately one year and during the course of the pro- ject, there was some filling that occurred in the canals in the vicinity of the project area. As a result of that, the City had held back some funds from Bumby and Stimpson asking them to correct the work. They subsequently instituted litigation against the City seeking a disburse- ment of those funds alleging that they were not legally obligated to remove material from the canal. In a subsequent stipulation, Bumby & Stimpson did admit liability for a portion of what is the South Grande Canal in Tropic Isle. There have been a lot of negotiations that have taken place in the case and it's been going on since November of 1978. It is now set for trial in December. Taking into account the number of cubic yards that has been estimated by the City's engineers which need to be removed from the South Grande Canal and the Granada Canal, the cost of doing that removal would be in the vicinity of approximately $25,000.00. The amount for which they have admitted liability is approximately $10,000.00 leaving a difference of $15,000.00. It has been proposed that the disputed amount be split; $7,500.00 City; $7,500.00 Bumby and Stimpson. The City would have the option of re- ceiving the $17,500.00 and proceeding with dredging to that extent and going no further or proceeding along with the additional $7,500.00 and doing a total of approximately $25,000.00 in dredging in that area. Under the stipulation, there is also an option to either have the City contract directly with the dredging company to perform the work or have Bumby and Stimpson contract with the dredging company and provide cer- tain p~ovisions in their contract that would provide for insurance and other matters concerning payment of the City's $7,500.00 and also the payment of the $17,500.00. He thinks the preferable option is to have the City contract directly with the dredging company. It would give the City better control over the contractor and would allow the City to be a little more flexible when the project is being performed. There is also a question concerning the engineering fees. This is one of the items of settlement in which he requests that Council make a counter-proposal. Bumby and Stimpson has agreed that they are liable for 2/5 of the amount of the work that remains to be done. The estimated engineering fees for supervising the dredging work is approximately $3,000.00. He thinks that Bumby and Stimpson should pay 100 percent of the 2/5 of those engineering fees and that the remaining 3/5 be split fifty/fifty which is the same thing that they are doing with the remaining disputed amount of the dredging work that has to be done. With that amendment, he is asking Council to authorize himself and Mr. Stubbs to conclude a settle- ment of this case with Bumby and Stimpson, substantially in the form of the stipulation. In response to a question from the City Manager, the City Attorney stated that according to the profiles that have been submitted to the City by Russell & Axon, in the event that the City were to under- take the dredging of the entire area, yes, the City would be paying an additional $7,500.00 based on the estimate that they've received from a company that does dredging work. There would be an additional cost in terms of engineering fees of approximately $3,000.00. With his amend- ment to this stipulation, Bumby and Stimpson would pay $2,100.00 of that and the City would pay $900.00. The City Manager stated that if the dredging expense is caused as a result of the contract, they could pursue using Public Works Grant funds if there is uncommitted money left in that fund. That is something that will have to be checked into. In response to questions from council, the City Attorney stated that what they are trying to resolve under the stipulation is the extent of the contractor's obligation as it relates to the performance of this specific contract and the extent to which the contractor will be obligated to remove fill material from the canals in the project area. - 3 - 11/1/79 Whatever obligation the City has in terms of the maintenance of the canals will not be increased or decreased because of the stipulation. This is a resolution of the contractor's liability. Mr. Stubbs agreed with everything the City Attorney said and added that it should be made clear that when they talk in terms of Bumby and Stimpson being responsible for $10,000.00, that is not precisely correct because their actual liability is not expressed in terms of dollars. They entered into a stipulation whereby they agreed that they would contract to do a certain amount of work and he is assuming that that will relate to $10,000.00 but it might be more or it might be less. He thinks that this is a good settlement. Mayor Weekes stated that he agrees with the recommendation of Mr. Stubbs and the City Attorney that the City's best interest is served by agreeing to the stipulation. To continue to litigate the casc~ is going to cost more in legal fees. So, if they continue litigation, they not only run the possibility of losing the case in court, they also have the certainty of incurring more legal expenses. Mrs. Durante moved to accept the proposed stipulation as presented by the City Attorney with the amendment as explained by the City Attorney in regard to the engineering fees, seconded by Mr. Young. Said motion passed unanimously. 4. The City Attorney reported that he would like to speak in regard to the contract with Intercounty Construction on the water treat- ment plant. It is not something that requires Council's formal action, but Intercounty Contruction has requested that additional language be added to the amendment, which Council previously approved, that would indicate that as well as the City's liability being limited to $2,000,000.00 that the contractor would also have no obligation to continue performing work after the $2,000,000.00; this obviously was within the intent of the amendment. Mayor Weekes declared the meeting adjourned at 1:00 P.M. ATTEST: / City Clerk MAYOR The undersigned is the City Clerk of the City of Delray Beach and that the information provided herein is the minutes of the meeting of said City Council of November 1, 1979, which minutes were formally approved and adopted by the City Council on~. /~/~?~ City Clerk NOTE TO READER: If the minutes that you have received are not completed as indicated above, then this means that these are not the official minutes of City Council. They will become the official minutes only after they have been reviewed and approved which may involve some amendments, additions, or deletions to the minutes as set forth above. - 4 - 11/1/79