In the latest saga involving the Cannery Project, the city announced this week that the city has terminated the contract of the Northern Pacific Corporation for completing the Cannery Bike and Pedestrian Undercrossing at Covell and L.
The undercrossing and safe passage of bikes and pedestrians from Cannery under Covell was a key component of the city’s approval for Cannery. The city in a statement indicated that while “significant work has been completed on this project,” the work “is on hold at this time.”
The city writes: “The progress of this project has been much slower than planned, and the current hold is due to the inability of the contractor to perform adequately.
“The City of Davis has terminated the contract and alerted the surety (insurance company),” the statement reads. “This is a serious matter and an infrequent occurrence. We acknowledge the inconvenience and impacts to the community and appreciate residents’ patience.”
The city goes on to say: “(W)e can assure the public that by taking these actions, the City has set in motion the means to hire a new contractor through the surety and complete the project. Unfortunately, this is not likely to be resolved quickly, but the City must act as good stewards of City resources and follow this process.”
In the meantime, the city has put up protective fencing around the project to alleviate any safety concerns and Covell will remain open to four lanes of traffic and will remain that way until a contractor is hired to complete the work.
In documents obtained by the Vanguard, on May 3, 2019, the city sent Bryan Koeberer, CEO of the Northern Pacific Corporation based in Napa a letter with “Notice of Intent to Terminate for Cause.”
In that letter, the city noted: “NPC has effectively abandoned timely performance of the Project, and is approximately 85 calendar days behind schedule in completion of the work on the Project.”
The city had “previously notified NPC on several occasions that it is behind schedule.”
According to the contract signed almost exactly a year ago on May 29, 2018, by Mr. Keoberer, the work was to start on September 4, 2018 and be completed January 28, 2019. The city awarded them with the bid for a sum of $2.2 million – to be paid for from the Cannery developers.
As of May 3, “The Project is now over three months behind schedule. This delay is not only unacceptable from the City’s standpoint, but has also had a very detrimental impact to the public resulting in numerous complaints from the community.”
The city was “very concerned regarding the failure of NPC to prosecute the work in a manner that ensures timely completion and questions whether NPC has the capability to perform the balance of the work in an expeditious manner to mitigate further delay.”
The city raises the issue of “copious stop payment notices from subcontractors, including a number of critical subcontractors, employed by NPC to perform work on the Project. To date, the City is not aware of NPC resolving any of these stop payment notice claims. This is problematic because several of these subcontractors are critical path subcontractors whose work is necessary to finish the Project, but have ceased all operations and demobilized from the Project due to their unresolved claims against NPC.”
The city gave Northern Pacific until May 13 to resolve 22 issues, including a number of stop payment notices.
On May 17, the city wrote Mr. Keoberer back with a Notice of Termination for Cause. In the letter, the city indicates that, following their previous notice, “the City was contacted by NPC’s legal counsel with a proposed plan to have R.E. Maher,” a concrete subcontractor, return to work on the Project.
Under that proposal the city would have taken funds going to Northern Pacific and paid them directly to R.E. Maher.
The city writes: “The City rejects this proposal for failure to adequately address the defaults set forth in the City’s Notice.”
In the letter, the city states that the project cannot be completed “if the sole action taken by NPC is to re-mobilize R.E. Maher. Namely, the City cannot open the bike/pedestrian path to the public with only the outstanding concrete work completed.”
The city also required, at a minimum, “the electrical subcontractor and fencing subcontractor to be remobilized to provide lighting and railings on the Project.”
There were a number of other issues raised by the city that would have to be completed.
The city writes: “In order to re-mobilize each of the foregoing key subcontractors and vendors, funding to satisfy their outstanding claims would need to be obtained from a viable source. Such funding is not available via the remaining Project funds on account of the numerous stop payment notices and liquidated damages for which the City is currently withholding funds.”
The city writes: “NPC has failed to cure any of the defaults set forth in the Notice or present a realistic and cogent plan to complete the Project.”
Based on that, the city terminated the contract for cause.
They added, “The City hereby makes a claim against the payment and performance bonds issued by Surety seeking performance of the outstanding obligations under the Agreement and reimbursement of all damages arising out of NPC’s defaults.”
In a statement from City Manager Mike Webb, he told the Vanguard, “The project, which is funded by Cannery Development Agreement funds and development impact fees, will provide grade separated bicycle and pedestrian access to the Cannery neighborhood, in addition to improving ADA access along the pathway.”
He said, “The circumstance of the contractor failing to fulfill their contractual obligations to complete the job is very frustrating for everyone. While this delay is outside of the City’s control it is still unfortunate and an inconvenience to the community. “
Mr. Webb indicated: “Fortunately, these situations are exceedingly rare and the City is well protected via our contract which provides remedies (via a Surety) to ensure the job is completed and that the City is not financially harmed in the process. Our staff and legal team are working diligently to ensure completion of the project as quickly as possible.”
Mayor Brett Lee and Councilmember Lucas Frerichs each declined comment to the Vanguard.
—David M. Greenwald reporting