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Home My WebLink AboutM-82-0103F-1 G To Howard V. G Nial, a ag r , o bls1A......_— FROM Project Director Conference Center r.iC;Q.aNr,Ulm OA.E February 2, 1982 ri:.E 5 tie 2F cr Convention Center Change Orders for the Hotel At the meeting on January 27 to resolve the differences between the City and the Hotel Developer regarding the Developer's obligation to pay for changes made in the Convention Center plans for hotel improvements, a report was requested on status of the change orders disputed between the City and the Developer. In order to put the disputed change order issue into perspective, it is first necessary to review the status of the construction contract and the contingency allowances within the contract. CONSTRUCTION CONTRACT FUNDING After the $60 million Revenue Bond sale in August 1980, the City had slightly over $51 million available to complete the project. About $46 million in construction contracts had been awarded, including $31.1 million for the Convention Center building and $15 million for the Parking Garage. At that time there were two contracts for the construc- tion of the Convention Center - a $4.4 million structural steel contract with Florida Steel Corp. and $26.7 million general construction contract with Frank J. Rooney, Inc. In order to have all construction under one contractor, there was a provision to assign the structural steel contract to the general contractor. Shortly after the Revenue Bond sale, two (2) change orders were executed to make the structural steel contract assignment and to take care of inflationary cost increases and structural steel changes. These change orders added $2.4 million to the construction contract and increased the contingency allowances for a building addition. When released for complete construction after the bond sale, Rooney's new contract amount was $33.5 million including-$1.3 million in contingency allowances. The original plans were not fully complete for construction, but were issued as bid plans to establish a construction price for the Revenue Bond sale. As Rooney began work on the complete building, the Architect issued revised plans (dated July 180) for construction. The changes were more extensive than anticipated and the contractor subsequently requested a $2.7 million change order to construct the project in accordance with the revised plans. The cost of the changes exceeded t, existing contract contingency allowances. .000/- 82-102 82-10R (S 2 Howard V. Gary February 2, 1982 Page 2 At their meeting of March 17, 1981, the City Commission approved this change order and provided an additional $1.0 million for anticipated changes in the project. 'This action authorized $3.7 million for construction changes which ultimately increased Rooney's contract to $37.2 million including $5.0 million in contingency allowances. Since the original bids were awarded, the construction cost of the Convention Center has increased $6.1 million. The Trust Indenture for the Revenue Bonds provides for the interest earned on the bond proceeds to be deposited into the Construction account. By Ordinance No. 9330 (Oct 10 '81), the City Commission authorized $400,000 in additional interest to be used for the project and a change order is pending to increase the contingency by this amount. STATUS OF CHANGE ORDER EXPENDITURES To date, the City has approved change orders totaling over $4.0 million from the contingency allowances provided in the construction contract. The remaining existing funds to pay for pending changes are as follows: Remaining Contingency Allowances $ 967,000 Pending Contingency Increase 400,000 Special Allowances for Specific Work 250,000 $1,617,000 As of this date, Rooney has submitted $3.3 million in pending change order requests of which $2.1 million are for changes made in the plans for hotel improvements. Herein lies one of the basic dilemmas regarding pending change orders. The amount requested for changes, particularly for the Hotel, exceed the existing funds in the construction contract. Although the amount will be reduced after a thorough review, the problem is worsened by the fact that Rooney has indicated there are over a hundred change order requests which they have not submitted and for which a value can not be estimated at this time. The City is aware a substantial amount of these pending requests are also for hotel improvements. The City's attempts to negotiate a satisfactory resolution of the problem have been unsuccessful. At this point, it should be noted in order not to delay the project, the City has already approved $300,000 in change orders and authorized the contractor to proceed on about $500,000 in work for hotel improvements. 82-102 82-103 �\ 4 Howard V. Gary February 2, 1982 Page 3 CHANGE ORDERS FOR HOTEL IMPROVEMENTS The City's construction plans essentially provide unfinished shell spaces for the areas leased to the Hotel. After the sale of Revenue Bonds, the Hotel Developer engaged special consultants to design the restaurants, kitchens, interiors and pool facilities for the hotel spaces. Then in his role as construction manager, the Developer directed the Architect to interface the hotel consultant's designs into the Convention Center plans. This process has continued well over a year and has resulted in substantial changes in the Convention Center project involving both money and time. It is the City's position that it is the Developers obligation to pay the cost of changes made in the Convention Center plans for hotel improvements beyond the provisions in the original plans. As indicated above, the change orders disputed between the City and the Developer include approved and pending change orders. The change order work which the City claims is the Developers obligation to pay is as follows: Approved Change Orders $ .3 million Pending Change Orders 2.1 million Total Hotel Change Orders to Date $2.4 million As of this date, the Developer has agreed to pay only one change order in the amount of $2,194. However, his check was conditional on the City approving over $347,000 in plumbing changes plus other pending changes. The City is also reserving the right to have the Developer pay his share of $240,000 in approved change orders which may have resulted from the impact of structural changes in the hotel tower. The magnitude of the change order work which the City claims is the Developer's obligation to pay is estimated to be between $2.5 and $3.0 million after all change orders for the hotel are resolved. AIP/mim Attachment: Table I cc: Vincent E. Grimm, Asst City Mgr George Knox, City Attorney Terry Percy, Deputy City Attorney Darrey Davis, Special Counsel 82-1U:4 8 2 - 1 0 3 I TABLE i February 2, 1982 CONVENTION CENTER CHANGE ORDERS ADJUSTING CONSTRUCTION CONTRACT AMOUNT ** Original Construction Contract (10/24/79) Change Order No. 1 (7/l/80) R- 80-435 (6/19/80)* $1,001,359 Inflation Cost Increase 300,000 Added Contingency Change Order No. 2 (8/18/80) 'r r0-434 (6/19/80)* 0,5,348,698 Structural Steel Assignment 200,000 Added Fee for Assignment Change Order No. 27 (3/17/81) Rt-81-202 (3/7/81)* $2,339,312 Steel & Const. Changes (5) 360,688 Added for Fee ge Order No. 52 (7/28/81) 12202 (3/17/81)* $500,000 Added Contingency for Changes Contingency Allvaances =""4 Contract Stun Included in Contract Sum *'+1 Icq $26,700,000 $850,000 (1) Not including separate $4,385,�%o Structural Steel contract -00 1,301,359 300,000 $28,001,359 $1,150,000 $ 5,548,698 (3) $ 150,000 (1) (2) Contingency already included in structural steel contract (3) Original structural steel contract increased from $4,385,991 to $5,348,698 for changes and i.nflat $33,550,057 (4) $1,300,000 (4) Contract sum follcrwing Bond Sale (8/7/80) $ 2,700,000 -0- (5) $46, 723 Additional teas paid from existing contingency $36,250,057 500,000 $36,750,057 Change Order No. 73 (7/27/81) 500,000 R-81-202 (3/17/81)* $500,000 Added Contingency for Changes $37,250,057 Pending Change Order No. 154 400,000 Ord. No. 9330 (10/7/81)* $400,000 Added Contingency for Changes $37, 650, 057 *Resolution or Ordinance number f $1,300,000 500,000 1,800,000 500,000 (6) Less $1, 332, 847 in Approved Change Orders to date leaves $967,15? remaining contingency $2,300,000 (6) Additional Note: By Ord. No. 9353 (11/19/81) City Cann. 400,000 authorized $700,000 to L-e deposited into Convention Center Const. Account for future Parking Garage and $2,700,000 Convention Center changes. _**Other change orders paid for changes from the mntinaPnc-v all.owanceIs in tfiP ront-rart