052703 EDA AgP
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CITY OF SHOREWOOD
ECONOMIC DEVELOPMENT AUTHORITY MEETING
TUESDAY, MAY 27,"2003
AGENDA
5755 COUNTRY CLUBltO.Uf
COUNCIL ClIAMBERS
Immediately FollowiBg J.blpblr
Counell MeetiDg
1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING
A. Roll Call
B. Review Agenda
2. APPROVAL OF MINUTES
A. EDA Minutes of April 28, 2003 (Att.- Minutes)
3. NEW BUSINESS
President Love
Garfimlicl_
Lizee
Zerby _
Turgeon _
A. Approve Payment of Claims (Att.- Payment of Claims)
4. OTHER BUSINESS
5. ADJOURN
CITY OF SHOREWOOD
ECONOMIC DEVELOPMENT AUTHORITY MEETING
MONDAY, APRIL 28, 2003
5755 COUNTRY CLUB ROAD
COUNCIL CHAMBERS
8:30 P.M.
D RIl\ FT
MINUTES
1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING
Vice President Garfunkel called the Economic Development Authority Meeting to order
at 8:47 P.M.
A.
Roll Call
Present:
Vice President Garfunkel, Commissioners Lizee, Turgeon, and Zerby;
Executive Director Dawson; General Counsel Attorney Keane; Assistant
Treasurer Burton; and Assistant Director Nielsen
Absent:
President Love
B.
Review Agenda
Without objection from the Board, Vice President Garfunkel proceeded with the Agenda
for the evening.
2. APPROVAL OF MINUTES
A. EDA Minutes of April 16, 2003
Zerby moved, Turgeon seconded, Approving the EDA Meeting Minutes of April 16,
2003, as presented. Motion passed 4/0.
3. NEW BUSINESS
A. Approve Payment of Claims
Executive Director Dawson stated that he had met with both the Fire and Police Boards.
The Staff recommends approval of this item.
Commissioner Zerby asked if these claims had been approved by the Fire and Police
Boards.
Executive Director Dawson stated that both boards had met and approved the claims.
Zerby moved, Lizee seconded, Approving the Payment of Claims. Motion passed
4/0.
4. OTHER BUSINESS
1#,1"
Woody Love, President
ECONOMIC DEVELOPMENT AUTHORITY MEETING MINUTES
April 28, 2003
Page 2 of2
Executive Director Dawson stated that Staff had no other business to report. He stated
that another meeting of the Economic Development Authority would be held in four
weeks.
5. ADJOURN
Turgeon moved, Zerby seconded, adjourning the Economic Development Authority
Meeting of April 28, 2003, at 8:49 P.M. Motion passed 4/0.
RESPECTFULLYSUBNUTTED,
SUSAN FISCHER
Recording Secretary
Craig W. Dawson, Executive Director
Shorewood Economic Development Authority
Check Approval List for 5/27/03 Meeting
Check # Vendor Name Description Check Date Invoice #
1049
1049
1050
1050
1051
1051
1051
KRAUS-ANDERSON CON W.FIRE - PV #7 5/28/2003 4904-7
KRAUS-ANDERSON CON W.POLlCE - PV #7 5/28/2003 4904-7A
TOTAL FOR KRAUS-ANDERSON CONSTR CO
STRUCTURAL DESIGN A W.FIRE - APR PROF SVC 5/28/2003 14078
STRUCTURAL DESIGN A W.POLlCE - APR PROF S 5/28/2003 14078A
TOTAL FOR STRUCTURAL DESIGN ASSOC INC
W.FIRE - APR PROF SVC 5/28/2003 7703
W.POLlCE - APR PROF S 5/28/2003 7703A
E.FIRE - APR PROF SVCS 5/28/2003 77038
TOTAL FOR TSP ONE, INC.
TSP ONE, INC.
TSP ONE, INC.
TSP ONE, INC.
TOTAL CHECKS
Amount
$108,969.00
$108,999.00
$217,968.00
$1,674.20
$1,674.20
$3,348.40
$11,285.18
$11,745.80
$8,937.11
$31,968.09
$253,284.49
#31(
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
5755 Country Club Road
Shorewood, Minnesota 55331-8926
952.474.3236 FAX: 952.474.0128
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
EDA Commissioners ^ ~
Craig W. Dawson, Executive Director ~
May 22, 2003
Discussion of Agenda Items, Various Matters
The EDA meeting for May 27 is routine. The only real item of business is the payment of invoices.
The EFD and SLMPD governing boards have recommended approval of payment of them.
Communications with Architect
There have been a number of recent change orders that have caused concern by the EFD and SLMPD
boards and staff. In response to these concerns, a letter went under my signature from the EDA to
TSP One, Inc. The purpose of this letter was to let the architect know that we were taking the
situation seriously and monitoring performance. The architect responded to these concerns. Both my
and the architect's letter were placed in your Council in-box. It is important to maintain a good
working relationship among the team members, particularly at this stage in this project. A reckoning
will occur later in the project. No action is necessary by the EDA Board at this time.
Budget Performance
Attached is the latest budget monitoring report for the public safety facilities. Please accept my
apologies for the small print; however, it's the only way to get the information on one page.
The key for analysis of the project is how much remains in the contingency category. Revisions in
the original amounts for the budget categories will happen many times during the course of the
project as better information is available. In any event, the result of the changes must fall within the
maximum budgets -- $2,060,000 for East Fire; $5,060,000 for West Fire; and $5,245,000 for Police.
The chiefs, architect, and construction manager have indicated that several tens of thousands of
dollars in savings will likely occur in some of the planned installations. They are not shown in the
budget worksheet at this time, however, as fIrm numbers are not available. It is likely that costs for
bond issuance will be less than originally estimated; however, this will not be known until the bond
counsel, Kennedy & Graven, invoice us for its services. Any "savings" is returned to the
Contingency.
Response to Questions at EFD Board: I've attached my response on behalf of the EDA to questions
raised at the April meeting of the EFD Board. I would expect further probing by representatives of
Deephaven regarding the engagement ofKraus-Anderson's services for the East Fire Station. No
action is necessary by the Board at this time.
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Section 3.2. Acquisition and Construction of Facilities; Payment of Cost.
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
5755 Country Club Road
Shorewood, Minnesota 55331-8926
952.474.3236 FAX: 952.474.0128
MEMORANDUM
TO: Excelsior Fire District Board
FROM: Craig W. Dawson, Executive Director rl>>
DATE: May 16, 2003
SUBJECT: Delivery Date of Facilities;
Contract Provisions with Kraus-Anderson Construction Company
Completion and Scope of Facilities:
At its April meeting, the Board requested information whether, in the various agreements for the
public safety projects, there was a date specified that the EDA complete and deliver the public safety
facilities.
Each of the Lease-Purchase Agreements-between the EDA and the City of Shore wood for Police,
and for Fire, as well as between the EDA and the City of Deep haven for Fire-contain the identical
language:
. . . (b) The Authority shall cause the Improvements to be completed and the
remainder of the Facilities to be acquired with all reasonable dispatch. ...
Each of these leases has a sublease to EFD or SLMPD, and thus these organizations are appointed
agents for the purpose of construction of the Improvements.
In resolutions adopted by each of the city councils in June 2002, all agreed to the scope of the
proposed fire facilities, and that the costs not exceed $5,060,000 for the West Station and $2,060,000
for the East Station. By their resolutions in August 2002, each of the five city councils approved the
agreements needed to construct the facilities.
Both the EFD Board and SLMPD Coordinating Committee have indicated their desire to terminate
their leases with the City of Excelsior as soon as reasonable possible, in order to eliminate their rent
obligations.
Additionally, the EFD joint powers agreement calls for the construction of the new or renovated
facility(s) to be underway by June 30, 2004 (Sec. 11.2.(2)).
EFD Board
May 16, 2003
Page Two
Al!reement with Kraus-Anderson Construction Company:
In June 2002, the staffs of the EDA, EFD, and SLMPD interviewed three of the five firms which
responded to a Request for Proposals (RFP) for general contractor construction management services
for the public safety facilities. In August 2002, the EDA, EFD, and SLMPD agreed with the
selection of Kraus-Anderson Construction Company to provide these services. Following their
approvals, the Agreement was forwarded to the five city councils for their approvals as well.
At the time ofthe agreement, it was possible that both West and East facilities would be under
construction at the same time, and there would be better continuity and project management by
having one firm perform on behalf of the Owner. The EFD and SLMPD Boards were also vitally
concerned that a firm be engaged that it was confident would have capabilities to differentiate
accurately the costs attributable to the Fire and Police sides of the ::!::$1 0 million in construction for
the combined projects.
The terms of a GC/CM arrangement are detailed in "AlA Document A131, Standard Form of
Agreement between Owner and Construction Manager where the Construction Manager is also THE
CONSTRUCTOR; and where the Basis of Payment is the Cost of the Work Plus a Fee and there is no
Guarantee of Cost (1994 Edition)". This is the form used in the EDA agreement with Kraus
Anderson. In general terms the service provider (e.g., Kraus-Anderson)
. assists and solicits bids from all trades and disciplines in compliance with Minnesota's
competitive public bidding law
. administers and coordinates the means and methods of construction by and among the various
trades and subcontractors
. is charged with oversight and administration of the work and its compliance with plans and
specifications
. is responsible for scheduling contract administration, and delivery of the finished product
The subcontractors are guarantors of the work performed; the GC/CM will act on behalf of the
Owner during the warranty periods.
Under the GC/CM arrangement, especially in the public bid environment required by Minnesota law,
the Owner should benefit by having the lowest responsible bid for each of the trades and disciplines
required for the project. In a general contractor approach, the price paid by the Owner would depend
upon the team of subcontractors assembled by the general contractor.
The experience of the five cities, and particularly that of Shorewood as responsible agency, with the
construction of the Southshore Senior Community Center was a recent object lesson. The
performance by the general contractor was very problematic; there were issues with quality and
warranties, cost overruns, poor construction, and late delivery of the facility. The City of Shorewood
spent inordinate amounts of time and money addressing these issues throughout and well after
construction. There was also strain among the five cities participating in the cost ofthis facility.
EFD Board
· May 16,2003
Page Three
In light of this experience, it is very important to the Shorewood EDA, the Owner whose only
available funds come from the bond proceeds for these projects, that a competent and reputable firm
be engaged on its behalf. The EFD and SLMPD governing boards have agreed.
EDA General Counsel Opinion: At the May 14 EFD work session, questions were posed (1)
whether a general contractor could bid on the East Fire Station, and (2) whether a bid could be
awarded for the "general conditions" work on the project.
(1) Consistent with the practice in the bid packages for the West facility, anyone may submit a
bid for any combination of bid divisions - including all of them - and the EDA may award
combined bids that have less cost than the respective bids on individual divisions.
(2) The contract awarded to Kraus-Anderson was done on a competitive basis. In its proposal,
and subsequently in its contract, Kraus-Anderson's prices for general conditions are public
information. Allowing other parties to bid on general conditions, with Kraus-Anderson's
prices already public, would constitute a violation of Minnesota's competitive contract law.
(3) The EDA may request that Kraus-Anderson amend its Agreement to remove general
conditions services and costs for the East Fire Station project. Kraus-Anderson is under no
obligation to do so.
The EDA general counsel advises that the EDA is in its best legal position to continue the Agreement
with Kraus-Anderson and to proceed consistent with the plans agreed to by all parties last summer.
Under the policies and procedures approved and recently amended by the EFD, SLMPD, and EDA,
"Roles. Responsibilities. and Communications
5) The EFD and SLMPD governing boards will provide direction and must authorize
work (e.g., agreements, awarding contracts, changes orders) to be accomplished by the
EDA prior to EDA action on such matters.
6) The EDA will notify the EFD and SLMPD governing boards of matters that may
adversely affect the position of the EDA as owners of the facilities."
Changing the current arrangement with Kraus-Anderson Construction Company and the Agreement
between it and the EDA would adversely affect the position ofthe EDA as owner of the EFD East
Facility.
C: Shorewood EDA Commissioners
Tim Keane, EDA General Counsel