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Water tank project moves forward: City, contractor agree to 1-year stay of lawsuit

PRESCOTT - A contract amendment that will allow work to resume at the Skyline Drive location of a new city water tank got the OK of the Prescott City Council Tuesday.

With the approval, Prescott Engineering Services Director Mark Nietupski said work could get under way this week on the project, which has been delayed for more than a year over a dispute and resulting lawsuit by the contractor, CLM Earthmovers.

In late January, the City Council discussed the matter in closed-door executive session. Although officials would not comment on the lawsuit at the time, city records showed that a claim from CLM sought $960,000 in damages over a disagreement on excavation of "unsuitable materials" at the site of the proposed 1.25-million-gallon water tank near Thumb Butte (the city's Zone 27).

Because of the dispute, work stopped at the site in October 2012 - just weeks after the city's September 2012 approval of a $5.6 million contract with CLM. (Other elements of the contract, which included new water mains along West Gurley Street, Thumb Butte, Skyline Drive, and Country Club Circle, have been completed, Nietupski said).

The proposed contract amendment was not on the council's original agenda, which was posted online last week. City Clerk Dana DeLong said the city posted the amended agenda at about 11:30 a.m. Monday.

A city memo noted that the amendment was proposed at the request of CLM's attorney - providing that the city would assure the company that it would not be liable for the use of a temporary easement for the installation of soil stabilization pins for the excavation work necessary to build the water tank.

"In order to provide the requested assurance... the city will agree to indemnify CLM from claims arising out of CLM's reliance on the assurances by the city that the easement is adequate for the purposes of placement of stabilization soil pins under the easement area," the city memo stated.

As a part of the amendment, the two sides agree to file a stay of the lawsuit for one year.

"This will allow CLM and the city to complete the project without the lawsuit being an immediate issue," the city memo stated.

A number of questions arose among the council members about how the lawsuit and the stay would affect the project.

"This just sets the lawsuit aside," City Attorney Jon Paladini said. "At the end of the project, then the parties go back to litigating and resolving the differences that are in dispute at the time."

Mayor Marlin Kuykendall asked whether the city would face liability over a possible negotiated add-on to the contract amount, which could move the total cost above what the second-lowest bidder proposed.

Paladini responded: "Any or all construction projects have a potential for change-orders." If the change-order is legitimate and increases the cost, he said, "then, presumably all of the other bidders would have had to submit to that change-order as well."

The council voted 6-1 to ap-prove the amendment, with Councilman Charlie Arnold voting in opposition.


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