Oversight Board Approves Takeover Agreement With Surety, Settlement Agreement For Gonzales Lawsuit
Tiffany Rider - Senior Writer
January 15, 2013 – After what has been several years since the former redevelopment agency (RDA) entered into a contract to build a fire station and emergency resource center in North Long Beach, the project is finally moving ahead with an expected completion date of August 31 or sooner.
Several bumps in the road – including a declaration of default by the city on the contracted builder, Gonzales Construction, followed by a claim and a lawsuit filed by Gonzales – are being smoothed as both the RDA Successor Agency and its oversight board approved both a settlement agreement with Great American Insurance Company (the city’s surety on the project) and/or Gonzales Construction, as well as a takeover agreement with the surety to complete Fire Station 12 and the center as originally designed. The agreements are now headed to the state finance department for final approval.
“We are looking forward to seeing the building start moving forward toward its new completion date under the surety,” Rob Zur Schmeide, deputy director of Long Beach Development Services, told the Business Journal. Zur Schmeide, a former RDA employee, has been involved with the mitigation efforts on this issue.
Fire Station 12 and the center were originally slated for completion by fall 2011 under a typical construction contract, he said. By November, the city declared Gonzales in default as the company was “way behind schedule.” Gonzales reacted to the default declaration with a claim stating city actions had caused the delay and damages. The city denied the claim in a written response dated January 10, 2012.
“Based on our investigation of your claim, we have determined that neither the City nor any of its employees are liable to you for any alleged damages,” the letter reads. “Your claim was rejected on that basis, and no further action will be taken on this matter.”
The city, surety and construction company worked together over several months to attempt to reach a settlement to get the project done, Zur Schmeide said. Following the baseline laid out by its claim, Gonzales Construction filed suit against the successor agency (the City of Long Beach) in June 2012 alleging “breach of contract,” according to staff reports.
Mediation continued through the fall until the city sent a letter to Gonzales in October declaring the construction company in default of the contract terms. The city had discovered Gonzales’ contractor license had been suspended by the state on an unrelated matter, Zur Schmeide said. “A contractor license is a basic requirement,” he said. “When that happened, that’s when we said we’re done.”
Since then the city has entered into an interim takeover agreement with the surety, and the surety has found another contractor – Toby Hayward of Hayward Construction based in Monrovia. Gonzales is off the job and off the site, Zur Schmeide said.
According to Jane Netherton, chair of the oversight board, the litigation involving Fire Station 12 was the only unresolved lawsuit at the time the RDA was dissolved. If for some reason the state finance department elects to not approve the agreements, the city may ask to provide further information.
“We have asked them for reconsideration and they so far have tended to do that,” Zur Schmeide told the oversight board at its January 8 meeting. Ultimately if the department refuses, the city would pursue litigation.
In the interim, the Long Beach Fire Department Chief Mike DuRee is pleased with the work that has been done to get the project going again.
“We are as pleased as we can be, given the circumstances, that we are going to be moving forward, and I can’t say enough about the good work that development services has done to keep the ball rolling,” DuRee said. “The design of this station and this entire facility, when it’s completed, will be the nicest fire facility in the City of Long Beach. And it will be the most capable facility that we have.”