Mitchell City Council debates Puetz’s roleOfficials wonder if company should serve dual roles of architect and construction manager.
By: Tom Lawrence, The Daily Republic
Allowing a Mitchell firm to serve in dual roles for upcoming city projects sparked a lengthy debate during Monday night’s City Council meeting at City Hall, but no decision was made.
The council has been unsure if it should award contracts for architect services, as well as construction manager at-risk, to Puetz Corp. Puetz, which has done several projects for the city, would be responsible for cost overruns and other construction issues as manager for the upcoming addition of a second sheet of ice for the Mitchell Activities Center.
It’s not a new question.
The city of Sioux Falls sought an opinion on the matter from the South Dakota Attorney General’s Office in 2009, and Mitchell did as well in 2011.
City staff members have spoken with other lawyers, and people with expertise in the area. City Attorney Carl Koch said he has spent several hours studying it.
A clear answer is difficult to obtain, the city officials said Monday night.
“Reasonable people can come to different conclusions, and this is an example of that,” Mayor Ken Tracy said. “It is certainly confusing.”
Councilman Mel Olson said the way he reads the 2011 letter from Attorney General Marty Jackley, a construction manager cannot play the second role as architect. The letter states that it “may not perform any construction work,” Olson said.
“That would seem to me to be the final statement,” he said. “It just cannot be done.”
Councilman Phil Carlson, who is a lawyer, said he feels Olson has the correct interpretation.
Councilman Steve Rice said he reads it exactly the opposite way.
Public Works Director Tim McGannon said he studied state law on the matter. McGannon said his goal was to try to simplify the issue and explain the difference between a construction manager at-risk and a construction agent.
He said he believes a construction agent works for the city, strives to make things work in a fiscally responsible way, and is answerable to the owner, who assumes the risk.
This kind of firm would submit bills to the owner, who would then pay all companies that did work.
A construction manager at-risk does just that: assumes risk for cost overruns and other issues. An owner would make one payment to that company, and it would then disburse the funds to involved parties.
The question is, under state law, can a firm serve as an architect and a CM at-risk?
Koch said he has studied volumes of legal precedent and cases to try to understand the issue. He also met with Mitchell Superintendent Joe Graves for his perspective on it based on recent school building projects.
“The school let all the contracts to the trade sub-contractors through the school, and did not assign them to a contract manager,” Koch said.
Koch said if the city allows Puetz to serve in both capacities, a legal challenge is virtually assured, and the city would find its projects held up for “months or years.”
Mark Puetz, speaking for his firm, said he was glad to have the discussion in an open setting. There were numerous people who own construction firms, or work in the construction business in the audience, but none of them spoke, and all departed after the council discussion.
Puetz said his company does not do any of the physical work at its construction manager projects. Instead, Puetz would design the project and oversee the work as CM at-risk. It would not serve as the general contractor, he said.
Puetz said if someone wanted to mount a legal challenge, they could find a way to do it one way or another. He said he has consulted with several other lawyers and government officials around the state as Puetz Corp. has done 23 similar projects.
“It is not our desire to do anything improper,” Puetz said.
Mitchell lawyer Tim Bottum, representing Puetz Corp., said he feels the attorney general’s opinions make it clear that serving as architect and manager are perfecting acceptable.
The Legislature has spelled out the difference between a contractor and a manager, Bottum said.
Olson asked if Puetz serves as both architect and construction manager, who is the general contractor?
“There is no general contractor,” Bottum said. “It’s a different statutory scheme.”
Wayne Puetz, of Puetz Corp., said the first AG’s opinion was issued in September 2009, but when the Mitchell School District asked for a review of it later that year, the attorney general then said there was a difference between a construction manager who did not do any physical work, and a general contractor who did some.
Therefore, he said, it would seem Puetz could serve as both architect and construction manager.
In the end, after almost an hour of discussion, no decision was reached. Tracy finally called a halt to the debate.
“The two letters we have are opinion, they are not law,” he said. “I think this has been a very worthwhile discussion, and I’m glad we had it.”
Union contracts finalized
The council adopted Resolution 3059, the ratification of union contracts with the three city unions that cover Police Division employees, Fire Division employees, and general city employees.
All three contracts are for one year, and include a 1.75 percent salary increase plus 25 cents more per hour for the more than 100 employees who are in the unions.
Shoddy sidewalks reported
A Mitchell company hired by the city for sidewalk installation did some poor work and will not be paid for some of its efforts, according to a city official.
Public Works Deputy Director Terry Johnson said Big O Concrete left work incomplete, and some jobs were poorly done. Johnson said he had to constantly badger the firm to try to get work done, and in some cases it was done hastily and shoddily.
Another contractor and city staff, including Johnson himself, completed or redid some of the work.
In addition, some city residents had complaints with how the firm did its work, Johnson told the committee. Payment was withheld for the work that was not done properly, he said.
Johnson said he recommends not using Big O Concrete in the future, even though Big O may submit the low bid on projects.
The Sidewalk Committee met before the council meeting to discuss 2012 sidewalk projects, and consider hazardous sidewalk and 2013 sidewalk projects.
Johnson also asked the committee to “pull back” on some projects, including installation on Norway Avenue, to focus on completing sidewalks in other areas of the city, and repairing some damaged sidewalk. The committee agreed.
Johnson said several sidewalk ramps in the city have been upgraded to meet Americans with Disabilities Act (ADA) requirements. More work remains to be done to ensure sidewalks meet those guidelines.
The council also:
• Discussed the proposed new Mitchell Historic Commercial District, which would include City Hall.
The South Dakota Historical Society Board of Directors is recommending adding the city building to the National Register of Historic Places. Last month, the council voted 6-1 to ask the state board not to do so.
Tracy said while it appears the National Park Service, which oversees the register, almost always agrees with state boards, he feels the city submitted an excellent letter explaining its objections. The building, opened as an armory in 1937, has repeatedly been modified. It has served as City Hall since 1960.
• Approved an independent contractor agreement for professional services for a medical director with Dr. Martin J. Christensen.
Christensen will serve as a parttime adviser on emergency medical services, and develop and review standards. He will replace Dr. Robert Snortum, who resigned from the post after more than a decade.
Christensen, an Avera Queen of Peace Emergency Room physician, has held the post before.
He will be paid $500 per month. It’s a one-year contract that will automatically renew if both sides agree to do that.
• Held a hearing on and approved the petition of R & S Rental, CJM Consulting LLC, Dennis Hartman, Diane Hartman, David Harris and Karie Harris for a vacation of a portion of a street located on East Hanson Avenue.
The council also adopted Resolution 3055, the vacation of a public right-of-way, to close, or vacate, a section of the street.
• Adopted Resolution 3056, an addendum to Tax Increment Financing District 16 project plan.
• Adopted Resolution 3057, the 2013 salary resolution for city employees.
• Authorized Wilson to create capital project funds for 534 Starlight Estates, Tax Increment Financing District 18, a housing project in southern Mitchell.
• Adopted Resolution 3058, interim financing of $15,000 for the Starlite Estates project, TIF District 18. The money will come from the General Fund, and will be repaid when increment tax dollars come in.
• Held the second reading of and adopted Ordinance 2420, supplemental appropriations for numerous city departments and divisions.
• Held the first reading of Ordinance 2421, amending City Code 8-1-1, adding minimum design standards for city streets.
All streets that are reconstructed must be 36 feet or wider. New streets must be 40 feet or wider
Residential streets must have 8 inches of base and 3 inches of asphalt; commercial streets must have 12 inches of base and 4 inches of asphalt.
• Authorized Gary Larson, CPA, to conduct the audit for the 2012 fiscal year. He will be paid $23,000.
• Approved raffle requests from Mitchell Community Scholarship Fund, with the drawing to be held Feb. 25; James River Gobblers-NWTF, with the drawing to be held Feb. 2; and James River Valley Chapter-Rocky Mountain Elk Foundation, with the drawing to be held March 22.
• Observed a moment of silence at the start of the meeting for the “terrible tragedy” in Connecticut, Tracy said.
• Heard from Senior Services Director Jessica Pickett, who said a story in Saturday’s Daily Republic sparked support for the senior meals program.
The story reported on a shortfall of money for the giving tree, and since that time, more than $2,000 has been donated, bringing the total to $3,958. The goal is to collect $4,680 to ensure all people who need punch tickets for lunches will receive them.