The Floyd County Board of Supervisors made a move Friday morning to settle the lawsuit against the county architect law enforcement center and courthouse update projects that ended up costing a lot more and taking a lot longer than originally planned.
Prochaska’s Supervisory Board and Partnersof Omaha, Nebraskahad filed claims against each other from July 2021, regarding the cost of Prochaska’s services, cost overruns, change orders and other items. One of the main points in dispute is about an additional half a million dollars that Prochaska says the county owes him for his services.
Prochaska’s architectural design fee, per its contract with the county, is 10% of construction costs. Because the project ended up costing around $5 million more than originally expected, Prochaska says she’s owed extra $500,000.
The county argues that the project is costing significantly more than originally projected due to Prochaska’s “professional negligence”, including numerous change orders during the project to correct what the county says were design errors. design.
The county requested that a jury not only decide the $500,000 does not need to be paid, but that Prochaska should be held responsible for some of the additional construction costs.
Prochaska has filed counterclaims, including asking that the county be ordered to pay the additional costs $500,000 that the company says it is due.
The action has been set for the start of a jury trial January 17 in United States District Court in Cedar Rapidsbut Friday the Board of Supervisors approved a motion accepting a proposed settlement that had been negotiated by a retired Federal Court judge over the past month.
Mediated deal includes paying county Prochaska $162,500 plus any insurance proceeds from Prochaska’s liability insurer, estimated at $50,000 but potentially more.
If agreed to and signed by both parties, the waiver would not prevent the County from acting in the future for any claims regarding Prochaska’s work discovered after the date of the mediated agreement, and Prochaska would still have the right to try to collect more than $8,700 in administrative costs.
As of Friday afternoon, Prochaska had not told the county whether it would accept the mediation offer.
the Board of Supervisors passed the motion to agree to mediate at a special meeting on Friday morning after about an hour of closed-door discussion with their attorney on the matter, Peter Rogermanaging partner of Simmons Perrine Moyer Bergman PLC law firm at Cedar Rapidsby teleconference.
It was one of the last official acts of the three outgoing directors, whose terms officially ended at the end of the day. January 1st.
When asked if they felt any urgency to resolve the issue before three new supervisors took over next week, the supervisor Linda Tjaden says it went into their decision.
“We’ve been involved in this project since day one,” she said. “Setting up a new supervisory board would have taken longer, because all the new board would have to be aware of it.”
Originally filed by the County of Iowa district court nearly a year and a half ago, the Board of Supervisors claimed that Prochaska broke its contract with the county because it failed to design a project that met the requirement not to exceed the construction cost of $10,898,700.
“In addition, there have been more than 30 change orders to date due to items Defendant omitted from the original project plans and specifications used to bid on the project,” the county alleged. There have been other change orders since the initial complaint was filed.
Since Prochaska is an out-of-state company, the architectural firm managed to get the business transferred to United States District Court in the North district to Iowa.
The initial construction cost estimate that Prochaska provided in early 2018, which was used to determine the amount of general bonds that would need to be sold to fund construction and other costs, was approximately $1.09 million.
When Prochaska completed the actual design of the project, its estimated cost rose to $13.98 million. The company the county hired as the construction manager, The Samuels Groupin 2019 the construction costs estimated at $12.49 millionbased on Prochaska’s design.
Prochaska then reviewed the design to make changes to reduce costs, including a much smaller atrium between the courthouse and the new law enforcement center and other changes, but the cost was still higher than the original budget and more than could be paid for with the $13.5 million bond income that Floyd County voters overwhelmingly approved the project.
The project was the subject of a call for tenders in September 2019 with the modifications made by Prochaska, and the total price of the lowest bidders’ offer reverted to $16.42 millionor $5.5 million more than the original cost estimate.
The county made some additional changes to the project by eliminating or delaying some elements, Samuels Group made engineering changes to the value with contractors to reduce the price, and the county identified additional funding sources for the project in addition to bond revenue, including the use of general fund revenue which would eventually increase county property taxes.
The final construction cost estimate was just over $16 million and the county proceeded to award the bids. Construction has officially begun with groundbreaking November 13, 2019.
In August of this year, Prochaska filed a motion for summary judgment in the lawsuit and counterclaims, asking United States District Court chief justice williams to order the county to pay the additional architectural fees and to dismiss the malpractice lawsuits against the company, arguing that the county made the decision to proceed with the projects despite the known higher cost.
The county then filed its own motion for summary judgment, asking the court to declare that the county does not owe Prochaska the additional costs.
At November 30, williams filed an order denying the county’s motion for summary judgment and denying part of Prochaska’s motion for summary judgment, but granting part of the motion.
The county auditor said the county had been seeking mediation since last summer, but Prochaska only agreed to mediation after the judge ruled on the summary judgment motions. November 30.
As part of its decision, williams decided that the “not to exceed” budget figure of $10,898,700 “was adjustable and not a guaranteed maximum price.”
The county had argued that even if it had agreed to proceed with the projects at the higher price, Prochaska’s fees should still be bound by the original cost estimate. williams rejected this argument.
But williams also noted that Prochaska agreed that the county never gave written approval to proceed with the higher costs, as required by the contract.
“With this record, a reasonable jury could conclude that the plaintiff never provided written approval to increase the construction budget figure beyond $10,898,700“, williams wrote. “And in fact, the record indicates that (the county) moved forward by obtaining additional funds, accepting offers subject to negotiations and implementing change orders, not by changing the budget by written approval.”
Because of this, he writes, “a reasonable jury might find that (Prochaska) breached his promise to (the county) to design a project that could be built for less than $10,898,700.”
The total cost of the project with the architectural costs and other costs such as the cost of purchasing the necessary land, amounts to more than $18 million. The project is still not finished.
