Edmonds Council considers proposed policy for change orders but no decision

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By Harry Gatjens

The Edmonds City Council discussed but did not make a decision Tuesday night on a proposed policy governing the processing of change orders on city contracts. The discussion followed an investigation requested by the City Council into whether former Edmonds Mayor Gary Haakenson violated city policy when he approved $725,000 in change orders for construction at Haines Wharf Park.

A draft proposal was presented by Public Works Director Phil Williams following a recommendation by the State Auditor’s Office and the City Attorney that the City develop a procedure for change orders in contracts.

Councilmembers agreed with Mayor Mike Cooper that the policy needed some additional fine-tuning by staff and City Attorney Jeff Taraday before approving it. In particular, Councilmember Michael Plunkett expressed concern that while the proposed change order process would work well with current staff members, that may not be the case with new staff.

The council did approve change orders for two current projects:
The first was for the rehabilitation of sewer lift stations 7 and 8, to increase the sewage capacity and replace the outdated electrical systems at each station, plus replacement of approximately 1,500 feet of 8-inch diameter sewer pipeline in Dayton Street. The final construction cost for the now-completed project is $2,520,467, and five change orders totaling $210,055 have been processed. The remaining change order recently agreed to in June — for $70,215.25 — when added to the previously paid change orders, will exceed the 10 percent contingency of $224,020 approved when the contract was awarded.

“The final construction costs were impacted by several unforeseen conditions and a significant portion of the change order cost is related to contaminated soil found in Dayton Street, Lift Station 7 and Lift Station 8 located near the BNSF railroad tracks north of the new Sound Transit Station,” the staff report said.

The second change order was related to the Interurban Trail construction project, originally approved for $1,368,721. Phil Williams noted that the project had already exceeded the original 10 percent contingency reserve due to unexpected additional work, and he requested an additional 10 percent contingency for future needs, which the council approved.

In addition, the council:
— Confirmed the Mayor’s appointment of Shawn Hunstock, current finance director for the City of Tukwila, as the City’s Finance Director. Hunstock will start his new job Oct. 10.

— Approved two ordinances regarding the use of apprentices on City construction contracts and creating criteria to be used in determining whether or not a bidder on a City construction contract is a “responsible bidder” under state law.

-Discussed the idea of requiring a one-time fee on developers that could be used to pay for new, expanded or improved parks. The council decided to get additional input on these fees and their viability, and requested a staff presentation addressing both historical development activity and anticipated future development, along with how such fees would be used.

— Approved a resolution recognizing the late Ed Aliverti for his more than 50 years of service to Edmonds athletics and music. Aliverti, a former Edmonds School District music teacher, was known as one of the greatest wrestling announcers of all time.

17 COMMENTS

  1. Mayor Cooper made a particularly important statement last night; he announced that the state auditor’s report of our city’s 2010 operations would say that the city does not currently have a contract change order policy and needs to implement one.

  2. It’s unfortunate the auditors weren’t sharp enough to notice this a couple of years ago before it became obvious to everyone. That would have been useful. It shows how you can have big problems even when state auditors give their stamp of approval.

  3. @Joe – As a former auditor, the scope of the audit is generally boilerplate issues (cash, handling of cash, verifying cash to fund balances, etc.).

    It is only when the administration or Council brings up issues that those items are looked at which is why the auditors invite City Council to these meetings. In 2009, I brought up the Park Trust Fund and Ordinance 3466 whereas the City removed money from the park trust fund and placed it in the General Fund. Of course, the citizens that donated to that fund were very upset as the fund was set up specifically for retaining our glorious flowers. The auditors did find this an exception. Last year, at my suggestion, the Council voted to replace that $36K back into the fund. This year, Ms. Hite strengthen that ordinance so that citizens can be assured that when they donate to that fund, it will not be raided to go into the General Fund. That same year, I also brought up that the administration had put through an amendment lowering REET funds by $400K moved those monies to the General Fund despite the fact that REET 126 had a bond payment owing. The auditors did itemize this in note two “Stewardship Compliance and Accountability” in the Comprehensive Annual Financial Report as the bond payment had to be made by “dipping” into existing REET money (or as Government Accounting Standards Board would define: •explanation of deficit fund balances, net asset or retained earnings in individual funds).

    So kudos to Mayor Cooper for bringing this issue up about the lack of a change order policy. With the new finance director, he has brought with him many new policies that we will be looking at in other areas of operating such as investing, reserves, etc.

  4. The auditors reference Ms. Buckshnis indicates is the following:

    NOTE 2 — STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY
    There have been no material violations of contract provisions. At December 31, 2009: Fund 126 – Real Estate Excise Tax 1, Parks and Acquisition Fund exceeded budget by $35,939, however there was adequate fund balance to address the overage.

    This note makes no reference to the removal of $400,000 from REET revenues. $400,000 was removed from the 2009 budget for REET revenue. I’ve asked Teresa to post the relevant report, which I have supplied to her. Ms. Buckshnis needs to produce evidence that $400,000 was removed from revenues received.

  5. I think someone needs to go back to school. As I read it no money was moved anywhere. The budget was revised to show that Reet money was not coming in. How many times did Mr Hines explain this to Ms. Buckshnis and she couldn’t understand it?

  6. Paul:

    I’ve tried to explain this to Ms. Buckshnis several times, via emails and on this site, over the past 16 months. Her last responses were that I’m a dummy and “I just don’t get it”.
    I’m sending you a string of some of the emails that we exchanged, and I’d be happy to send them to anyone else who’d like to see them.

  7. Ron You are absolutely correct the report reads forcast revised. I to would like Diane to explain her remarks. As it appears no actual money was transfered

  8. Ron B’s comment #10 is a direct response to Ron W’s comment #2, the subsequent comments about the role of an auditor, and the change order discussion in the original article. I don’t see how anyone could conclude Ron B’s comments are posted in the wrong place.

  9. Ron W:
    By making up a motivation for Ron B that doesn’t even make logical sense (comment #13), you are again resorting to a personal attack. You’d be doing yourself a favor by listening better to what people say, and avoiding attempts to guess why they are saying it.

    Using a euphemism for excrement in publicly describing the comments of an elected official is not helping you either.

  10. I have talked to people outside this forum and they know that Diane doesn’t understand finances. If that’s concidered an attack on Diane by Ron B and Joe, so be it. The only thing we are certain of is she thinks $400,000 are missing like the 2 mil that she finally figured out we had.
    Someone who puffs themselves up better watch out that someone doesn’t walk by with a pin.

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