HomeMy WebLinkAbout(1) HAROLD COLLINSINTEROFFICE MEMORANDUM
TO:
FROM:
SUBJECT:
DATE:
STEVE FITZGIBBONS, CITY MANAGER
DALE L. WATSON, DIRECTOR OF PLANNING ~/].. 0
HAROLD COLLINS
05/24/02
Mr. Collins is on the agenda to talk about a recent change in the requirements for bidding
on City Housing Rehab projects. The following background information might be
helpful in explaining the situation.
1. The City is not a party to the contract between the homeowner and contractor in
housing rehab and reconstruction projects.
2. Under the adopted guidelines the homeowner bas three options for obtaining a
contractor:
The homeowner may choose a contractor fi.om the City approved contractor list
and obtain a bid. If the bid is within 10% of the estimate, they may execute a
contract.
The homeowner may choose a contractor of their own and obtain a bid. If the bid
is within 10% of the estimate and the contractor can meet minimum city
standards, they may execute a contract.
c. The homeowner may ask the city to formally bid the project for then~ If the bid
is within 15% of the estimate they may execute a contract.
We were instructed by the City Attorney that for all future bids in excess of $25,000 we
would be required to have a payment bond and for any contract over $100,000, a
performance and payment bond would be required. We met with the contractors
concerning this change. Several stated that they would no longer bid on city housing
projects if this change was made. The others indicated a significant increase in price.
We bid the next group of reconstruction projects as instructed by the Attorney's office.
The bids came in approximately 15% higher. Mr. Collins was the low bidder on this
work. He was unable or unwilling to obta'm the required bonding.
I recommend that we not require these bonds for housing projects for the following
reasons:
a. The City is not a party to the comract. It is between the homeowner and the
contractor.
b. The majority of the work in the housing program is performed by small
contractors who may be unable to obtain the bonds.
c. The cost of the bonds will increase the cost of all housing work.
We have spoken to our HUD representative and she indicates that we have
flexibility in this area because oftbe small contractors and the decision on whether
to require these bonds is a local decision.
The City Attorney has indicated that he might not require these bonds under certain
conditions if we receive approval l~om HUD in writing.
Since HUD has stated that this decision is a local one and providing a response in writing
is not of a high priority, I would recommend that we revert to the process that we had
been using. HUD has conducted several audits of our housing program while we were
using the previous method and did not comment on it.
Should the Council agree to use the process we had previously used, we will rebid the
project in an expeditious manner.
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