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Home My WebLink AboutPR 22159: APPROVING A PROPERTY DAMAGE SETTLEMENT IN THE AMOUNT OF $59,755.00 FOR DAMAGES TO CITY OF PORT ARTHUR HEALTH DEPARTMENT CHILLER EQUIPMENT • City of or! rlhur�� • 7i<.1 rls INTEROFFICE MEMORANDUM Office of Safety & Risk Management Date: September 17, 2021 To: Ronald Burton, City Manager From: Trameka Williams, Director of Human Resoc . RE: A Resolution Approving a Property Damage Settlement in the Amount of$59,755.00 for Damages to City of Port Arthur Health Department Chiller Equipment Nature of the request: On June 11, 2021, the City of Port Arthur's Health Department AC chiller sustained mechanical malfunctions resulting in repairs. Per Resolution 21-270, Industrial Commercial Mechanical (ICM) of Beaumont, Texas replaced the equipment for $96,621.96. Staff.1nalysis, Considerations: As a result of the damages a claim was filed with Texas Municipal League Intergovernmental Risk Pool (TMLIRP). Texas Municipal League Intergovernmental Risk Pool has offered the City a settlement of $59,755.00 (Exhibit "A" attached) less the $10,000 deductible per occurrence making the final settlement amount $49,755.00. Recommendation: I recommend approval of Proposed Resolution No. 22159 authorizing the property damage settlement against Texas Municipal League Intergovernmental Risk Pool for damage sustained to the chiller equipment at the Health Department. Texas Municipal League Intergovernmental Risk Pool has offered to settle the claim for $59,755.00 less the $10,000.00 • deductible per occurrence making the final settlement amount $49,755.00. This is considered a fair and reasonable settlement. Bud'et Considerations: The funds received will be deposited Account 001-00-000-4744- 00-00-000, HINGF. "Remember we are here to serve the Citizens of Port Arthur" P.R. No. 22159 09/17/2021 taw RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE SETTLEMENT OF A PHYSICAL DAMAGE CLAIM IN THE AMOUNT OF $59,755.00 MADE AGAINST TEXAS MUNICIPAL LEAGUE INTERGOVERNMENTAL RISK POOL (TMLIRP) AS A RESULT OF PROPERTY DAMAGE TO CHILLER EQUIPMENT AT THE HEALTH DEPARTMENT(449 AUSTIN AVENUE) WHEREAS, on June 11 , 2021 , the City of Port Arthur's Health Department chiller equipment sustained mechanical malfunctions resulting in repairs; and, WHEREAS, as a result of the damage, a claim was filed with Texas Municipal League Intergovernmental Risk Pool (TMLIRP); and, WHEREAS, Texas Municipal League Intergovernmental Risk Pool (TMLIRP) has offered to settle the claim for $59,755.00 less the $10,000.00 deductible per occurrence making the final settlement amount $49,755.00, which is considered a fair and reasonable settlement. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: Section 1 . That, the facts and opinions in the preamble are true and correct. Section 2. That, the City Manager is hereby authorized to execute settlement in the amount of $59,755.00 less the $10,000.00 deductible per occurrence making the final settlement amount $49,755.00, for the claim against Texas Municipal League Intergovernmental Risk Pool (TMLIRP) in substantially the same form as delineated in Exhibit "A". Section 3. That, a copy of this Resolution be spread upon the minutes of the City Council. READ, ADOPTED, AND APPROVED this day of , AD, 2021 , at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers NOES: . Thurman "Bill" Bartie, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: 1/-ite e Val Tizen , i torney APPROVED FOR ADMINISTRATION: Ronald Burton, City Manager EXHIBIT " A " EN 15 1 A 22130 Merchants Way, Suite 150 TOLL-FREE 888.782 3473 Katy, TX 77084 envistaforensics.com FORENSICS CHILLER DAMAGE INVESTIGATION City of Port Arthur Texas Municipal League Claim No: PR145995 Envista Matter No: MAT-126145-C7Y8 REPORT DATE: July 30, 2021 Prepared for: Ms. Lisa Kutch Texas Municipal League P.O. Box 149194 Austin, Texas 78714-9194 Lkutch@tmlirp.org CERTAINTY IN AN UNCERTAIN WORLD ,..a,.n,a i•...m. P.a i ry wrn Qn n',r!..,e:.ot v.: ".m R,.Ga:ror,..n a C-1837 • Date Submitted to T:R1LIRP:O S 24 2021 12.30 PM EN ISTA Page 2 of 4 FORENSICS Envista Matter No:MAT-126145-C7Y8 Texas Municipal League Claim No: PR1 45995 BACKGROUND On June 30, 2021, Envista Forensics received this assignment regarding damage to chiller equipment. The equipment is located at 449 Austin Avenue in Port Arthur, Texas. This report contains Envista's findings and conclusions reached as a result of our research. Reportedly, the subject equipment failed on or about September 19, 2020. There were two (2) different failures that reportedly occurred to the chiller on different dates. Neither the insured nor the vendors recorded the date of loss for the failures. PURPOSE Texas Municipal League retained Envista to assess the reported damage. Specifically, Envista was requested to research the subject property to determine the cause of damage and the cost to return the equipment to a pre-loss condition. CONCLUSIONS After conducting research of the subject property located at 449 Austin Avenue in Port Arthur, Texas, it is Envista's professional opinion that: 1. In summary, based on the information provided and the pattern of damage sustained, it is the opinion of Envista that the multiple failures on different dates is consistent with damages from mechanical breakdown. There is no evidence to indicate damages from an external source. 2. Based on Envista's research, the repair cost of$56,391.00 is both fair and reasonable for like kind and quality equipment. DOCUMENTS REVIEWED The following documents were reviewed and/or referenced as part of Envista's investigation, and/or contain information pertinent to the discussion and conclusions presented herein: Quote from ICM for $17,824.00 Quote from ICM for $38,567.00 Quote from ICM for $93,322.00 DISCUSSION Envista contacted Ms. Judith Smith with the City of Port Arthur to discuss the circumstances surrounding the claim. Ms. Smith stated they moved into the building in 2002. She said there have been several repairs to the chiller over the past few years. Ms. Smith was uncertain of when the failures had occurred to the chiller in question. Date submitted to 1\ILIRI' ON 24 2021 12 10 PM EN 1 STA Page 3 of 4 FORENSICS5 Envista Matter No:MAT-126145-C7Y8 Texas Municipal League Claim No: PR 145995 Envista contacted Mr. Roland Ozone daytime janitor with the City of Port Arthur to obtain information concerning the chiller. Mr. Ozone stated two (2) of the compressors on the chiller are leaking freon. He said the chiller barrel is also leaking and that the two (2) failures occurred on different dates. Mr. Ozone said he was uncertain of the dates on which the failures occurred. He provided the Daikin McQuay chiller information model: AGZ080DHHNN-ERIO, S/N: STNN120500129. This indicates this is an 80-ton air cooled scroll chiller that was manufactured in May 2012. Envista contacted Mr. Gary Cater to obtain information concerning the chiller. Mr. Cater stated he was initially called out in the summer of 2020 to examine the chiller barrel leak. He said the leak on the chiller barrel (evaporator plate heat exchanger) developed a leak through normal use. Mr. Cater said he attempted to repair the leak by injecting an epoxy into the coil. The coil continued to leak after the repair efforts. Mr. Cater told the insured that he recommended replacement of the chiller barrel. He said the repair job was too large for him and recommended another vendor be brought in to perform the repairs. Mr. Cater stated approximately 1-month after the chiller barrel leak occurred one (1) of the two (2) compressors failed, and approximately 1-month later the second compressor in the tandem circuit then failed. Envista contacted Mr. Jerry Johnson with ICM (Industrial and Commercial Mechanical) to obtain information concerning the chiller. Mr. Johnson stated he was uncertain of when the failures had occurred as the chiller was being maintained by a different mechanical company. He said he was asked by the insured to provide a replacement quote for the chiller. He said he had also provided a quote for repairs. Mr. Johnson stated during his initial inspection of the chiller he found the evaporator plate heat exchanger displayed rust and was leaking. The two (2) compressors were found to be grounded. Envista reviewed a quote from ICM for $17,824.00 dated August 18, 2020. This quote is for the replacement of two (2) 25-ton Copeland compressors model: ZP295KCE-TEC-965, R410A freon, crane rental, with two (2) HVAC technicians. This cost is fair and reasonable for the scope of work. Envista reviewed a quote from ICM for $38,567.00 dated September 22, 2020. This quote is for the replacement of evaporator plate exchanger for the 80-ton chiller model: ACH500DQ-106H, refrigerant recovery, crane rental, HVAC technicians, pipe fitting personnel for chill water supply, drying, vacuum pump, and reinstallation. This cost is fair and reasonable for the scope of work. Envista reviewed a quote from ICM for $93,322.00 dated June 3, 2021. This quote is for the chiller replacement with an 80-ton Carrier chiller model: 30RBX805-H-3, crane rental, HVAC technicians, electrician, pipe fitter, and disposal of the Daikin McQuay chiller. This cost is fair and reasonable and is considered like kind and quality for the damaged chiller. The initial failure was the leak in the heat exchanger, then followed by the failure of the two (2) compressors. There is no evidence to indicate damage by power surge or lightning. From the information provided it is the opinion of Envista that the failures are due to mechanical breakdown of the heat exchanger and failure of the compressors from having to work harder due to the leaking heat exchanger. EN ISTA Page 4 of 4 Envista Matter No:MAT-1 26145-C7Y8 FORENSICS-- Texas Municipal League Claim No: PR145995 CLOSURE This report is for the exclusive use of our client and is not intended for any other purpose. Our report is based on information made available to us at this time. Should additional information become available, we reserve the right to determine the impact, if any, of the new information on our opinions and conclusions and to revise our opinions and conclusions if necessary and warranted by the discovery of additional information. Thank you for allowing us to provide this service. If you have any questions or need additional assistance, please call me at 888-782-3473 or on my cell at 832-687-5559. Sincerely, Envista Forensics 7 Joseph Kennedy Project Consultant Technical Review by: 114,1,iv yajj_ Wesley Grandlienard, P.E. Technical Director Date Submitted to I\ILIRP t)Y 24 2021 12.3))PM