The city had received nine bids from contractors seeking the task of constructing Vermillion's new city hall. The lowest submitted base bid, from Peska Construction of Sioux Falls, came in at slightly more than $4.4 million.
The architect of the new building had estimated that construction costs could be nearly $4.8 million.
"We felt really fortunate to get this base bid," City Manager John Prescott said, noting the architect's higher estimated costs for the building project.
The bid package contained five alternates to the building design, depending on the total of the final bids, and whether the alternates would fit in the city budget.
"There are probably two alternates that we would like to take a look at," Prescott said. "One is a terrazzo floor for the lobby. That was something that, in my opinion, the city hall committee always had an interest in, and seeing that this would help with the finishing fit and the design of the building … but they didn't want to do that if the base bid came in substantially higher."
Because of Peska Construction's lower than anticipated bid, there is room in the city budget for the flooring, he said.
A second alternate that has received support from both the city hall committee and city staff includes vinyl wall coverings throughout the main floor beyond the lobby, the wall behind the reception desk and the conference room.
"The base bid at one point in time did have vinyl wall coverings in it. The initial estimate from Peska Construction to add this element to the building is $26,830.
"I recognize that is a lot of money for vinyl wall covering," Prescott said. "What staff has done is said that if that is still more than what the city council would like to do, we would go back to them (Peska) and say let's remove that from private offices and the copy room to help bring that price down."
Prescott said city staff believes the vinyl wall coverings would help maintain the appearance of the city hall interior in high traffic areas such as hallways, and would also help continue the visual continuity of the building.
Title insurance issue
Prescott also informed the council that an issue related to the city hall project has arisen regarding the city's title insurance.
"There are two outstanding contracts for deeds related to the property," he said. "One is a 1915 contract when the city purchased the power plant (which currently serves as city hall) and the other one, and the other one is a 1976 contract when the city purchased some ground which is now used as a parking lot immediately south of the building."
City staff and Vermillion City Attorney Jim McCulloch had worked through the day to find a solution to clearing the titles so that the city could issue bonds for the city hall project.
McCulloch said the solution was complex, but if all goes as planned, it would allow the city council to approve a guaranty to the Clay County Abstract and Title County and its underwriter.
"Also, if you accept the low bid tonight, you should make the usual motion that you would make in that regard, but then I have some language here … that would be a conditional acceptance of the bid assuming that Assured Guaranty does accept this situation."
If Assured Guaranty does not agree to the city's actions,
the acceptance of the low bid would not go into effect and the city council would take up the issue once again.
"It's long, convoluted, with a lot of different entities involved, and every one has to sign off on this before we get the job done here," McCulloch said. "But we think we have this put together."
He said that a quiet title action was set into motion immediately after this problem was discovered.
"By the time the quiet title process is complete, which we think will be favorable to the city, then, at that point in time, that guaranty will have no practical meaning because all of the title problems will have been solved."
"What this agreement does is saves us up to 60 days of waiting time," Mayor Dan Christopherson said. "From 1915, it is difficult to find records that are complete, but apparently somebody didn't file the end result of a contract for deed that I think was paid off in 1920."
Alderman Mary Edelen made a motion to approve the base bid of $4.45 million to Peska Construction, with the addition of terrazzo floors and vinyl wall coverings, contingent upon acceptance by Assured Guaranty of the city of Vermillion's guaranty to Clay County Abstract and Title Company and its underwriter, Security Union Title Insurance Company to facilitate the sale and issuance of certificates of participation by Dougherty and Company.
"I think it's a responsible thing to award this low bid to the low bidder," Christopherson said, who added after the motion received unanimous approval, "I think we made a historic decision here."