Mayor Fowler led the salute to the flag.

*Pending Council Approval

Councilmember Risch announced the Sunnyvale Historical Society held a successful fundraiser event which raised $165,000 for the new Murphy House reconstruction. He thanked Laura Babcock for her efforts.

Councilmember Walker asked the City Attorney for clarification on the grounds to approve or disapprove a request for subcontractor substitution.

Valerie Armento, City Attorney, clarified the role of the City Council is to determine if there was a reasonable opportunity for parties to enter into a contract, and if it is reasonable to grant permission for a substitution.

Vice Mayor Miller asked for clarification on the frequency of the Council approving substitutions for subcontractors.

Ms. Armento responded it does not occur frequently. Director Rose clarified substitutions are not common and only come to Council when there is a dispute.

In response to Mayor Fowler’s inquiry when the City was notified of this dispute, Director Rose stated he was made aware of the issue prior to September 16^th 2002, but that the official request to substitute was received on September 16^th 2002.

Mayor Fowler opened the Public Hearing at 5: 46 p.m.

Quinlan Tom, counsel for Thompson Pacific, requested Thompson Pacific be granted a substitution on the grounds that the contract was not signed by Crown Masonry in accordance with the terms of their bid, and plans and specifications. He stated one of the concerns is delay of the project. They have been negotiating with Crown Masonry since May 2002. He further stated that Crown Masonry did sign a contract, but amended the contract several times changing the terms.

In response to Councilmember Walker’s inquiry, Mr. Tom responded the work would be completed on time.

In response to Mayor Fowler’s questions on timelines, Mr. Tom stated the bids were opened on January 16, 2002, and the date of the original substitution was on March 29. He further stated the date tendered for the subcontract agreement was May 6 and a second contract was submitted to Crown Masonry on May 28, which was not accepted. Mr. Tom stated that Crown Masonry had issues with the bond requirement and the liquidated damages clause. Another contract, removing the bond requirement, was submitted to Crown Masonry on July 17 and Thompson Pacific asked that the contract not be amended. However, Crown Masonry amended the contract and had an issue with liquidated damages. Mr. Tom stated the proposed new subcontractor is Joe Esbaraza Masonry Contractors.

Gary Kirshner, counsel for Crown Masonry, stated that to date, Crown Masonry has not received a contract that is consistent with their bid which excluded liquidated damages. He asked Council to deny the substitution and move forward with Thompson Pacific presenting a contract to Crown Masonry which is consistent with their bid.

Councilmember Walker questioned why Crown Masonry is pursuing this when they could not agree on a contract. Mr. Kirshner replied they were before Council to defend their right to perform on a contract they were awarded.

Councilmember Vorreiter asked why they struck the entire paragraph beyond the liquidated damages clause. Mr. Kirshner agreed that the entire paragraph should not have been struck.

Vice Mayor Miller noted this is an impasse, and asked what will it take to break the impasse. Mr. Kirshner replied they agree to sign a contract that excludes the liquidated damages clause.

Mayor Fowler commented there appeared to be agreement to remove the liquidated damages clause, but disagreement on the wording.

Mr. Tom rebutted that Crown Masonry did not just strike out the paragraph beyond the liquidated damages clause, but also amended several sections of the contract. He further stated that Crown Masonry did not execute the contract in a reasonable amount of time, highlighting they have been trying to negotiate with Crown Masonry since May 28.

Councilmember Risch asked the City Attorney at what point is it considered that a reasonable period of time has passed.

Ms. Armento replied this is a judgment call for the Council, but once the exchange of contracts has been unsuccessful and there has been a failure to execute, the general contractor can seek a substitution. She stated once they have initiated this process, the exchange of contracts and resolutions is stopped as this indicates an impasse.

Mr. Kirshner rebutted they never had a valid contract and have done everything they could to move the deal forward.

Vice Mayor Miller inquired whether both contractors were union and if they were paid prevailing wages. Mr. Kirshner responded that Crown Masonry is union. Mr. Tom responded he was not aware if the new subcontractor is union, but were paid prevailing wages.

In response to Councilmember Howe’s inquiry, Mr. Kirshner stated he did review the contract with Crown Masonry.

In response to Mayor Fowler’s inquiries if Crown Masonry could perform on its bid, Mr. Kirshner stated they could and they would sign a contract that is consistent with their bid which eliminates the liquidated damages clause.

Mayor Fowler reviewed and clarified the timelines and contract negotiations with Mr. Kirshner.

Mayor Fowler closed the Public Hearing at 6:53 p.m.

Councilmember Walker moved, and Councilmember Risch seconded, to find the subcontractor Crown Masonry has been unable or unwilling to execute a written contract with Thompson Pacific after having a reasonable opportunity to do so, and grant Thompson Pacific’s request for a substitution.

The motion carried with Mayor Fowler, Vice Mayor Miller and Councilmember Howe dissenting.

Mayor Fowler presented the report to Council. He stated that the Council adopted a new procedure that calls for a "beginning of the year" meeting with each Council employee to set goals and objectives for the coming evaluation period. The procedure calls for a facilitator to assist the Council set the goals. The proposal from Mathis & Associates was solicited in conformance with this new procedure. Mayor Fowler clarified the goals for Phase I of the Review Process and reviewed the fee schedule.

Vice Mayor Miller inquired if the $20,000 cap was just for Mr. Mathis or did the fee include his associates. She further asked why mileage is being billed at $.48 per mile instead of the IRS rate of $.365.

City Attorney Armento clarified that the $20,000 not-to-exceed rate is inclusive of all expenses, including fees for associates and mileage.

Vice Mayor Miller questioned if it was appropriate to take just one bid.

In response to Councilmember Risch’s inquiry regarding the transition to a new Mayor and Vice Mayor, Mayor Fowler stated it would be his preference for the new Mayor and Vice Mayor to undertake this process.

Mayor Fowler opened the Public Hearing at 7:06 p.m.

Werner Gans, a member of the public, thinks the new procedures are complicated and expensive. He questioned the need for a facilitator.

Councilmember Walker commented that the prices seem high and asked if are they negotiable.

Mayor Fowler closed the Public Hearing at 7:13 p.m.

Vice Mayor Miller moved, and Councilmember Walker seconded, granting the Mayor authority to negotiate with Mathis & Associates in order to agree on different terms and conditions focused on the costs.

Councilmember Walker offered a friendly amendment for a subcommittee to be appointed to negotiate with Mathis & Associates. The amendment was accepted.

Councilmember Howe stated he would like to see this contract either move forward or solicit other bids.

Vice Mayor Miller asked that Councilmember Walker’s friendly amendment be revised to state an ad hoc committee. The amendment was accepted.

Councilmember Valerio asked for clarification on the parameters of the ad hoc committee. He asked if the direction was part of the motion to colleagues and how far were they trying to reduce the fees.

Councilmember Walker responded they need more detail on the fees and how they were broken out. He did not have specific directions to give to the ad hoc committee without the fee detail. Vice Mayor Miller responded there may not be any negotiation if Mathis is not receptive.

Councilmember Howe offered a friendly amendment to include this item on the November 12 Council meeting. The amendment was accepted.

Vice Mayor Miller moved, and Councilmember Walker seconded, that Council appoint an ad hoc committee to negotiate with Mathis & Associates for reduced terms and quantification for what has been submitted to the Council, and bring that information back to Council on November 12. If Mathis & Associates is unable to negotiate their terms, the ad hoc committee is empowered to further their search for a facilitator.

The motion carried unanimously.

Mayor Fowler appointed Vice Mayor Miller and Councilmembers Walker and Risch to serve on the ad hoc committee.

No action was taken. Vice Mayor Miller noted she did not receive this item in her packet.

Thom Mayer, a member of the public, submitted written questions to the Council. City Manager LaSala will respond in two weeks with a progress report to Council. Mr. Mayer opined that the sidewalk and bike lane work area closure guidelines are not being followed.

Vice Mayor Miller announced that the "Spare the Air Program" ended this week. The Bay Area experienced two excesses on July 10^th and August 9^th at the Livermore monitoring station. No overages were reported at the Sunnyvale monitoring station. There have been a total of seven Spare the Air advisories.

City Manager LaSala relayed information from Trudi Ryan, Planning Officer, responding to the Council’s request for information regarding the number of projects in housing units that will be affected by the deferral of action on the Comprehensive Review of the BMR Program. Staff has identified six applications for preliminary review affecting nine to ten parcels, and several zoning districts, as well as a range of approximately 850 housing units that could be affected by this action, with a range of 75 to 130 BMR units. Staff is recommending that Council schedule this for consideration at the January 28, 2003 meeting.

The consensus of the Council is to schedule the action for January 28, 2003.

The Mayor adjourned the meeting at 7:42 p.m. to reconvene to a Closed Session regarding Personnel Matters - Public Employment/Public Employee Performance Evaluation, Positions of City Manager and City Attorney, Pursuant to Government Code 54957, in the West Conference Room.

Mayor Fowler declared the Closed Session adjourned at 10:15 p.m.

Respectfully submitted,
Susan Kitchens
City Clerk