Juanita Beach Park project could cost city additional $346,000 | Update

Most Kirkland residents have voiced their pleasure with the changes made to Juanita Beach Park. The park became a point of contention last summer when redevelopment was not completed on time. The city eventually fired DMSL, Inc. of Arlington, the project’s original construction company, as it’s financial troubles, and weather-related issues delayed the project’s completion.

By Matt Phelps • August 3, 2012 10:09 pm
A DMSL Construction Inc. employee works to remove trees from Juanita Beach Park in 2010. The city terminated its contract with the company because renovations were not finished on time.
A DMSL Construction Inc. employee works to remove trees from Juanita Beach Park in 2010. The city terminated its contract with the company because renovations were not finished on time.

Juanita Beach Park was packed last weekend as temperatures went into the 90s for the first time in two years. But it was tempers that were hot last summer when the park’s redevelopment was not completed on time.

Now, city documents reveal that those delays not only cost Kirkland residents time in the park last summer but could ultimately cost the city an additional $346,000.

“Because of our conservative budgeting process we have a capital projects reserve of $4 million to deal with this,” said Kirkland City Manager Kurt Triplett. “That is one of the reasons we have a AAA rating. We set aside funds for just this type of thing.”

City planners had originally procured up to $1 million in state matching funds to complete the project. But delays set the completion date back more than two years, from spring of 2009 to August 2011. State funds are only distributed if projects are completed on time. The limit of two extensions expired on June 1, 2011.

The project’s original construction company, DMSL Inc. of Arlington, was terminated on June 3, 2011.  Financial troubles and weather related issues repeatedly pushed DMSL’s completion date back. Construction was set to take 10 to 12 months but ultimately took more than 15 months.

The result of the delay means that the city received just $622,000 in state matching funds, according to city documents.

City officials originally believed that Pennsylvania-based First Sealord, the company that held DMSL’s construction bonds, would be held liable for reimbursing the city for the lost funds. But First Sealord was placed into receivership on Feb. 8 by the Pennsylvania Insurance Department. First Sealord had experienced a steep drop in its surplus after creditors went after the surety bonds in numerous cases where construction companies or builders had failed to complete projects or pay for them, just as in the case of the Juanita Beach project.

As a result, the city may ultimately not be reimbursed for the shortfall on the project.

“The city has submitted a claim to the trustee appointed to administer the receivership but according to him it will be years before the extent of First Sealord’s liabilities are known and the claims paid,” said Director of Parks and Community Services Jennifer Schroder and Deputy Director of Parks Michael Cogle in a memo to Triplett.

The $346,000 will now have to be taken out of the capital projects contingency fund to cover the remaining costs, said Triplett.

“The Juanita Beach project was the perfect storm,” said Triplett. “All of these things happening on one project is extremely rare. The odds are astronomical.”

Most of those funds will go to Lake Stevens-based Marshbank Construction, Inc., which was hired to finish the project after DMSL was terminated.

“Financial projections during the Marshbank phase were difficult to pinpoint, since not all of the costs could be anticipated,” stated the memo.

The urgency to which the project needed to be completed resulted in a no-bid contract for Marshbank.

Triplett said that city officials called around to different companies but did not formally bid out the project.

“No one would do a bid because they didn’t know the risks,” said Triplett.

A bidding process would have also taken six additional weeks.

The contract was ultimately worth $1.4 million. DMSL was paid $897,000 for its work on the project. The original estimate for the cost of the project was $1.18 million.

Triplett said despite the fact that this was an “extremely rare” case the city has made changes.

“We did a deep evaluation of the all the processes that go into these types of projects,” said Triplett.

The project is just the first phase of the park’s $2.8 million redevelopment. A second phase of the redevelopment project will deal with the north side of the park where a skate park, new parking area and rose garden are to be constructed. The bath house on the south side, or waterfront side, of the park was not renovated with the rest of that portion of the park.

Environmental enhancements to the park include the renovation of Juanita Creek, creation of new wetlands and quality marshes, and formation of re-graded lawn areas with improved drainage and irrigation systems. New walking paths, including an accessible beachfront promenade extending the length of the waterfront were installed. A new parking lot with associated lighting, landscaping and improved low-impact development pollution and stormwater controls were constructed. Other improvements include a new open-air amphitheater for small community events, new site furnishings including benches and picnic tables, and extensive new native landscaping.

The renovation project is the city’s initial implementation of the Juanita Beach Master Plan. The plan was formally adopted in 2005 following an extensive public participation process. The $2.8 million project is funded in part by the 2002 park bond, approved by Kirkland residents, and a grant from the King County Flood Control District ($100,000).