Commission extends Ortuno housing contract 45 days after dispute over delays and liquidated damages

The Liberal City Commission voted to extend the Ortuno housing addition construction contract by 45 contractual days under section 4.02 at its June 2 meeting, a change the city says will allow the developer more time to finish streets and other infrastructure tied to the RHID-funded project.

City staff told commissioners the project "got off to a rocky start" but improved after staff changes; the city completed a project tax-exemption for the work on Sept. 23, 2024, and the first payment voucher that day was $37,242, city staff said. Staff recommended moving forward with a time extension rather than pursuing liquidated damages while the developer finishes work.

The extension changes the contract term from 240 contractual days to 285 under subsection 4.02, city staff said. The motion to extend was made by Mayor Jose Lara and seconded by Commissioner Vasquez; the commission recorded the motion as passing with four votes in favor and one abstention.

Commissioners and project representatives debated how many weather and calendar days had been counted against the contract. City staff said the contractor's project manager reported 22 weather days earlier in the work and that there had been confusion about whether the contract showed 240 days or 240 plus weather days. The contractor and project manager said that, weather permitting, the streets were ready for paving and the work could be finished within roughly two weeks of favorable weather; they said rain had caused the most-recent delays. City staff said they had not received a complete, day-by-day substantiation of all claimed delays from the project manager.

Members also raised the question of liquidated-damages enforcement. During discussion different speakers referenced different penalty figures: one speaker described a daily assessment of $800 per day, while another cited a figure of $100 per day described in the contract; the commission did not adopt a new damages rate during the discussion. Commissioners debated whether to enforce penalties immediately or allow additional time so the developer could complete the work and proceed with home construction.

Commissioners and staff clarified related pieces of the financing and project scope: sidewalks in the development are not part of the city's construction contract and are handled through the RHID (Rural Housing Improvement District) repayment structure, meaning the city’s infrastructure loan would be paid first and RHID items recovered afterward; the developer also faces a five-year deadline under the RHID for completing homes, after which the city could exercise clawback provisions, staff said. Staff also noted that some lots in the development are in FEMA floodplain and that final building progress for homes may be delayed until FEMA paperwork is complete.

The commission settled on the 45-day contractual extension (which staff described as an increase of the contractual total from 240 to 285 days) and directed staff to finalize the change order for the contract. The motion passed with a recorded tally of four in favor, zero opposed and one abstention; individual roll-call votes were not specified in the meeting record.