Los Banos council terminates design‑build agreement for civic center after cost dispute

The Los Banos City Council on May 5 adopted Resolution 7086 to terminate, for convenience, the city’s progressive design‑build agreement with Swinton Builders for the Las Civic Center/Development Services Center project.

City staff told the council the decision followed months of negotiations after the contractor applied its overhead markup in a way that staff and the city’s construction manager interpreted as producing materially higher indirect costs than the city expected under the contract. Staff said that difference—described in presentations as a swing from an original 15% overhead assumption to a contractor interpretation nearer 35%—would have forced the project beyond the city’s guaranteed maximum price while removing core elements of the building program.

Staff recommended the termination to protect the project scope and budget. In practice staff said the city would pay the contractor only for completed, eligible work, secure the design documents for reuse, and open negotiations with the next‑ranked proposer from the procurement. During the public presentation staff named Fortune Ratliff and Paul Halagian Architects as the next‑ranked team the city would approach.

Council members asked for clarifications about the alternative team and the timing of the contractor’s cost interpretation. Staff said the difference was an interpretation of contract language that the city attorney considered incorrect and that multiple attempts to resolve the dispute at the staff level were unsuccessful.

The council took a voice vote and the motion carried; one vocal opposition was recorded. The council did not record individual vote tallies in the public discussion, and staff said they would report any further procedural steps and financial impacts as they are known.

What happens next: staff will secure project documents, finalize payments for eligible completed work, and begin negotiations with the second‑ranked design‑build team while preserving remaining project budgets for reuse on the project.

Authorities and legal basis: the action is recorded as Resolution 7086; staff said the termination is for convenience under the existing agreement and that the city attorney had reviewed the contract interpretation dispute.

The council moved quickly from that agenda item to a full‑day budget workshop focused on FY 2026–27 priorities and capital projects.

Speakers: Reporting in this item was provided by city staff in the Finance and Community & Economic Development teams. No individual council member was quoted directly on the record in the transcript beyond the voice vote.