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Council weighs stronger liquidated-damage calculations and contractor incentives for EDC-led projects
Summary
Members explored boosting contractor accountability by improving liquidated-damage calculations and pairing them with incentives for early completion; staff agreed to assemble models and sample forms to make LDs legally defensible.
Staff (Speaker 1) and agency legal counsel (Speaker 8) said liquidated damages must be tied to demonstrable project-specific harm (for example, congestion costs for a roadway) in order to be enforceable. "They based it on a variety of things...so it's different for every single project," Speaker 1 said of how LDs are calculated.
Councilors discussed using objective third-party data to support LD calculations rather than flat percentages. Speaker 8 suggested linking LDs to an analytical framework that quantifies public costs of delay for the affected project type so that courts will consider the damages reasonable. "If we are able to tie our liquidated damages... to the damages that that's doing to the public, then you're going to have a legitimate third-party objective basis," Speaker 8 said.
Members also debated incentive structures to encourage early completion while warning that poorly set baselines could let contractors game the system. Staff agreed to provide existing calculation templates and sample LD language, review them with legal counsel, and propose revised forms at the next EDC/council meeting.
