Palm Springs says insurer will finish work on downtown park after contractor abandoned project

The City of Palm Springs says it is working with an insurance group to arrange for the completion of work on a new city park in downtown Palm Springs after Fast-Track Construction Corporation, which was hired to build the park, abandoned the project.

In Nov. 2019, the city hired Culver City-based Fast-Track Construction Corporation to build a new city park across from the Palm Springs Art Museum near Belardo Road and Museum Drive. The contract originally called for construction to begin that month and be finished in one year. However, the completion date was later extended to March 2021 because of delays resulting from the COVID-19 pandemic.

But while the park was able to open last October, the work was never fully finished, city engineer Joel Montalvo told The Desert Sun.

Instead, the city has moved to hold Fast-Track responsible for failing to meet the project deadline and is requiring that the project's insurer take responsibility for completing it. KESQ-TV was the first to report that action by the city earlier this week.

In a letter sent to Fast-Track in April, Montalvo wrote that the city considered the company to be in default because it had "abandoned" the project by failing to report to the site and finish the required work.

The letter identified seven aspects of the project which the city said Fast-Track had not finished either at all or up to the city's specifications. Montalvo explained Thursday that many of those items are related to the Palm Springs Police substation that is part of the park.

Montalvo described aspects of the workmanship of the substation as "unacceptable" and said those aspects include hinge doors that need adjusting, weather stripping that needs fixing and stucco on the backwall that needs reinstalled.

'Major failure' of water feature

Beyond those items, Fast-Track also needs to repair the park's showcase water feature, which sprays water and mist and includes a waterfall meant to be reminiscent of those in the canyons surrounding Palm Springs.

Although the feature was fully operational when the park opened in October, it experienced a major failure when additional work was done on the park after the opening, Montalvo said. Montalvo explained that the main connection point from the main water supply line to the mechanical room failed, and that the city believes the contractor was responsible for the line's failure.

"During the project, (Fast-Track) had some employees on the job, but as the project progressed, (Fast-Track) staff became minimal," Montalvo told The Desert Sun. "The city believes that (Fast-Track) was also not managing their subcontractors on the project properly and that they failed to secure proper staffing."

City Manager Justin Clifton wrote in a memo to the city council last June that the city believed correcting the water feature's defects would require "significant work and expense" as the water feature's mechanical equipment is located underground.

City paid contractor $7.4 million

The city was to pay $8.6 million to Fast-Track to complete the park and had paid about $7.4 million as of June 16, according to documents. On March 4, the city began billing Fast-Track Construction $5,400 a day for damages in accordance with the construction contract. More than $2.5 million in damages is now owed as of August.

Since the completion deadline, the city also has received 15 stop-payment notices from subcontractors on the project. A subcontractor can file a stop-payment notice when they have not been paid or feel they will not be paid by a contractor for services provided, Montalvo said.

The 15 stop-payment notices total about $967,000, according to the city. However, the city has withheld about $1.2 million in payment from Fast-Track as it is legally obligated to withhold 125% of the amount of any stop-payment notices it has received until the payments have been made.

With Fast-Track kicked off the project, responsibility for ensuring it is finished has fallen to Great American Insurance Group. Great American provided a surety bond for Fast-Track in its contract with the city.

A surety bond is a guarantee that a project will be completed to satisfaction and that the bond holder will step in to ensure that completion if the contractor does not do so. Under the terms of the contract, the city will now pay Great American for the remaining work. However, if Great American does not finish the project in a satisfactory manner, the city can withhold payment, hire someone else to do the work and invoice Great American for the cost.

A letter sent by the city to Fast-Track and Great American in June stated that the insurer had 15 days to submit a plan to the city outlining how it would finish the project and fix the water feature. That letter detailed communications made by the city to push Fast-Track to complete the project, which the city said Fast-Track ultimately failed to do.

Fast-Track Construction did not respond to inquiries for comment from The Desert Sun. The phone number for the firm listed on its website is no longer in service.

Montalvo said Thursday that the city was negotiating an agreement with Great American for the company to take over and complete the project, including fixing the water feature. He said that once the agreement is finalized, Great American will direct a contractor it will hire to complete the work.

"The city is working diligently with the surety to complete the project in a timely fashion, so that the public can enjoy the entire park, including the water feature," Montalvo said.

The city is also negotiating a settlement with Fast-Track to close out its involvement in the project. That settlement will involve damages which have yet to be finalized, Montalvo said. He did not say whether Fast-Track had made any damage payments to the city.

Fast-Track Construction did not respond to inquiries for comment from The Desert Sun. In the June letter sent to Fast-Track, the city noted that Fast-Track's contractor's licenses had been suspended by the state after the company's contractor's bond was canceled in March. The city said it had also received notice that Fast-Track's workers compensation insurance had been canceled that same month. However, Fast Track's license is currently listed as "current and active" on the state licensing website.

But even if Great American eventually completes the project, the delays in the process have already cost the city additional money. In June, the city council voted to increase the amount of an existing contract with design firm Rios Clementi Hale Studios to provide up to $30,000 to provide two more years of services for the project.

Montalvo explained that Rios Clementi Hale Studios is the architect of record for the project and the city is using them to determine if the outstanding construction items are satisfactorily complete.  He said the addition will allow the firm to assist the city by reviewing the work performed by the contractor’s surety. The company had previously paid about $1.2 million to that firm.

Another firm challenged bid in 2019

After the project was awarded to Fast-Track in 2019, another construction firm that had also bid on the project submitted a protest of the awarding of the bid to Fast-Track. That firm, Robert Clapper Construction Services, Inc. cited several reasons why they felt Fast-Track had not submitted an adequate bid, including a failure to list trades for any work in the restroom police substation building.

However, city staff found that the bid protest was without merit and recommended that city council rule it as such and award the contract to Fast-Track.

When asked if the problems the city has seen with Fast-Track were predictable based on the concerns raised by Robert Clapper Construction Services, Montalvo said they were not. He also noted that under California contract code, the city is obligated to award a contract to the lowest responsive, responsible bidder. 

He also said  that Fast-Track provided a response to the allegation brought by Robert Clapper and that the city, at the time, did not have the ability to foresee the failures of FTC and legally had to award the contract to FTC.

"Unfortunately, other than relying on references supplied by the bidders, it is often very difficult to determine, ahead of time, that a bidder is not a responsible contractor," he said.

Paul Albani-Burgio covers breaking news and the City of Palm Springs. Follow him on Twitter at @albaniburgiop and via email at paul.albani-burgio@desertsun.com.

This article originally appeared on Palm Springs Desert Sun: Palm Springs says contractor abandoned downtown park project