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December 21, 2014

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So sue us, you can still work for us

Two years ago, after learning that each of 23 tennis courts at the new Washington Buffalo Park was cracked even before it opened, city staff did not want the city to work again with Asphalt Paving Corp., the courts' general contractor.

The City Council ignored that recommendation, however, and allowed APCO to bid for $19.1 million worth of work on the Centennial Hills Community Center. APCO did not win that contract. But shortly after, APCO filed a $7 million claim against the city over the $29.7 million Washington Buffalo Park job.

During the past year, APCO has bid twice on city projects and both times the City Council awarded the contracts - worth a total of $13.2 million - to the company, unanimously and without question.

The oddity of those early 2007 votes became apparent only two weeks ago when City Council members expressed strong reservations about APCO, wondering aloud whether the city had to keep doing business with a company that is suing it.

"Why allow them to bid if they are suing us?" Councilman Gary Reese asked.

City Attorney Brad Jerbic replied that the city has an obligation "to award to the lowest responsive and responsible bidder."

He added, however, that two years earlier, city staff declared that APCO was "not a responsible bidder and should be disqualified for the Centennial Hills project."

"We thought they should be denied," he said. "The City Council (voted to let APCO bid) after we teed it up."

Reese's question stemmed from a request by Jerbic's office for $800,000 more - bringing its legal tab to date in the APCO claim to a whopping $2.3 million - for outside attorneys and experts in defense against APCO's $7 million claim.

That is the amount the company contends it is owed because of delays and construction changes caused by the city during construction of the Stacy and Amanda Darling Memorial Tennis Center. The city filed a counterclaim, saying the tennis court repairs would cost about $7 million.

The case between APCO and the city will be decided by an arbitrator. If the city loses, city attorneys told the City Council, APCO is likely to ask the city to pay its legal fees, which could be an additional $2 million.

While City Council members carefully questioned the city's legal staff about the cost of the fight against APCO and whether the city still had to do business with APCO, Mayor Oscar Goodman abstained from voting because of his ties with APCO executives. Goodman holds a 4 percent stake in Apex Business Park, which is partly owned by APCO employees.

Given those ties, why did he vote in favor of the two city contracts with APCO within the past year?

In both cases - on Jan. 3 and April 18 - the City Council voted unanimously to award the contracts to APCO. Asked about those votes, Goodman first insisted he did not vote on the items. When told they were part of a consent agenda - in which several items are lumped together and the council, including the mayor, is asked to vote for all of them simultaneously - the mayor said he did not remember voting on them.

"If I did, it was certainly an oversight on my part," he said.

Goodman's staff later clarified the situation, saying that APCO submitted no disclosure forms for its 2007 bids. Had those forms been provided, it would have revealed the potential conflict.

"As a result of the lack of documentation, the mayor was unaware of the conflict," said Diana Paul, senior public information officer.

Bill Henry, the city's senior litigation counsel, blamed attorneys for APCO for the high legal costs, which the city initially thought would not surpass $1 million.

"Every tactical choice made by lawyers for APCO, whatever their motivation is, and I wouldn't speculate to that, (has) resulted in increasing the expense to the city and also to APCO," Henry said.

At the council meeting, Goodman said he would likely be able to broker a deal between the city and APCO if his intervention did not constitute an ethical violation. But the mayor later said Jerbic informed him that ethical considerations barred him from intervening.

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