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CV Strategies Change Order City Council Meeting — November 17, 2009 Page 2 of 3 Mr. Bernheimer has offered to waive all finance charges ($846.52) plus $1,500 of the $15,225.35 balance owing (approximately 10%), for a total settlement amount of $13,725.35. Staff recommends agreeing to this amount in order to settle this dispute. While it is true that staff authorized work beyond the City Manager's contractual authority of $25,000 and the law generally places the responsibility on the consultant to understand the contractual authority of City staff, CV Strategies did perform requested work. If the City does not agree to the compromise settlement amount, the City will almost certainly face a civil lawsuit. Mr. Bernheimer is himself an attorney and has his own law practice. In addition, the City faces the potential of paying Mr. Bernheimer's legal fees and costs if he was to prevail against the City, because the City's agreement includes an attorney's fees clause, authorizing the court to award fees and costs to the prevailing party in any litigation matter. ENVIRONMENTAL IMPACT Not applicable. FINANCIAL IMPACT If the City does not agree to the compromise amount and CV Strategies pursues litigation, the City should estimate litigation fees and costs of at least $25,000 - $50,000 if the matter goes to trial, with the potential for more contentious litigation to exceed $50,000. In addition, we should be aware of the possibility of paying the plaintiffs legal fees and costs if they prevail in court. Funding for this project is available in account 520-8000-8001-2350-0923-000. The benefit to the Electric Utility is proportional to the cost increase associated with this change order, and thus staff would recommend payment of the balance owing from this electric fund account. Budget Amount YTD Expenditure Oen Encumbrances Available Balance $637,010.29 $112,801.62 $205,831.16 $318,377.51 CONFLICT OF INTEREST -- Gift Disclosure Requirements Name of Company: CV Strategies President: Erin Gilhuly Points of Contact: Erin Gilhuly & Rob Bernheimer ORANGE\DDERLETH\62738.1