2016-10-13 School Committee Minutes - Executive Session

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Mr. Doneski said that the first draft ruling was on the issue of asbestos abatement. He went on to review this ruling. The Master found largely in favor of TLT. He determined that the material contained in the exterior walls was an unforeseen condition therefore TLT was entitled to additional compensation. In the draft report regarding the track the Master determined that the To" was entitled to a credit for costs incurred for replacement of the original track surface. The master also determined that the Town was entitled to a partial credit for the stadium lighting and additional site work and TLT was awarded a credit for the additional site work performed. The next steps in the process is that each party had an opportunity to respond to the individual draft rulings with proposed amendments or revisions. After issuance of all draft reports and receipt of proposed revisions from counsel, the Master will then prepare a final ruling and report to the Superior Court. Mr. Doneski pointed out that the Superior Court would not address this case, if it got to this point, until sometime in 2017. At various times since April of 2014 TLT had been approached with settlement offers. The offers were consistently met with rejection. Following the issuance of the Master's first three draft reports (asbestos abatement, track and stadium light) in April of 2016, the School Committee met with counsel to review the rulings. At that time, it appeared that the net result of the Master's ruling could be $2.6 million dollars or more, which would be subject to 12% annual interest from the date of the complaint which was November of 2007. After the meeting, the School Committee voted to authorize a settlement offer to TLT of up to $5 million dollars. An offer of $4.1 million dollars was made. This offer was rejected. A draft report on the project schedule and phasing which includes liquidated damages was issued in early September. The Master ruled in favor on portions of the claim for both sides. If judgement were to entered into on this date, an award of $3 million dollars would be subject to interest in the amount of $3.2 million dollars. If the case were to continue without settlement, it would likely be several months before a judgement would be entered in Superior Court. At their meeting on September 26th the School Committee voted to authorize counsel to make a settlement offer of up to $6.5 million dollars. Counsel contacted TLT's counsel with a revised offer of $5.75 million dollars which was countered with an offer of $6 million dollars. Mr. Doneski informed TLT's counsel that he would recommend that the Town accept this offer. TLT's counsel confirmed agreement on the settlement figure and understands that a Town Meeting vote will be required. The Town will endeavor to complete the process by December 30th but cannot guarantee final payment within that time frame. TLT's counsel understood and agreed to that stipulation. Mr. Doneski reviewed the process to formally complete the process. Lastly he indicated that a former associate of TLT is asserting an attorney's lien on any payment by Reading to TLT. This matter will be addressed in the settlement agreement — to protect the Town from any further claims — by some form of assurance or indemnification obligation. Funding options were discussed which include the amount of the remaining balance of the project appropriation, free cash and a source to be determined. There are two liens on the settlement (Western Surety and the former associate). The settlement agreement will be structured as a Change Order. Mr. LeLacheur asked if Town Meeting should act prior to an executed agreement. Mr. Miyares indicated Town Meeting could appropriate the funds contingent on a signed settlement. Mr. Page 1 2