THOMAS A. BELT, INC., )
vs. ) CASE NO. 75-2139BID
Respondent. )
A hearing was held in the above-captioned matter, after due notice to the parties, at Tampa, Florida, on February 27, 1976, before the undersigned Hearing Officer.
For Petitioner: Stephen C. Cheeseman
Whether the Petitioner or Respondent is responsible for the payment of a sewer connection fee to the City of Tampa, Florida, under a contract for the construction of a drivers license facility HSMB-6115.
On June 17, 1975, Petitioner submitted a bid to Respondent for the construction of drivers license facilities in Tampa, Florida, project number HSMB-6115. The base bid was $98,548.00 (Respondent's Composite Exhibit 2).
Bids were opened on June 17, 1975, and Petitioner was awarded the contract as the lowest responsible bidder. The contract was thereafter executed by the parties on July 24, 1975 (Supplemental Exhibit). The contract involved construction of a building and a small amount of site improvement including paving, landscaping, and grading. There was an existing Highway Patrol Station on the designated tract of land and also a frame structure which had been a temporary facility for the use of drivers license examination. The specifications for the project provided in section 15300 that part of the work was "building sanitary sewer and including connection to the collection system." A survey of the property contained in the plans showed an existing sanitary
sewer on the west side of 30th street that flowed in a southerly direction toward East Hillsborough Avenue. The site plan indicated that construction of a sanitary sewer line was required from the proposed drivers license facility in an easterly direction to the west boundary of 30th Street. Two existing water meters were located on the land in question, a 2-inch meter, and a 1-1/2 inch meter, the latter being near the proposed new facility. Although a septic tank was then on the property to service the existing buildings, this fact was not indicated in the plan or specifications. Neither was there any clear indication in the contractual documents of an existing sewage collection system on the property that tied in to the City sewer on 30th Street. None, in fact, existed. The 1-1/2-inch water meter had been installed on September 24 1974, and the 2- inch meter in 1967 (Testimony of Coates, Dowdell; Petitioner's Exhibits 2, 3).
Prior to the submission of bids, Petitioner, along with other proposed prime contractors and plumbing subcontractors, visited the site of the work to determine the scope of the project. Based upon the existence of the 1-1/2-inch water meter, the different flow directions as set forth above, and the absence of any indication of septic tanks in the plans and specifications, it was generally assumed by these firms that the sewer line to be constructed would tie in to an existing internal state-owned collection system servicing the older buildings and thence be connected to the city sewer on 30th Street.
Although several of the contractors made inquiries to the City Sewer Department concerning the possibility of charges in connection with the sewer line, they received no definite information as to whether a connection fee would have to be paid. In several instances, they were told that the cost would be twelve dollars a foot for the pipe connection from the project to the tap into the city sewer line. A number of the plumbing subcontractors in submitting their bids to the proposed general contractors qualified their bids to exclude any "impact fees" or "sewer tap fees," including the Arthur A. Schleman Plumbing Company which ultimately became the plumbing subcontractor. Several of the general contractors also qualified their bids to exclude such fees, but not the Petitioner (Testimony of Dyser, Schleman, Respondent's Exhibit 1 and Composite Exhibit 2).
Mr. Coates, a civil engineer with the architectural firm that was Respondent's agent, only became aware of the need to submit an application to the City of Tampa for a sewer connection subsequent to the opening bids. The subject was brought up in general conversation with the bidders at that time. Several days later, Mr. Coates called the Tampa Sewer Department and was told that the owner of the property had to make an application for commitment of sewer services. On June 23, 1975, five days after the opening of bids, but before final award of contract to Petitioner, Mr. Coates prepared an application and forwarded it to Lieutenant C. J. Hutches, Regional Supervisor, Division of Drivers Licenses. The application was signed and submitted by him to the City of Tampa where it was received on July 11, 1975. It was not until July 24th that Mr. Coates became aware that the application had been approved and that the amount of the sewer connection fee would be $4,000.00. At this point in time, Petitioner could not have changed his bid or refused to sign the contract without penalty of forfeiture of bid bond. A contractor cannot make a sewer connection until the owner received approval of its application from the City of Tampa. Neither the contractor nor the architect is authorized to submit the application (Testimony of Coates, Dowedell, Petitioner's Exhibit 6).
Respondent did not pay the $4,000.00 charge and Petitioner became aware of the amount of the charge in October 1975. By letter of October 29, 1975, to Mr. Coates, Petitioner requested that the Respondent be responsible for payment
of the charge by issuance of a change order to the contract with an equitable adjustment in the amount of $4,448.00, which included $44.00 for increase in bond premium and $404.00 representing the contractor's overhead and profit for the increased amount of the contract. On November 3, 1975, Respondent's representative advised Petitioner that its request for a change order was denied based on Article 4.7.1, General Conditions of the contract, which requires the contractor to secure and pay for all permits, governmental fees and licenses necessary for the proper execution and completion of the work. This letter also advised Petitioner that he could dispute the decision under Article 8.5 of the contract and that, due to the attitude of the City of Tampa during the bidding period, it was believed that there were "extenuating circumstances that provided firm basis for dispute." The letter also advised the Petitioner not to delay diligent pursuance of the work under the contract. By letter of the dame date to Respondent, Petitioner submitted a formal appeal to the decision under Article 8.5 of the contract. By check, dated December 17, 1975, Petitioner paid the connection fee to the City of Tampa under protest (Petitioner's Exhibits 4, 5 & 8).
Expert testimony was presented concerning reasonable costs for Petitioner and his counsel to prepare and prosecute this contract appeal. Petitioner spend approximately 24 hours on the matter and bills his time at
$35.00 per hour for a total of $840.00, which is found to be fair and reasonable. Petitioner's counsel expended some 20 hours in preparation of the appeal and 6 hours at the hearing. Although expert testimony was to the effect that in such a case of a somewhat novel nature, a fee of $100.00 an hour would be fair compensation, it is hereby found that such an hourly rate is excessive and more properly should be $50.00 an hour, plus the sum of $500.00 for the hearing, making a total of $1,500.00 as reasonable attorney's fees (Testimony of Oaks, Belt, Woodward).
CONCLUSIONS OF LAW
The appeal of the Respondent's decision denying Petitioner's requested change order lies under paragraph 8.5 of the contract which reads as follows:
8.5 Claims and Disputes: Except where under the terms of this contract the Architect's determination is final, and except as otherwise specifically provided in the contract, all disputes arising under this contract, including claim by Owner for damages for delay in completion of the construction within the time agreed upon in Article 4 of the Agreement, shall be decided by the Architect, subject to written appeal within thirty (30) days to the Department of General Services. Hearings in connection with such appeals shall be held before one or more Hearing Examiners appointed by the Executive Director of the Department of General Services to hear such appeals, whose findings, if approved by the Executive Director or the Governor and Cabinet, shall be final and conclusive upon the parties thereto as to such disputes. In the meantime, the Contractor shall diligently proceed with the work as directed. In the
determination and settlement of any such dispute, the said Review Panel may assess the costs and charges of the proceeding upon either or both parties , as it may deem equitable under the circumstances, which costs and charges may include, but shall not be limited to, any professional, legal or technical advice and counsel it may require, and if it deems it equitable, it may award
to the successful party, in any dispute, damages for delays, or for necessary costs and expenses, caused by the proceeding, it if finds that the appeal or refusal to accept the Architect's determination was without reasonable cause. The determination of all such matters in the manner provided in this Article shall be a condition precedent to any right to legal action of either party against the other or any matter of dispute arising under the contract.
It is considered that a valid dispute within the framework of paragraph 8.5 above is presented in the instant proceedings. Article 12.1.2. provides that the contract sum may be changed only by change order.
Petitioner also contended that the "concealed conditions" clause, Article 12.1.6 should govern the situation in question because the existence of a septic tank on the premises was unknown and not shown in the contract documents. However, it is considered that this provision is inapplicable because such omission did not affect the contractor's ability to actually perform the work required.
The fact that neither Petitioner nor other bidders may have been aware at the time of bid submission that payment of a sewer connection fee would be required is considered insufficient to absolve the Petitioner from his responsibility to ascertain this fact, if indeed, such payment falls within the ambit of Article 4.7.1, which reads as follows:
4.7.1 The contractor shall secure and pay for all permits, governmental fees and licenses necessary for the proper execution and completion of the work, which are applicable at the time the bids are received.
It is not the responsibility of the Contractor to make certain that the Drawings and Specifications are in accordance with applicable laws, statutes, building codes and regulations.
Although the specifications were somewhat misleading by using the words "building sanitary sewer including connection tot he collection system" in Section 15300, thus indicating that an internal collection system might be in existence on the premises, this, in itself, was insufficient to justify an assumption that a tie-in into the city sewer system was not required. In like manner, the failure of the plans and specifications to make reference to the existence of a septic tank and the discrepancies concerning the direction of flow in the existing city sewer line on Sheets C1 and M1 of the plans also fail to justify such an assumption. Although the presence of a 1-1/2-inch water
meter could normally indicate that time-in to the city sewage system had previously been accomplished, this was by no means certain due to the possible existence of a septic tank. All of these discrepancies that caused uncertainty in the mind of Petitioner, as well as the other bidders, should have prompted it to have addressed a request for clarification to the architect in this respect, pursuant to Section B4 of the specifications for issuance of a written addendum to the bidding documents. Section B12 requires bidders, before submitting their proposals, to visit the site of the proposed work and completely familiarize themselves with the nature and extent of the work and any local conditions that may in any way affect it. Consequently, it is concluded that Petitioner was negligent in not ascertaining the true circumstances prior to submission of his bid.
Petitioner further argues that only the owner was permitted by the City of Tampa to make application for sewage connection services, and the Respondent's subsequent application and agreement to pay such a connection fee establishes its liability therefor. Further, Petitioner claims that it could not obtain information from the City Sewage Department as to the necessity of paying such a fee and the amount thereof. These assertions also fail to provide sufficient basis for Petitioner's lack of liability to pay the connection fee. The undertaking by the city in the above respect would not affect Petitioner's liability under the contract, if any. Also, the amount of such a fee easily could have been ascertained by referring to the appropriate provision of the Tampa City Code, based on the size of the water meter.
However, all of the foregoing is considered moot in view of the conclusion that the sewer connection fee or "impact charge" was not within the scope of Petitioner's responsibility under Article 4.7.1 of the General Conditions. The evidence established that such a charge is not a "permit, governmental fee, or license." As indicated by the testimony of the Tampa Sewer Department official, the payment is in the nature of a service charge to the owner of property to help defray the cost of necessary sewage facilities, and if it were not for such charges, monthly sewage costs to users would necessarily be increased to recapture these expenses of processing sewage. Whether this payment be viewed as a service charge or as a tax of some sort, it scarcely could have been considered under Article 4.7.1 as a permit, fee, or license for which the Petitioner properly should pay. The "sewer connection fee" is a misnomer . . . it is not a fee to reimburse the city merely for the cost of connection a private sewer line to municipal facilities. In fact, the testimony showed that the actual cost of such a connection by the city, i.e., the provision of pipe extension from the owner's land to the city sewer is not specifically charged to the owner unless it is a second connection to the city system. The term "impact charge" is certainly a more apt description of the amount paid because it is solely based upon the effect the owner's total sewage will have on city facilities and the city's consequent recovery of capital investment therefrom. Accordingly, it is concluded that such a charge should not be levied upon the Petitioner and that a change order should be issued with an appropriate adjustment of the contract price to reimburse Petitioner for his payment of the charge, together with other costs and attorney's fees authorized under Article 8.5 of the contract, which total $6,788.00.
That pursuant to Article 12.1.2, General Conditions of the Contract for construction of State Project Number HSMB-6115, Drivers License facility, Hillsborough County, Florida, a change order be approved and issued increasing
8.5 of the aforesaid contract.
DONE AND ENTERED this 7th day of April 1976 in Tallahassee, Florida.
THOMAS C. OLDHAM
May Jo Carpenter, Esquire Assistant Attorney General Department of Legal Affairs The Capitol
Stephen C. Cheeseman, Esquire Gordon and Maney
