Santa Rosa settles long-running public works dispute with Bay Area contractor

The issue stemmed from delays of a major overhaul of Stony Point Road that was completed in 2018.|

Santa Rosa will pay $2.75 million to a Bay Area road contractor to settle its part in a protracted contract dispute related to a major overhaul of Stony Point Road completed in 2018.

Bay Cities Paving and Grading was hired in May 2015 to construct the second phase of a project aimed at addressing congestion and safety on a 1-mile section of Stony Point Road from Sebastopol Road to just south of Hearn Avenue.

Paving work was expected to take just over a year, but design issues and other factors caused significant delays, stretching construction to three years.

The company sued Santa Rosa in October 2019 alleging a breach of contract stemming from the delays and claimed the city owed approximately $6.3 million for additional work.

Santa Rosa will pay Bay Cities $2.75 million to settle the matter. The firm hired by the city to prepare the design, GHD, will pay $3.75 million to Bay Cities.

“The city is pleased to have this matter behind us in a fair resolution that involves a substantial contribution by GHD,” the city said in a statement.

The settlement puts a cap on one of Santa Rosa’s longest running public works projects, which was mired with issues from the start. And it ends a yearslong legal battle involving several countersuits, court delays stemming from the COVID-19 pandemic and staffing changes at the city.

Work began on the second phase of the Stony Point Road widening in August 2015 and included adding travel lanes in both directions, sidewalks, bike lanes, improved traffic signals and crosswalk improvements. Bay Cities of Concord was awarded the $10 million construction contract after submitting the lowest bid and construction was expected to be completed in December 2016.

The entire widening project, which took nearly a decade to build, cost upwards of $32 million, including the environmental analysis and costs to acquire land and provide financial assistance to homeowners displaced by construction from Highway 12 to about Hearn Avenue.

It had been in the works since at least 2002, and the city started work to widen the first phase, from Highway 12 to Sebastopol Road, in 2009.

The overall project was supposed to address congestion on the busy north-south thoroughfare, often used as an alternative to Highway 101 between Petaluma, Rohnert Park and Santa Rosa.

But the second phase hit snags almost immediately. It was initially held up during the Great Recession of 2007-2008 and a wet winter later set back construction. There also were issues with widening the culvert carrying Roseland Creek under the road.

The city, according to a staff report, said “disputes arose almost immediately over GHD’s design plans” once work got started, too.

In one instance previously reported by The Press Democrat, Bay Cities discovered a design error that caused 900 feet of curb and gutters along the west side of the road to be installed at the wrong elevation as they were working to complete construction. The work had to be torn out and redone.

The city’s public works head said at the time construction was “consistent with the plan” but the plans misidentified the location of the water line by as much as a foot. It left little room between the pipe and the road base, which could cause problems down the way as heavy vehicles traveling across that section place stress on the pipe, and affected drainage requiring additional work.

The project was finally completed in August 2018 but delays caused headaches for homeowners along Stony Point and families and staff at Robert L. Stevens School.

Bay Cities, in its lawsuit, alleged work was to last no more than 300 days according to the contract.

The company said plans and specifications of the underground utilities were “highly defective and inaccurate, causing massive amounts of extra work, inefficiencies, and delays.”

The company submitted multiple change orders to the city for additional compensation related to the delays and extra work but the city failed to pay, according to the lawsuit.

Santa Rosa denied any fault and disputed Bay Cities’ requests for compensation. The city, in its response to Bay Cities’ lawsuit, said the company failed to mitigate its damages as required by law and alleged Bay Cities would be “unjustly enriched” if it won in the courts.

In January 2022, the city filed a countersuit against GHD alleging the firm failed to perform its duties and its negligence led to delays.

Santa Rosa had hired GHD Inc., then known as Winzler & Kelly Consulting Engineers, to provide planning and design services for the entire project. The firm’s responsibilities were later expanded to include construction management.

Drawings prepared by GHD, the city argued in legal filings, were flawed. The city denied responsibility in its countersuit.

“The city reasonably assumed the design prepared by GHD was free from errors and omissions, and could be constructed as shown in the prepared designs,” according to the city’s counterclaim.

Under the terms of its contract, the city said, GHD was liable for any damages incurred by the city and must indemnify the city against any claims “arising out of the negligent acts or omissions or willful misconduct in the performance by the consultant.”

GHD sued the city in response and in court filings argued the city shared responsibility for any claims arising out of the design and construction of the project.

What led to the design errors remains unclear.

The parties met March 4 for mediation and entered a conditional settlement agreement on March 26, which the council signed off on during a closed-door meeting with city attorneys. The resolution came ahead of an expected trial date set for April 12.

The City Council on April 16 approved appropriating $1.85 million in reserve funds to pay for its portion of the settlement. The city also will tap into $600,000 in contingency funds left over from the project and $600,000 previously appropriated for the litigation.

As part of the settlement, Bay Cities agreed to dismiss the lawsuit against the city and Santa Rosa agreed to release GHD from any claims. None of the parties admitted any liability as part of the settlement, according to a copy of the agreement.

Bay Cities’ attorney said the company was pleased with the resolution.

“This matter was, to our eyes, always a mystery as to how and why the City of Santa Rosa could have left such an obviously open and shut case against it to have gone on for so long,” attorney Steven Copeland said. “Both Bay Cities and I are extremely pleased with the resolution of this and the professionalism of the city's new outside attorneys and their efforts to both pay Bay Cities what was always due and to get significant contribution toward that payment from the city's project designer, GHD.”

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.