Assess penalties for late streetcars now, some council members say

2013-05-07T00:00:00Z 2013-09-11T15:34:03Z Assess penalties for late streetcars now, some council members sayDarren DaRonco Arizona Daily Star Arizona Daily Star
May 07, 2013 12:00 am  • 

While city workers are taking a wait-and-see approach toward collecting damages for late streetcar deliveries, some City Council members say it's time to hit Oregon Ironworks in the pocketbook.

They're calling on city staffers to immediately start charging late fees for each of the delayed vehicles and not wait until the project's end.

"We need to be lighting a fire under Oregon Ironworks now, and the only leverage we have is (liquidated damages)," said Councilman Steve Kozachik.

Tucson recently told the company it planned on charging $250 a day on the three vehicles that are currently late. The first vehicle was due March 29, but isn't expected to arrive in Tucson until August. As the days pass, the city can potentially charge up to $2.9 million total in late fees for the eight cars.

The city's next $480,000 installment payment on the streetcars is due in less than two weeks, but streetcar project manager Shellie Ginn said it's unlikely the city would withhold anything from the company at this point.

But that's not good enough for Councilman Paul Cunningham.

He said that he believes the city has bent over backwards long enough to accommodate the company and should collect its money as soon as possible.

"We need to go payment on delivery. Each day it comes late, we should have $1,000 taken off the sticker price," Cunningham said. "No more addendum. No more renegotiations. We need to place penalties in the contract and if they can't meet the delivery deadline, we should sue their posteriors to kingdom come."

Ginn said it's typical to wait until the end of a contract to add up all the damages caused by the delays and then collect.

Mayor Jonathan Rothschild agrees.

"We are going to enforce all of our rights ... but there is a legal way to do this, and we are doing it," Rothschild said. "You put them on notice that you intend to apply the charges," and decide on a final number after everything is calculated.

Kozachik scoffed at the notion the city has to wait before it can assess damages.

"Staff cannot say with a straight face that it's typical to wait until the end of a project before you figure out who owes who what. We've never assessed (late delivery) on a project like this, so nothing's typical except that it's getting typical that we keep pushing back the due date," Kozachik said.

"I'm looking at a schedule produced by our team that says we should have had the first vehicle approved for shipping to Tucson back in October of 2012," he said.

"The taxpayers and private sector developers who have made investments in the tens of millions of dollars counting on these things rolling up and down the tracks are sitting and hearing staff say that things are going well. ... All the while we look at empty tracks," he said

Rothschild said that although it's entitled to compensation under the contract, the city just can't charge whatever it feels like regarding damages. It has to justify exactly how the delays hurt the city financially.

"We have a duty to keep those damages reasonable," Rothschild said.

One of the costs the city can point to, said Councilwoman Regina Romero, is how much extra the city has to pay in bus service.

Transit estimates show the city can save $1 million a year by modifying bus routes covered by the streetcar, Romero said. And the longer the line sits vacant, the more the city pays.

Even when the cars do start arriving, it doesn't mean everything's ready to roll, Kozachik said. With testing and the hiring and training of operators, it will be months before the system is operational.

"Getting the cars here is only the beginning," he said.

On StarNet: View a timeline of Tucson's modern streetcar progress at azstarnet.com/streetcar

Contact reporter Darren DaRonco at 573-4243 or ddaronco@azstarnet.com

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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