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HomeMy WebLinkAbout26-031 - Resolution - MDH Correction Order - WSB - City AgreementCITY OF LINO LAKES RESOLUTION NO. 26-31 RESOLUTION APPROVING THE RESOLUTION AGREEMENT BETWEEN THE CITY OF LINO LAKES AND WSB LLC REGARDING MDH CORRECTION ORDERS FOR 20 AFFECTED PROPERTIES WHEREAS, the City of Lino Lakes ("City") and WSB LLC ("WSB") are parties to a January 1, 2014 Professional Services Contract under which WSB provides engineering services to the City; and WHEREAS, as part of the City's 2025 Utility and Street Reconstruction Project, sanitary sewer facilities were installed within 50 feet of private wells on 20 properties in the Pine Haven and Colonial Woods neighborhoods, contrary to Minnesota Rules without a variance; and WHEREAS, WSB, serving as the City's engineer for the project, identified the setback issue following construction, and the Minnesota Department of Health ("MDH") subsequently issued Correction Orders Nos. 250026 and 250027 on September 25, 2025; and WHEREAS, MDH has granted the City an extension until November 30, 2026 to complete the required corrective actions; and WHEREAS, under the 2014 Contract, WSB is obligated to indemnify and hold the City harmless for damages, liability, and costs arising from negligent errors or omissions in the performance of professional services; and WHEREAS, the City and WSB have negotiated a Resolution Agreement establishing responsibilities, corrective actions, reimbursement procedures, and long-term obligations necessary to resolve the issues identified in the MDH Correction Orders; and WHEREAS, the City Council finds that approval of the Resolution Agreement is in the best interest of the City and its residents, ensures compliance with MDH requirements, secures reimbursement for City costs associated with corrective work and provides relief to affected property owners . NOW, THEREFORE BE IT RESOLVED by the City Council of Lino Lakes, Minnesota that 1. The Resolution Agreement between the City of Lino Lakes and WSB LLC, attached hereto as Exhibit A, is hereby approved. 2. The Mayor and City Clerk are authorized to execute the Agreement on behalf of the City. 3. City staff are directed to implement the terms of the Agreement, including coordination with WSB, affected property owners, and MDH to ensure timely completion of corrective actions. 4. All actions taken by City staff to date in furtherance of the Agreement are hereby ratified and approved. Adopted by the City Council of the City of Lino Lakes this 91h day of March, 2026. Ro fferty, Mayor ATTEST: Roberta Colotti, CIVIC, City Clerk Exhibit A EXHIBIT A RESOLUTION AGREEMENT THIS RESOLUTION AGREEMENT (the "Agreement") is entered into this 0(46day of M,ow� , 2026, by and between the CITY OF LINO LADES, MINNESOTA (the "City") and WSB LLC ("WSB") (collectively referred to as the "Parties"). RECITALS WHEREAS WSB and the City are parties to that certain contract dated January 1, 2014 (the "Contract), under which WSB agrees to provide city engineer services to the City; WHEREAS, as part of the City's 2025 Utility and Street Reconstruction Project (the "Project"), the City installed new sanitary sewer facilities within certain right of way in the Pine Haven and Colonial Woods neighborhoods; WHEREAS, WSB served as the City's engineer for the Project; WHEREAS, following the construction of the Project, WSB discovered that the sanitary sewer line was installed within 50 feet of wells located on 20 properties identified in Exhibit A (collectively, "the Properties"), contrary to Minnesota Rules absent a variance from the Minnesota Department of Health ("MDH"); WHEREAS, WSB then sought a variance on behalf of the City due to the unavailability of another location for the sanitary sewer line which would meet the 50 foot requirement but the variance request was not considered by MDH; WHEREAS, the MDH issued correction orders (Correction Order Nos. 250026 and 250027) for the Properties dated September 25, 2025, which required corrective action completed on or before November 13, 2025; WHEREAS, the MDH has subsequently granted the City an extension until November 30, 2026 to complete the necessary remedial measures; WHEREAS, pursuant to the Contract and confirmation via letter from WSB dated October 1, 2025, WSB must indemnify and hold the City harmless from damages, liability, and cost — including reasonable attorneys' fees — to the extent caused by WSB's negligent errors or omissions in the performance of professional services on behalf of the City; WHEREAS, in settlement of the dispute, the Parties have agreed to certain corrective actions to be taken with respect to the Properties and the Parties' responsibility for the costs associated with the corrective actions; and WHEREAS, the Parties now wish to memorialize their agreement in writing. NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby Page 1 of 9 acknowledged, the Parties agree as follows: 1. Scope of Properties. The 20 Properties are made up of the Connected Properties and the Non -Connected Properties, as each are defined below. The use of the term "Property" or "Properties" shall include both Connected Properties and Non -Connected Properties. a. Connected Properties. The parties agree that of the 20 Properties, 5 of the Properties have previously applied for utility connection permits, connected to municipal water, and have sealed, or have contracted for sealing of the well located on their property. Those properties are identified as the following: i. 8011 Elbe ii. 8032 Danube iii. 954 81st iv. 945 81 st v. 904 81st (collectively the "Connected Properties") b. Non -Connected Properties. The parties agree that of the 20 Properties, 15 of the Properties have not previously applied for utility connection permits. These properties currently have an unsealed well that does not meet the setback requirements under Minnesota Rules. Those properties are identified as the following: i. 8032 Elbe ii. 8028 Elbe iii. 8024 Elbe iv. 8020 Elbe v. 8016 Elbe vi. 8019 Elbe vii. 8021 Elbe viii. 8025 Elbe ix. 8029 Elbe x. 953 81st xi. 8074 Lake Drive xii. 8020 Danube xiii. 8024 Danube xiv. 8028 Danube xv. 6216 Red Maple Ln (collectively the "Non -Connected Properties"). 2. Costs and Responsibilities for Connection to Municipal Water and Well Sealing for Connected Properties. WSB shall be responsible for the costs incurred or to be Page 2 of 9 incurred to connect the Connected Properties to municipal water supply and seal the wells located on the Properties that do not meet separation requirements from the mainline sanitary sewer, and all costs for 2025 water connection charges and permit fees. Such costs shall include but are not limited to all construction components for the corrective work, including excavation, installation, backfilling, and surface restoration to a condition substantially similar to that which existed prior to the commencement of the work. a. Completed Well -Sealing. For those Connected Property property owners who have already completed both the well -sealing and municipal water connection process, the construction costs for sealing the well and connecting to City municipal water supply shall be determined as follows: For reimbursement for municipal water connection costs, the property owner and/or its contractor shall provide an invoice showing the total amount paid by the property owner to the contractor for connection to municipal water, and include proof of payment by the property owner. ii. For reimbursement for well -sealing costs, the property owner and/or its contractor shall provide an invoice showing the total amount paid by the property owner to the contractor for well -sealing, and include proof of payment. The property owner and/or contractor must also provide a well -sealing certification or other documentation to confirm that the well -sealing has been properly completed in accordance with Minnesota law. Such reimbursement shall be made within 30 days of WSB's receipt of documentation verifying the costs incurred. The City shall be copied on all payment correspondence. b. Unfinished Well -Sealing. For those property owners who have only completed the municipal water connection process but not yet sealed their well, the construction costs for sealing the well and connecting to City municipal water supply shall be determined as follows: For reimbursement for municipal water connection costs, the property owner and/or its contractor shall provide an invoice showing the total amount paid by the property owner to the contractor for connection to municipal water, and include proof of payment by the property owner. ii. For well -sealing costs, WSB shall coordinate the work. and make payment to the contractor consistent with Section 3 depending on whether the property owner hires a contractor directly (Section 3(b)) or if the City hires the contractor (Section 3(a)). Such reimbursement for municipal water connection costs shall be made Page 3 of 9 within 30 days of WSB's receipt of documentation verifying the costs incurred. The City shall be copied on all payment correspondence. c. Municipal Water Connection Charges and Permit Fees. The 2025 municipal water connection charges to be reimbursed to all Connected Property property owners is as follows: Trunk $2,588 WAC $1,628 Special Connection $3,280 Total $7,496 The permit fees reimbursable to all Connected Property property owners is as follows: Water Connection Inspection $250.00 1/4" Domestic Meter + NM $623.30 Sales Tax on Meter 50.64 Total $1,123.30 Such reimbursement for municipal water connection charges and permit fees in the total amount of $8,619.30 per Connected Property shall be made within 30 days of the date of this Agreement. The City shall be copied on all payment correspondence. 3. Costs and Responsibilities for Connection to Municipal Water and Well Sealing for Non -Connected Properties. For all Non -Connected Properties, WSB shall be responsible for the costs of hiring a contractor to perform the work identified herein except, as outlined herein, property owner may choose to hire their own contractor to perform the work and be reimbursed by WSB for those costs. If the property owner's cost of using their own contractor exceeds the costs obtained by the City in a public bidding process, then WSB shall only be responsible for reimbursing the property owner in the amount of the cost for the contractor obtained by the City through the public bidding plus an additional ten (10) percent. The property owner, in their release agreement with the City, shall also acknowledge that there will be no warranties provided by the City or WSB for any work performed by their own contractor. The Parties agree that WSB shall be responsible for the design of the corrective work, any necessary bidding or contract procurement responsibilities as a part of the City's contract, and administration of the City's contracts for corrective work, subject to final approval by the City. a. City Contracts. The City will, unless otherwise agreed to with specific property owners, enter into the corrective work contract with the contractor(s) selected after following the necessary procurement processes. WSB shall administer and oversee the corrective work as the City engineer. Except as outlined below, the City shall pay the contractor directly for properly performed Page 4 of 9 work- consistent with the applicable contract documents. WSB shall reimburse the City for all costs incurred for the work- in this Section 3 within 30 days of the receipt of an invoice from the City. b. Property Owner Contracts. Upon request from a properly owner, that property owner may choose to select their own contractor to perform the necessary work hereunder. WSB shall require a work plan developed by the property owner's contractor to review for compliance with the requirements imposed by the MDH as part of the correction orders. Upon completion of the work, WSB shall reimburse the property owners consistent with the process outlined in Section 2(a) for Connected Property property owners and reimbursement limits specified in Section 3. c. Municipal Water Connection Charges for Non -Connected Properties. WSB agrees to pay the applicable municipal water connection charges at the time permits are pulled for individual properties. Such payments shall be made directly to the City in accordance with the City's established fee schedule and payment procedures. WSB will obtain permits from the City after an agreement has been executed between the property owner and the City for the corrective work. The City agrees that it will waive its inspection fees permitted under City Code. For 2026, the municipal water connection charges for each Non -Connected Property will be as follows: Trunk $2,666 WAC $1,677 Special Connection $3,280 Total $7,623 4. Well Testing. WSB agrees to cover the cost of testing the wells prior to sealing. Such testing shall be conducted by a qualified third -party professional in accordance with applicable Minnesota Department of Health standards and regulations. WSB shall provide copies of all test results to the City and the affected property owners within 15 business days of receipt. 5. Overall Project Responsibilities. The Parties agree both shall use their best efforts to obtain property owner compliance and complete all work on or before November 30, 2026. However, WSB agrees that for Properties that do not agree to the wort- in 2026, WSB will remain responsible for the costs related to resolving issues with the MDH and property owners incurred prior to November 30, 2031. However, if a property owner has refused corrective work before November 30, 2026, and the MDH makes a determination that the Property no longer requires corrective work- by the City or grants the property owner or City a variance negating the need for corrective work, WSB shall no longer be held responsible by the City for corrective work at that Property. Further, if the MDH grants an extension for the timeline for a property owner to comply with the correction orders, the parties agree that the extended deadline should govern the period for when the corrective worl- must be completed. WSB shall provide written Page 5 of 9 documentation of any such MDH determination to the City within 5 business days of receipt. The parties understand and agree that WSB remains responsible for its indemnification obligations to the City under the Contract. 6. Utility Credit. The City and WSB agree that a $1,000 water utility credit will be provided to the affected property owners. WSB shall be responsible for 50% of the utility credit for the 20 Properties, representing a total amount of $10,000. This equates to $500 per property owner. For each property, WSB shall make this payment to the City within 30 days of the completion of the corrective work. The City will be responsible for the remaining portion of utility credits offered to property owners. 7. Property Owner Agreement. WSB will prepare a release for each property owner to sign at the earlier date of when the property owner agrees to the corrective work or reimbursement for work already performed. The release will include at least the following information: consent from the property owner to allow the City, WSB, and any necessary contractors to access the Property to perform the work; a release of claims from the property owner; and information regarding the utility credit offered to the property. The final language in the agreement will be subject to City approval. 8. Administrative and Legal Costs. WSB agrees to pay a total sum of $5,000 for all non- legal administrative costs incurred by the City. This payment shall be made within 30 days of the execution of this Agreement. WSB agrees to pay the City's legal fees already incurred to date in the amount of $4,277. WSB also agrees to pay the City's legal fees related to the correction orders. The City shall reasonably attempt to provide WSB notice prior to engaging the attorney for such work and an estimate of the cost and shall keep WSB apprised of the status of legal actions. Payment for legal fees incurred to date shall be made within 30 days of the execution of this Agreement. Payment for future undisputed legal fees shall be made within 45 days of WSB's receipt of an invoice from the City. WSB is entitled to review full billing invoices to confirm reasonableness of billing and subject matter. Where reasonably possible, the City agrees that it will attempt to notify WSB prior to requesting any legal work be performed with respect to the 20 properties. Failure of the City to provide notice does not negate WSB's responsibilities under this Paragraph. 9. WSB's Costs. WSB agrees that the City will not be billed for any of WSB's costs associated with the correction orders, including but not limited to administrative costs, professional fees, testing costs, and any other expenses incurred by WSB in fulfilling its obligations under this Agreement. 10. No Admission of Liability. This Agreement does not constitute an admission of liability or wrongdoing by any party. Neither this Agreement nor any negotiations, discussions, or proceedings related to this Agreement shall be offered or received as evidence of an admission of liability or wrongdoing by any party. 11. Entire Agreement. This Agreement constitutes the entire agreement between the Page 6 of 9 parties and supersedes all prior agreements, understandings, and communications between them, whether oral or written, with respect to the subject matter hereof. No modification, amendment, or waiver of any provision of this Agreement shall be effective unless in writing and signed by both parties. 12. Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without giving effect to any choice of law or conflict of law provisions. Any dispute arising out of or relating to this Agreement shall be venued exclusively in the District Court of Anoka County, Minnesota, and the Parties hereby consent to the personal jurisdiction of such court. 13. Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. 14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Electronic or facsimile signatures shall be deemed original signatures for all purposes. 15. Authority to Execute. Each party represents and warrants that it has the full right, power, and authority to enter into this Agreement and to perform its obligations hereunder, and that the person signing this Agreement on its behalf has been properly authorized to do so. signature page to follow Page 7 of 9 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. CITY OF LINO LAKES, MINNESOTA Bv: Rob Rafferty, Mayor By: Roberta Colotti, City Clerk WSB LLC Page 8 of 9 Exhibit A List of affected properties identified in Correction Order Nos. 250026 and 250027, all located in Lino Lakes, Minnesota: ■ 8032 Elbe ■ 8028 Elbe ■ 8024 Elbe ■ 8020 Elbe ■ 8016 Elbe ■ 8010 Elbe (In MDH letter dated Dec. 3, 2025, MDH determined no correction actions are required for 8010 Elbe and this address was removed from the list) ■ 8011 Elbe ■ 8019 Elbe ■ 8021 Elbe ■ 8025 Elbe ■ 8029 Elbe ■ 954 81st ■ 953 81st ■ 945 81st ■ 904 81st ■ 8074 Lake Drive ■ 8020 Danube ■ 8024 Danube ■ 8028 Danube ■ 8032 Danube ■ 6216 Red Maple Ln Page 9 of 9