Highland County land bank board OKs change order, property sale at special meeting
Members of the Highland County Land Reutilization Corporation (land bank) board debated, then ultimately approved, a change order for work on a grant-funded demolition project and the sale of another property during a special meeting Friday, June 26.
Land bank administrator Jason Johansen presented a proposed $3,900 change order from the contractor of 246 East South Street in Hillsboro to remove an approximately eight-foot-deep cistern that was not previously identified. At the recommendation of legal counsel Todd Book, Johansen said he also obtained alternate quotes of $1,900 and “$3,500 on the high side” from two other contractors.
The property is one of the replacement projects using leftover funding from the 2024-25 Building Demolition & Site Revitalization Grant cycle.
According to Johansen, this is the third time this particular contractor has had a change order on a demolition project. Johansen said the other two change orders involved additional work that needed done and was not outlined in the initial contracts. He asked the board to consider whether they need to change the bid language to avoid these issues in the future.
“We want these sites revitalized, and I try to be as specific as possible, but I’m not perfect when it comes to that,” Johansen said.
For the 246 East South Street property, Johansen said there is a “debate on whether [the contractor] is required to remove” a cistern he discovered during the demolition process.
“I state in the bid documents, ‘no recorded well, cistern or septic tank,’ so ‘recorded’ means the health department does not have record of that,” Johansen said. “I put in parentheses, ‘if found, contractor must condemn in accordance with the Highland County Health Department.’
“I've had contractors come across unknown wells, cisterns and septics. They notify me, and then I consult with the property owner to see if they want that removed or if they want it left, and if they want it removed, I tell them to go ahead, proceed, and get your permit through the health department, and go ahead and demo this or condemn them.”
In response to a question from board president Terry Britton, Johansen said that other contractors have included this within the scope of work of their original bids without a change order. Johansen added that his “issue” is that the bid documents include contingencies for “unknown conditions,” where “if the contractor encounters an unexpected, unforeseen environment or other hazardous condition during the course of work, the contractor is to halt operations immediately, and contact the land bank and await further instructions on how to proceed.
“You could put this under the ‘unknown conditions’ category, but I do address cisterns, wells and septics,” Johansen said. “The issue with doing change orders is that the contractor can essentially state whatever price that they want. They know that it's not competitive, we're not going to rebid it out, or we haven't in the past. Maybe that's something that we want to start doing.”
After all of the background, Johansen opened up discussions with the board, asking them to consider whether their bid documents were accurate, whether they felt this was “change order worthy” and whether they should award the change order to the current contractor or give it to another company at a lower price.
Board member Lauren Walker said she felt that if a cistern was not recorded and the property owner was also unaware of it, it would qualify as an “unknown condition.”
“We've never done change orders, and so that's I think why I'm sticking to how we've done it,” Johansen said. “[The language] needs revised if we're going to go about it as it being an unknown condition.”
Walker said she did not feel “the language is wrong,” as “they could have found tons of things underground that were unknown.” Britton added that another option to clarify things in the future could be to hold “an open pre-bid meeting where they require all the contractors to come” to discuss “the rules and regulations.”
In response to another comment from Walker, Johansen said that other contractors have “taken the hit” and condemned unknown cisterns in the past without an additional cost. Britton agreed that they could be setting a precedent by granting a change order in this case.
“If we’re going to do a change order, I personally think that we should bid it out,” Johansen said.
Walker said that the land bank needs to implement “some kind of change order policy,” as Johansen said their current bid language does not discuss change orders.
Walker asked if Johansen could approach the current contractor and ask if they could match the $1,500 quote, and Britton agreed. However, after more discussion, they went back to the June 30 deadline and “time crunch” issue.
"Let's just get it done, then make our next bid packets kind of bulletproof with some of those items,” Walker said.
The board recommended that Johansen attempt to negotiate but said they would approve the current contractor working on the cistern at the site at whatever price they agreed upon, “not to exceed their original quoted amount.”
Britton again reiterated that a pre-bid meeting might eliminate some of these issues. Johansen suggested that they should set up a work session with Book.
Later in the meeting, Book tied in via phone and agreed that they can include additional language on “how it’s going to be dealt with” when these cisterns are located.
“We could put some language in there that if it's discovered, then it's determined the parties agree that the change order will be $500 or $1,000 or whatever it is to have that cistern removed or condemned,” Book said. “We could do something along those lines. That way everybody knows what we're looking at.”
In unrelated discussion, Johansen shared the results of the public auction of 222 McClain Avenue in Greenfield, after which the board agreed to accept the $8,000 sale of the parcel.
As previously reported, after months of debating options for selling the property owned by the land bank, the board agreed to try to sell the property at auction with a minimum reserve of $10,000. The parcel was first listed at $20,000, then lowered to $10,000 in January.
“There was a minimum reserve of $10,000 and then the property got $8,000, and so we're needing to discuss if we want to sell at that price,” Johansen said of the public auction. “The potential buyer plans to build a residential home, and then I will just throw in there, of course, Community Action is still interested, and that the property was donated to us.
“We have $10,000 in delinquent taxes cleared, roughly, a little under. We had an $8,400 grant funded demolition, and $350 in mowing costs and roughly about $700 in legal fees and communicating and doing the whole donation when we did that. That's where we originally got our price of just under $20,000 when we first put that for sale.”
Britton said it is “pretty obvious that we’re no going to get our $10,000,” as Johansen added that they were “approaching a year on the market.” Book said that an adjacent property owned by the village of Greenfield was also sold for the same price, to the same individual.
“Realize that, even though it's $8,000 there will be fees out of that, the auctioneer fees, and other expenses associated with the closing, so we're probably at the end of the day going to see about $7,000, I guess,” Book said. “It feels like the price of the price of the property has been established, and if we want to sell it, this is probably as good as we’re going to do for a while.”
Johansen said “the county is going to lose out,” but he also pointed out that it would be good to get the properties back into the tax base.
After a brief discussion, the board voted to approve the property sale.
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