D. Hearing for Final Acceptance of Project D. Hearing for Final Acceptance of Project

D. Hearing for Final Acceptance of Project

When the contract is complete, the engineer makes a report to the drainage authority showing the contract price, the amount paid on the partial payment certificates, the unpaid balance, and a summary of the work completed under the contract.⁸¹⁶ The auditor or secretary of the watershed district, upon receipt of the engineer’s report, is required to set a time and place for hearing on the report.⁸¹⁷ Notice is given by publication or by mail to all owners of affected property at least ten days before the hearing.⁸¹⁸ The notice must state that the report is filed, the time and location for the hearing, and that any party objecting to the final acceptance of the contract may appear and be heard.⁸¹⁹

A sample notice of hearing on final acceptance of the project is found in Template G.

The proceedings at such a hearing are intended to give any person who has a complaint about the completed work to be heard. Typical complaints aired at such a hearing are the contractor damaged crops in excess of that allowed by the viewers for damages, the contractor failed to bury the stumps and brush deep enough to permit agricultural operations over the top, or the contractor failed to properly install the side inlets thereby not allowing the water to drain into the open ditch through the berm. There is a question, then, as to who will pay the landowner. There is no legal authority for the drainage authority to pay for such losses. Doing so would, in effect, amends the viewers' report in the amount of damages to be paid.

One way of handling complaints against the contractor is to have the contractor pay the damaged landowner. The drainage authority can, upon recommendation of the engineer, reimburse the contractor with a change order provided the limits in increasing the construction costs do not impose an obstacle.⁸²⁰ This may be the proper way to handle these situations if the damages are determined by the engineer or drainage authority to be no fault of the contractor. The contractor must, however, be responsible for any faulty performance, such as failure to bury brush or to install drain pipes through the berm. If the contractor fails to make settlement with the landowner, the landowner may commence action against the contractor’s bond. The landowner has, in such case, no cause of action against the drainage authority.⁸²¹

The final acceptance hearing is also the time and place at which inquiry should be made by the drainage authority as to whether all laborers, materialmen, and subcontractors and payroll tax authorities have been paid. The drainage authority may demand to see proof of payment. The drainage authority should also demand that the contractor produce waivers of suppliers of materials and subcontractors who might otherwise file claims on the bond.

If there are significant complaints by landowners about the contractor’s performance, or if there is doubt about whether all persons entitled have been paid, the drainage authority may adjourn the hearing to another date certain. This would give the contractor the opportunity to correct the complaints and to provide the proof of payments requested. No new notice for the resumption of the continued hearing need be given.

When the drainage authority is satisfied that the work is complete and that all complaints have been dealt with, and everyone entitled has been paid, the drainage authority may order payment of the balance due on the contract.⁸²² If there is a question about whether liquidated damages are due, the drainage authority may waive them; if not waived, the drainage authority may deduct them.⁸²³ In any case, an order should be made by the drainage authority directing the auditor or watershed district secretary to pay the balance due on the contract, after accepting the contract as having been performed in accordance with specifications.⁸²⁴

A sample of a final acceptance order is found in Template H.

FOOTNOTES

⁸¹⁶ Minn. Stat. § 103E.555, subd. 1 (2015).
⁸¹⁷ Minn. Stat. § 103E.555, subd. 1 (2015).
⁸¹⁸ Minn. Stat. § 103E.555, subd. 1 (2015).
⁸¹⁹ Minn. Stat. § 103E.555, subd. 1 (2015).
⁸²⁰ The total increase in costs may not exceed 10 percent of the original contract price; benefits may not exceed the sum of construction costs and damages. Minn. Stat. § 103E.501, subd. 4 (2015).
⁸²¹ Grams v. Murphy, 114 N.W. 753 (Minn. 1908). Aggrieved landowners suit against bond is limited to damages resulting directly from contractor’s failure to complete the contract. Landowners may not recover for loss of use of land attributable only to delay in completion of the contract.
⁸²² Minn. Stat. § 103E.555, subd. 2 (2015).
⁸²³ Minn. Stat. § 103E.555, subd. 2 (2015).
⁸²⁴ Minn. Stat. § 103E.555, subd. 2 (2015).