Palm Coast Council Defends Splash Pad Settlement that Fell $1.2 Million Short, Citing ‘Diminishing Returns’

Palm Coast City Council members said they fought as hard as they could to recover as much money as possible through settlements of the litigation the city initiated against the designers and builders of the splash pad at Holland Park. But after a certain point, the council members said, the law of diminishing returns kicked in, and it was time to end the litigation. 

That was the council’s reasoning Tuesday before voting 5-0 to approve the final settlement with the last of a series of contractors the city sued in November 2022, a year and a half after the splash pad had opened, only to close soon after because of poor construction. 

In total, Palm Coast recovered $2.375 million from four contractors, but no legal fees, falling at least $1.2 million short of covering losses, and possibly more when all numbers are tallied. 

Council members said they recovered almost all they set out to recover. But that was putting a brighter face on the 2022 case. The attorney the council hired and who saw the case through had encouraged the council to sue. The assumption all along was that if the city prevailed, it would also recover attorney fees. The city mostly prevailed. It did not recover attorney fees. 

“We’ve had multiple shade meetings concerning this. And we have done everything we could to recoup as much money from this project as we could and the legal fees,” Mayor Mike Norris said. “So we feel like this is the best place to stop without going forward and costing the city residents more money as far as continuing on. This is our best resolution so far. And I think everyone on the council was comfortable with it.”

The splash pad’s history was leaky from the start, with a divided council voting 3-2 to approve its construction in 2019, not long after the end of the renovation of the majority of Holland Park, which had itself turned into a bog of delays, cost overruns and a fired contractor. 

Splash pad construction was part of the Phase 2, $6.28 million renovation of Holland Park, with the splash pad accounting for $5.1 million of that. The initial cost submitted by BBI, the main, was $7 million. The city insisted on cutting costs, bringing the final bill down to $5.1 million. In court, the contractor could have argued that it was not solely responsible for cost or corner-cutting.

The splash pad opened in May 2021 and failed weeks later, though even in May city officials knew the operation was faulty. 

The council debated whether to sue and whether to rebuild the splash pad, with heartburn over both. It ended up suing and rebuilding. The rebuilding by Daytona Beach-based Saboungi Construction cost $3 million. The legal fees for Palm Coast in the lawsuit, as of this week, totaled $626,492. In stark terms, the city spent $3.63 million in repairs and efforts to recover costs, and recovered $2.375 million, falling short by $1.255 million. 

“Since the repairs, we’ve got a better product for the city. I don’t think we’ve had any major issues since the new system came online,” the mayor said, accurately. 

“I do think it’s a good amenity, and it’s awesome,” Council member Theresa Pontieri said, giving the splash pad its only accolades from among any of the council members. “When we went to the grand reopening, there were so many families, so many kids there. Was really encouraging to see.” The splash pad reopened in 2024. It is dormant now, but will reopen March 1 for the summer season. 

Until now, all the negotiations that took place in closed-door meetings were off-limits to public inspection. Now that the suit has been settled, those transcripts will be made available. But Council member Ty Miller opened a window into those negotiations. He said the “assignable cost” the city could recover was placed at $2.4 million, not $3 million. (The city would not have been allowed to recover full costs of the new construction, which added drains and pumps, among other things, Miller said.)

That $2.4 million was the cost the city was going to ask for had it gone to trial. The last round of offers fell short by $200,000, Miller said. 

“I had a problem with it, and we all discussed it, and we went for more,” Miller said. “We asked for more, asked for them to come back up to that 2.4 so that we could get basically everything we could out of them.  And so the party that was more liable came up, the party that had a very small liability did not, and they knew, I think, that they had a strategy there, that we would risk a lot to try to get, say, an extra 25 grand.”

Council member Dave Sullivan had referred to that as “diminishing returns.” The council was not willing to pursue that risk “for just a few amounts of dollars,” Miller said. It risked “taking on, not just all of our legal fees, but if we were ruled against just for that additional amount, potentially we could take on the legal fees of some of these other parties.”

“We got all that we probably could have gotten, aside from just the administrative costs and the attorney costs,” Miller said. 

Pontieri, an attorney, said the council fought hard and cohesively, digging in its heels for as much as it could get. “As an attorney, I can tell you,” she said, “even if we went all the way, we went to trial, we prevailed. There’s the appellate process. So we’re litigating against multiple parties. Any one of them decides to appeal, four years from now we’re still having this discussion and a lot of money later. So I do think this is the best resolution we could have come to.”

Several of the council members distanced themselves, saying they had inherited the issue. It wasn’t clear whether they were talking about the original splash pad construction, which perhaps this council might have opposed, or the litigation, or both.