SR-912-000 (4)
EPWM/CM:GA:KL:CP:AA:LF:f/cmanager/staffrpt/psfvfinal
City Council: October 24, 2000 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Authorize the City Manager to Negotiate and Execute a
Construction Agreement and Various Professional Services Agreements
Necessary to Construct the New Public Safety Facility; Adopt a Resolution
Declaring the City's Intent to Reimburse Expenditures from the Proceeds of
Bonds to be Issued by the Santa Monica Public Financing Authority and
Approving Certain Related Actions; and Approve Necessary Budget
Changes
Introduction
This report recommends that the City Council authorize the City Manager to negotiate and
execute a ?modified design-build,? ?guaranteed maximum price? (GMP) contract for
construction of the Public Safety Facility and take related actions.
Background
Since the City Council approved a financing plan for a new Public Safety in February 1997,
work has been underway to design a 118,000 square feet facility that will include 115
parking spaces for safety vehicles, a City jail facility, emergency operations facilities and
modern police and fire dispatch facilities. The detailed project description and history
attached to this report (Attachment A) describes the main features of the project and the
City?s efforts to design and construct it. Because construction bids were significantly above
estimates prepared separately by three independent cost estimators, all bids were rejected
on May 2, 2000. Staff immediately began to develop and evaluate alternatives to fill the
financing gap and complete the project in a cost and time efficient manner.
Discussion
Staff negotiated with three of the pre-qualified contractors to explore opportunities to
reduce their bid amounts. In current market conditions, contractors are able to select the
most profitable jobs and efforts to reduce contractor fees for general conditions, overhead
and profit associated with the bids were unsuccessful. Seeking to limit project cost
uncertainty, staff then explored alternative approaches with four pre-qualified contractors
(the three contractors that submitted bids and one that withdrew shortly before the bidding
deadline).
THE MODIFIED DESIGN-BUILD, GMP APPROACH
The Public Safety Facility project was originally approached from a traditional design-bid-
build standpoint. In this approach, unanticipated costs that arise in the course of
construction are the sole responsibility of the owner, not the contractor. According to
construction industry experts it is not uncommon with design-bid-build projects to
experience construction contract cost increases of 10 percent. The potential for limiting the
likelihood of unanticipated costs became the focus of negotiations with the four firms.
Today, the private sector and many public agencies are working with a different approach
to large and complex projects. A ?modified design-build? approach includes a warranty
from the contractor on the design and constructability of a project. Generally, the
contractor assumes the risk for cost increases resulting from design errors and omissions.
Employing a GMP provides an additional advantage. The contractor develops costs based
on the amount anticipated for labor and materials plus overhead and profit. If savings are
realized during construction through measures such as selecting a less costly element or
construction approach while preserving or improving functionality (known as value
engineering) or due to favorable market conditions that allow the purchase of goods and
services at lower than estimated cost, the contractor and the owner share the savings.
GMP CONTRACT
Two firms responded with GMP cost proposals to construct the project, one for
$44,624,000 and one for $47,000,000. Staff determined that the $44,624,000 proposal
submitted by J.A. Jones Construction more closely matched the project objectives while
providing the lowest cost. J.A. Jones? price compares favorably with the original low bid of
$42,050,000 given that the contractor is assuming risk attendant with the project. This
approach will better control construction costs, ensure constructability of the project, and
reallocate the risk for design errors to J.A. Jones. Should any project cost savings be
realized, the City and J.A. Jones would share these savings in a ratio of 60 percent to the
City and 40 percent to J.A. Jones.
Prior to commencement of construction, the Design-Builder?s team, City Staff and the
construction manager will review and validate the construction documents. Additional
opportunities for value engineering to reduce project costs will be explored during this
phase that will commence after City Council action and be completed no later than March
2001. Under the modified design-build contract between the City and J.A. Jones, the City
will have sole discretion whether to allow modifications to the materials, systems, or
structural design of the project. While the review and validation process could result in
modification to the cost estimates for the project, it is unlikely that they will exceed the
contract and contingency amount proposed here. Construction is anticipated to begin no
later than April 2001, and every effort will be made to accelerate commencement of
construction. The project is currently scheduled to be complete by March 2003.
WATER PROOFING INSPECTION
The design of the Public Safety Facility includes a unique water feature that is integral to
the Architectural Review Board-approved design. Specialized inspection services will be
required to ensure that this design element and other waterproof features of the building
are appropriately installed. A Request for Proposals for waterproofing inspection services
was distributed on November 22, 1999. The scope of work contained in the RFP requested
that the selected consultant provide waterproofing and inspection services throughout the
construction of the Public Safety Facility and site work.
Responses were received from five firms. D7 Consulting, Inc., was selected as the most
qualified consultant. Their qualifications include completion of waterproofing and
inspection services for numerous public agencies. References who were contacted
reported that the consultant?s work was very satisfactory. D 7 Consulting, Inc., submitted a
cost proposal in the amount of $40,000.
INSPECTOR-OF-RECORD
Under the Uniform Building Code (UBC) the Public Safety Facility is categorized as an
essential facility. The UBC and the ?Essential Services Facilities Seismic Safety Act?
require that an Inspector-of-Record review and inspect all aspects of construction. The
City routinely contracts for Inspector-of-Record services. A Request for Proposals for
Inspector- of-Record services was distributed on October 29, 1999 to five firms. The scope
of work contained in the RFP requested that the selected consultant provide Inspector-of-
Record services throughout the construction of the Public Safety Facility and site work.
Responses were received from three firms. Advanced Inspection Services, Inc., was
selected as the most qualified consultant. Their qualifications include completion of
Inspector-of-Record services for numerous public agencies. References who were
contacted reported that the consultant?s work was very satisfactory. Advanced Inspection
Services, Inc., submitted a cost proposal in the amount of $380,500.
CONTAMINATED DEBRIS REMOVAL
During excavation and strengthening of the Kenter Canyon Storm Drain authorized by
Council on July 11, 2000, previously unidentified contaminated debris was discovered,
segregated, and abated in a proper manner by J.A. Jones. This work cost $300,000 more
than available project contingency. The contract with J.A. Jones must be amended to
reflect this added scope of work and cost. Additionally, Law Engineering and
Environmental Services, Inc. notified all applicable regulatory agencies of the discovery,
established safety and abatement plans, and oversaw removal of the additional
contaminated debris. The cost to perform this work was $24,250 and their contract must
therefore be amended.
CONSTRUCTION MANAGEMENT SERVICES
On September 9, 1997, after a competitive process, a professional services agreement
was awarded to The JCM Group (JCM), for construction management services related to
the design and construction of the Public Safety Facility. At the time of award, JCM?s fee
was based on a substantially earlier completion date of the Public Safety Facility. Due to
delays resulting from discovery of contaminated soils during Phase One of the project,
evaluation of options to construct the project considering the funding shortfall, and time
consuming negotiations with construction contractors under a modified design-build
contract, project completion is now projected to occur by March 2003. JCM worked closely
with the City during this interim period and the expanded schedule requires additional
construction management services through the anticipated completion date. The proposed
modification to Agreement should allow for construction management services for the
duration of the project and project closeout. The JCM Group has submitted a cost proposal
for additional services in an amount not to exceed $900,000.
GAP FINANCING PLAN
The costs for construction, construction management, contaminated materials removal and
professional services from other technical experts will exceed the original budget for the
Public Safety Facility project. Ultimately, financing to fill this gap will include interest
earnings produced by funds intended for this project and additional bond financing. Issuing
and receiving bond proceeds will be timed to immediately follow confirmation of the lowest
possible amount of bond proceeds necessary to complete the project. In addition, FY
2002/03 debt service payments will be advanced to the trustee now to assure bond holders
that they will be paid during the extended construction period. The following interim
funding sources will be available to the project until bond receipts are in hand:
Civic Area Development Designation $1,956,500
Police Building Retrofit Designation 3,320,700
Public Safety Facility ? Construction Designation 3,282,100
Consolidated FEMA Hazard Mitigation Grants/Local Match 3,883,538
Capitalized Interest Designation 694,000
Park Master Plan: Expansion Site Designs (Airport) 2,819,134
Due to grant deadlines, it is advantageous for the City to use the FEMA Hazard Mitigation
Grants for Parking Structures #1, 3 and 6; the Civic Auditorium; current Police Building; the
Main Library; and City Hall on the Public Safety Facility. FEMA has informally approved
this use, knowing that the City is committed to undertaking the seismic upgrades either in
conjunction with major renovation of the facilities or following completion of long-range
plans. The potential for financing seismic work with additional bond funds will be
evaluated. A careful review of General Fund supported capital project timelines was
conducted to identify project funds that would not be needed for 18 to 24 months. This
evaluation indicates that the funds from the Park Expansion Project at the Airport are
available for interim funding of the Public Safety Facility. Adoption of the attached
resolution (Attachment B) will allow the City to reimburse the Civic Area Development
Designation, Police Building Retrofit Designation and Park Expansion Project from the
additional bond issue.
Budget/Financial Impact
The budget actions necessary to implement this staff report are listed in Attachment C.
The following information details the contract costs and associated contingency for each of
the proposed contracts associated with the construction of the Public Safety Facility:
Action Contract Amount Contingency Total
1. GMP Contract with J.A. Jones $ 44,624,000 $ 2,231,200 $ 46,855,200
2. Contract with D 7 Consulting Inc. $ 40,000 $ 4,000 $ 44,000
3. Contract with Advanced $ 380,500 $ 38,000 $ 418,500
Inspection Services, Inc.
4. Change Order to J.A. Jones $ 300,000 $ 0.00 $ 300,000
Contract #7765 for Kenter
Canyon Storm Drain Hazardous
Material Abatement
5. Modification to Contract #7648 $ 24,250 $ 2,425 $ 26,675
with Law Engineering and
Environmental Services, Inc.
6. Modification to Contract #6765 $ 900,000 $ 90,000 $ 990,000
with The JCM Group
Following Council action funding for this project will be available at the following accounts:
Account Account Name Amount
C01005801 Public Safety Facility Construction $43,559,222
C20062000 Prop C ? Olympic Drive Extension $ 2,199,115
C13005801 FEMA Disaster Relief Funding $ 3,883,538
C21005800 Public Safety Facility $ 517,000
C25005800 Public Safety Facility Construction $ 200,000
RELATED DEVELOPMENT
As currently designed, the Public Safety Facility has a total of 115 parking spaces in the
upper and lower basement areas. These spaces are dedicated for parking of
motorcycles, cars, parking enforcement scooters and other vehicles used by the Police
and Fire Departments. No parking spaces are provided for visitors, staff vehicles, or
personal vehicles of Police and Fire Department personnel. Construction of the Public
Safety Facility also removes surface parking available to City employees. A parking
structure to accommodate visitors and City staff requiring access to the Public Safety
Facility and City Hall was contemplated in the concept plans for the Civic Center for these
reasons. A design consistent with the Civic Center Specific Plan is currently being
explored and will be presented to Council in the future for consideration.
Recommendation
It is recommended that the City Council:
1) Authorize the City Manager to negotiate and execute the following contracts:
a) A GMP contract with J.A. Jones Construction [in accordance with Santa Monica
Municipal Code Section 2.24.071(e)(1)] in the amount of $44,624,000 and approve
$2,231,200 in contingency funds.
b) A contract with D 7 Consulting in an amount not to exceed $40,000 and approve
$4,000 in contingency funds.
c) A contract with Advanced Inspection Services, Inc., in an amount not to exceed
$380,500 and approve $38,000 in contingency funds.
d) An amendment to Contract 7765(CCS) with J.A. Jones Construction for removal of
contaminated material in an amount not to exceed $300,000.
e) A Modification to Agreement #7648 with Law Engineering and Environmental
Services, Inc. in an amount not to exceed $24,250 and approve $2,425 in
contingency funds.
f) A Modification to Agreement #6765 with The JCM Group in an amount not to
exceed $900,000 and approve $90,000 in contingency funds.
2) Authorize City Staff to negotiate and execute any necessary change orders to complete
additional work within budget authority set forth in the Budget/Financial Impact section
above and in accordance with the Administrative Instructions on change orders; and
3) Authorize the City Manager to negotiate and execute amendments to the various
agreements related to the Lease Revenue Bonds, Series 1999 (Public Safety Facility
Project) and adopt the attached Resolution Declaring the City's Official Intent to
Reimburse Expenditures from the Proceeds of Obligations to be Issued by the Santa
Monica Public Financing Authority and Approving Certain Related Actions; and
4) Approve the budget actions outlined in Attachment C.
Prepared by: Gordon Anderson, Assistant City Manager
Katie Lichtig, Assistant to City Manager for Management Services
Craig Perkins, Director, EPWM
Anthony Antich, City Engineer
Lauren Friedman, Senior Architect
Attachment A: Project Description and Design/Construction History
Attachment B: Resolution Declaring the City's Official Intent to Reimburse Expenditures
from the Proceeds of Obligations to be Issued by the Santa Monica Public
Financing Authority and Approving Certain Related Actions
Attachment C: Summary of Necessary Budget Actions