sr-071409-8cCity Council Meeting: July 14, 2009
Agenda Item: ~-'
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Parking Structures 7 and 8 Fagade Improvement and Attendant Parking
Program Project Update
Recommended Action
Staff recommends that the City Council approve a phased approach to implementation
of the Parking Structures 7 and 8 Fagade Improvement and Attendant Parking Program
project to enable the project to move forward with available resources.
Executive Summary
The Parking Structures 7 and 8 Fagade Improvement and Attendant Parking Program
project (Project) involves the construction of capital improvements including .exterior
cladding, ground-level retail, bike parking, solar panels, public art and attendant parking
systems. This staff report provides an update on the Project and discusses the issues
concerning the project's cost estimates, timeline and options to keep the project moving
forward within available resources.
Background
On March 11. 2008, Council approved several key project components including
attendant parking, fagade improvements, retail leasing and streetscape improvements.
On July 8, 2008, Council approved design concepts and authorized the City Manager to
negotiate and execute agreements with Macerich Company, owner of Santa Monica
Place, in an amount not-to-exceed $10 million for construction of the fagade, attendant
parking, solar panels, ground-level retail, bike parking facilities, and signage
improvements.
Since that time, several project milestones were completed, including approvals from
the Architectural Review Board and California. Coastal. Commission and completion of
schematic design and design development.
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Discussion
Macerich hired TFO Architecture Inc. to prepare design development plans (Plans), in
conjunction with Pugh + Scarpa. Based on the Plans, refined construction cost
estimates for the proposed improvements were prepared by Macerich and the City's
independent cost estimator in June 2009. The estimates indicate that the Project as
proposed in Pugh + Scarpa's final schematic designs (Attachment A) cannot be
completed, as originally estimated, for $10 million. Currently, to complete construction
documents and construct the Project as designed, Macerich estimates it will cost $18.1
million, not including design costs, construction and project management costs and
project contingency. The City's cost estimate for final design and construction of the
Project is $17.3 million. The differential is $1:5 million, a variation of approximately
eight percent, which building industry standards consider to be an acceptable variation
for comparison purposes. Macerich also obtained estimates from an independent
contractor which priced the Project, based on the Plans, at approximately $16.7 million.
Cost Factors
As project design has progressed, the estimated design costs have increased due to
more detailed specifications, unexpected requirements and changes in material costs.
Attachment B summarizes the differences in estimated Project costs from 2008
compared to the costs estimates developed by Macerich in June 2009, including:
® The costs to install the facade improvements increased by over $1.67 million.
The costs for the exterior cladding increased due to requirements to use an
alternate material with an appropriate fire-rating. The cost of channel glass at the
PS 7 stairs also increased due to higher material costs.
® The cost to install bike parking facilities in both parking structures increased by
over $830,000, as additional work involving installation of HVAC units and HVAC
distribution and fire sprinklers is required.
® The cost to construct retail shops on the perimeter of PS 7 adjacent to Broadway
increased by over $1 million. Such construction will require the installation of a
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mechanical ventilation system on the ground floor of the parking structure,
extensive duct work, and relocation of an existing electrical vault.
® Costs related to the attendant parking program increased by over $2 million due
to additional costs for the parking control equipment, pay on foot machines,
signage and painting. The City and Macerich have agreed to share these costs
50/50.
® The costs for the proposed solar systems have increased by approximately $2.1
million. In the development of the Plans, it was discovered that installation of the
proposed solar systems (see Attachment A) will require considerable structural
reinforcement (strengthening of concrete columns) due to the load of the
equipment and wind protection specifications. Strengthening the columns will
involve wrapping the columns of each solar umbrella base and grounding the
wrapped columns at least one level below the roof top level of each parking
structure.
® The cost to replace all of the lighting in the parking structures is approximately
$2.0 million. In preparing the Plans, it was considered desirable to replace the
lighting fixtures to provide a fresh appearance to the interior of the parking
structures. Though not originally contemplated in the budget presented to
Council on July 8, 2008, initial estimates to install new lighting, with replacement
of existing fluorescent fixtures, was included in this Project budget for
consideration.
® In reviewing the proposed Project, the Public Works Department has requested
that the Project include installation of a storm water filtration system to hold and
treat urban runoff prior to discharge into the storm drain or sewer systems. This
cost was not considered in the original Project budget. An environmental
mitigation contingency in the amount of $621,714 is incorporated in the updated
Project budget to address this item in the event the study of the two garages
finds the existing system is insufficient in satisfying current regulations.
The Project costs include design, project and construction management, insurance,
testing and inspection and permit fees.
Proposed Phasing of Improvements
Due to the extent of increased costs with the Project, Staff recommends a phased
Project approach to maintain the commitment to complete the Project as conceptually
designed. Through phasing, the City would proceed with construction of certain
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elements of the fagade improvements (exterior cladding, sidewalk repair, retail at PS 7,
bike parking at PS 8, art work, graphics, and architectural services) and attendant
parking improvements (installation of parking controls, interior painting, and parking
advisory signs) to keep the project in line with available funding. The available funding
is $11.5 million, including the $10 million allocated for the project in July 2008 and $1.5
million remaining available in the project budget.
The solar photovoltaic systems, bike parking facility at PS 7, and lighting replacement
would be constructed in the future as Phase II. In addition to the need to reduce the
project budget, these project elements are recommended for Phase II for three reasons.
First, development of the bike parking facility in PS 8 will provide the City with more
experience with the actual operation of bike parking facility. Such experience will inform
the eventual development of a bike facility at PS 7. Second, as retail shops will be
located along the Broadway frontage of PS 7, ground-level pedestrian-orientation of the
garage will. be addressed during Phase I. The bike parking facility at PS 8 is considered
critical to Phase I as it provides the needed ground-level pedestrian-oriented use along
Colorado Avenue. Finally, staff recommends that the existing lighting in the parking
structures be replaced with energy-efficient fixtures. Such fixtures have not yet been
selected. The eventual selection of fixtures will alter the energy use of the garages and
the expected sizing of the solar panel array that serves the garage. Staff believes that
analyzing, designing and. implementing the lighting replacement and solar panels as a
package will provide the most energy- and cost-efficient outcome.
Potential funding sources for Phase II include Downtown Redevelopment Project Area
tax increment due to future growth from reassessment of the remodeled Santa Monica
Place. Conservative cash flow projections indicate additional increment of
approximately $1 million per year. Currently, all tax increment generated from the
Downtown Redevelopment Project Area goes toward affordable housing, though current
tax ihcremeht is minimal and has not been included in the future projections of funding
for housing. In addition, the growth in future parking revenues from PS 7 and 8,
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received under a revenue distribution agreement with Macerich, could be allocated
toward the construction costs. Preliminary estimates of the net available revenue, once
the attendant parking program is implemented at PS 7 and 8, range from $200,000 to
$500,000 per year. Staff will return to Council at a future time to provide an update on
funding options for Phase II.
Other Project Recommendations
The current construction phasing assumes that parking structures will remain open
during construction. Keeping both structures open during construction will mean that a
large proportion of the parking spaces in each garage will be unavailable to the public
while the work is being constructed. It also creates public safety concerns as the public
will be parking. amidst an active construction zone. In order to minimize public
disruption and enhance public safety, staff recommends that the contractor be allowed
to close one parking structure at a time.. The net impact on the availability of parking
spaces is not expected to change. However, the City and the contractor will be able to
communicate more clearly to the public regarding the availability of parking spaces. If
public safety could be maintained, the contractor would re-open the parking structure on
weekends with public parking demand for PS 7 and 8 is at its peak. In addition,
allowing the contractor to focus on one structure at a time is expected to save
approximately $600,000. Any savings associated with the Project could be allocated to
help fund Phase II.
The original Project budget included allocations for testing services, general conditions,
overhead, profit, and contingency, totaling approximately $1 million. The original
estimate for project and construction management was $600.,000. Macerich initially
proposed a Project and construction management fee of $1.8 million. They have
agreed to a project management fee of approximately $988,000, based on hard
construction costs, in order to facilitate the completion of the Project by the opening of
Santa Monica Place and Bloomingdale's. To ensure the reasonableness of Macerich's
proposed fees, staff evaluated the possibility of the City overseeing the Project. If City
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staff were assigned to manage the Project, assuming the need to hire a construction
management firm along with City staff costs, estimates range from $800,000 to $1.1
million. It would take approximately 4 to 6 months for the City to complete the City
process of procuring project management assistance. Using City project management,
the Project could be completed by late 2010, trailing the grand opening of Santa Monica
Place by nearly half a year. In consideration of the costs and benefits of City project
management versus Macerich, staff believes the fee proposed. by Macerich is
reasonable given their expertise, capacity, ability to expedite the Project and ability to
coordinate with their construction occurring on the site.
Alternatives
The City could proceed. with the Project as conceptually designed, constructing the
improvements in one phase. At a total cost of over $21 million, including hard and soft
costs, the option would require reallocation of the Redevelopment Agency's 2009/10
Capital Programs budget and reduction in funding for other Redevelopment priority
capital projects. Alternatively, the City could reduce the project to the available budget
and forego future Phase II improvements.
Next Steps
Following Council direction, staff and Macerich will pursue appropriate adjustments to
the project design with the goal of completing the project according to a timeframe that
complements the re-opening of Santa Monica Place in August 2010. Staff and
Macerich will continue to evaluate value engineering opportunities for the Project.
Financial Impacts and Budget Actions
There are no budget impacts related to the staff recommendation on the proposed
Project phasing approach.
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Prepared by:
Tina Rodriguez, Redevelopment Administrator
roved:
Andy Agle, Director
Housing and Econo
Forwarded to Council:
Attachments:
Attachment A: PS 7 & 8 Schematic Designs
Attachment B: Summary of Cost Differentials
~fnont Ewell
Manager
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S-$
ATTACHMEPdT A
Parking Structures 7 and 8
PARKING STRUCTURE #7
t/iew 1
Proposed
Existing Condition
P.QRKING STRUCTURE #7
~i:~.,,
View 2
Proposed
View 3
Proposed
3
PARKING STRUCTURE #7
View 4
Proposed
PARi41NG STRUCTURE #7
View 5
Proposed
Existing Condition
PARKING STRUCTURE # 8
View 1
Proposed
PARKING STRUCTURE #8
View 2
Proposed
View 3
Proposed
PARKING STRUCTURE #8
View 4
Proposed
Attachment B
Cost ®ifferentials and Phasing Recommendations
Original
Budget Revised Macerich Budget
Estimated Project Costs 07.08.08 (06.11.09 and 7.6.09) Cost Increase Reason for increase
(lnn<trrurfinn (Tctr
Faqade Improvements
Bike Parking Facilities
Retail Shops
Utility Line Relocation for Retail Shops
Attendant Parking Improvements
Solar Photovoltaic Panels
Lighting Replacement
Prooosed Phase 2 Imorovements
Solar Photovoltaic Panels
Lighting Replacement
Bike Parking Facility - Pkg Str 7
NeP Phase 1 Construction Cost
Construction Contingency
Environmental Mitigation Contingency
Total Construction Phase 1 Cost
Soft Cost
Architectural Services
Project Management Cost
City Oversight and Inspection Costs
Insurance
Permits
Testing & Inspections
Temporary Graphics/Directional Signage
Total Soft Costs
Total Phase 1 Project Cost
Macerich Share of Attendant Parking & Design
Macerich Share of Environmental Mitigation Contingency
$ 2,010,692
$ 546,000
$ 288,000
$ 2,000,000
$ 3,500,000
$ 3,681,755 $ 1,671,063 Alternate materials for fire rating
$ 1,382,493 $ 836,493 HVAC, fire sprinklers, equipment
$ 982,775 $ 694,775 Installation of ventilation system, duct work
$ 350,000 $ 350,000 Unanticipated requirement
$ 4,083,576 $ 2,083,576 Add'I equipment and signage required
$ 5,600,332 $ 2,100,332 Structural reinforcement required
$ 2,006,898 $ 2,006,898 Not originally contemplated
$ 18,087,829 $ 9,743,137
Total Construction Cost $ 8,344,692
Net Phase 1 Project Cost
$ (5,600,332)
$ (2,006,898)
$ (594 854)
$ 9,885,745
$ 882,412 $ 988,575
$ - $ 621,714
$ 9,227,104 $ 11,496,034
$ 900,000 $ 832,422
$ 600,000 $ 988,575
$ 100,000
$ 91,965
$ 116,824
$ 197,585 $ .302,168
$ 20,000
$ 2,451,954
$ 10,924,689 $ 13,947,987
$ (1,000,000) $ (2,385,738)
5 (435 200)
$ 9,924,689 $ 11,127,049