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Agenda Item 12.

City Council Meeting

Meeting Date:	10/03/2017
FROM:	Bill Gallardo

Subject:

Amendment to Agreement with Minako America Corporation dba Minco Construction for Removal and Replacement of Sidewalks, Curbs, and Gutters.

RECOMMENDATION

Approve Amendment with Minako America Corporation dba Minco Construction for Removal and Replacement of Sidewalks, Curbs, and Gutters.

BACKGROUND/DISCUSSION

In 2015, Minco Construction was awarded the City of Brea concrete maintenance agreement for the removal and replacement of sidewalk, curb, and gutter throughout the City. Maintenance has an annual budget amount of $180,000. The agreement term is for one year commencing on October 12, 2015 and may be extended for up to four (4) one year terms upon agreement by both parties. Upon renewal, the agreement allows for a cost-of-living adjustment, however, it did not include the methodology to calculate the Cost-of-Living adjustment increases.

In summary, the following proposed provisions would be added to the agreement:

Cost-of-Living Adjustments
For each of the one-year renewal terms, pricing shall be negotiated and agreed upon prior to the expiration date of the then current term based on the following:

Consumer Price Index (CPI) is published monthly by the U.S. Department of Labor, Bureau of Statistics (Index) for the Los Angeles-Riverside-Orange County area.
The Adjustment Index (AI) is for the month immediately preceding the adjustment date.
The Beginning Index (BI) is for the prior 12-month period.
If the AI is greater than the BI, then prices have increased and may be negotiated in an amount not to exceed the current prices multiplied by AI divided by BI.
Example:
AI = 250.189 on Dec 2015; BI = 245.357 on Dec 2016
250.189 / 245.357 =1.01969, rounded up is 1.02 representing a 2.0% increase.

Currently, the contract has been renewed twice with no price increase or budget increase. The contract is now up for a third renewal and will be effective on July 1, 2017.

Minco Construction has provided excellent services, pricing, and customer service that meets the needs of the City of Brea. Staff believes their experience allows them to facilitate the City’s need of removing and replacing displaced concrete while providing high-level customer service.

Staff is recommending to amend the agreement with Minco Construction to add language within the agreement to address future incremental cost of living adjustments. Attachment A is the current agreement and Attachment B is the proposed amendment.

COMMISSION/COMMITTEE RECOMMENDATION

Finance Committee recommended approval at the September 26, 2017 meeting.

FISCAL IMPACT/SUMMARY

The total annual budget for concrete maintenance is currently at $180,000 for Fiscal Year 2017-18, with funding of $80,000 from account 110-51-5121-4269 (General Fund) and $100,000 from the Fixed Asset Replacement Fund (Fund 182) for this work. No additional appropriation is needed.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Will Wenz, Public Works Superintendent
Concurrence: Tony Olmos, Public Works Director

Attachments
Attachment A (Agreement)
Attachment B (Amendment #1)