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4.
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| Finance Committee |
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| Subject: |
| Resolution Appropriating Additional Funds for the Laurel Elementary Magnet School/Lagos de Moreno Park Upgrades, Project 7929 |
| RECOMMENDATION |
| Adopt Resolution to appropriate an additional $480,000 from the Park Development Fund (Fund 250) for Project Construction Engineering and Administration. |
| BACKGROUND/DISCUSSION |
On June 6, 2017, the City Council awarded a contract to Lucas Builders, Inc. (“Contractor”) in the amount of $1,799,000 and approved a 10% construction contingency of $180,000 for the Laurel Elementary Magnet School/Lagos De Moreno Park Upgrades, Project 7929 (“Project”). This Project will make upgrades to the school and playground by adding ADA access at three (3) separate locations, and install a new restroom, playground equipment, ball walls, benches, tables, and swings. In addition, a 30’ by 30’ shade structure will be constructed between the two playground locations along with numerous retaining walls to accommodate all the new amenities.
Construction of the Project started in July 2017, with an anticipated completion date of November 2017. However, during construction, the Contractor encountered an unforeseen condition with respect to the school’s sewer lateral that lead to a significant delay and additional costs to the Project. The unforeseen condition required the removal and replacement of this sewer lateral along with soil remediation work. This resulted in a mutually agreed upon Contract Change Order ("CCO") in the amount of $159,000 with 30 additional working days added to the Contract, extending the Contract completion date to January 2018. Staff is currently in the process of seeking reimbursement for the extra cost with the Brea-Olinda Unified School District ("BOUSD"), which also includes the construction engineering cost associated with this CCO in the amount of $41,000, bringing the total for this unforeseen change to $200,000. The majority of this cost is currently being covered by the construction contingency and remainder funds in the Project budget.
Additionally, due to performance and other Contract issues with the Contractor, the City issued a Notice of Default and Demand for Take-Over letter to the United States Fire Insurance Company ("Surety Company") and Contractor on March 28, 2018. Currently, City staff and consultants along with the Contractor’s Surety Company representative are working with the Contractor to cure the default and expedite the Project to its completion, which is now presently set for August 23, 2018 (weather permitting) within the Cure Default Baseline Schedule. The performance issues with the Contractor have resulted in extra efforts from staff and consultants resulting in an increase to the Construction Engineering (Materials Testing, Inspection, Construction Management, and Administration) costs, which are projected to come in over the original budget by $685,000 by late August 2018. However, since mid-January 2018, staff has been assessing Liquidated Damages ("LD's") at $1,000/calendar day to the Contractor pursuant to the Contract, which is currently estimated at $122,000 as of late May 2018. Unfortunately, the LD's do not cover the total cost/day for the Department of State Architect (DSA) required Construction Engineering, which is approximately $2,000/day. Should the Project completion date extend out to August 23, 2018, the LD's would reach an amount of approximately $206,000, which would offset a portion of the extra construction engineering costs. The net impact to the overall budget budget is $479,000 ($685,000 cost less $206,000 LDs).
Furthermore, staff is evaluating additional testing and inspection costs associated with the Contractor's performance (included in the $685,000 cost) that would be on top of the LD's charged to the Contractor, currently estimated at $22,000. This construction payment deduct would help off-set the increased cost to the Monument and Art Piece and Shade Structure (approx. $21,000). With the estimated LD's for an August 23, 2018 completion date and the added testing and inspection costs paid for by the Contractor, the total net increase to the Construction and Construction Engineering budget would be $478,000. Staff is requesting the City Council consider appropriating a total of $480,000 (rounded from $478,000) to the Project budget from the Park Development Fund (Fund 250). Any project funds not used would be returned to the Park Development Fund (Fund 250).
COMMITTEE RECOMMENDATION
The Parks, Recreation and Human Services Committee reviewed staff's recommendation at their June 4, 2018 meeting and recommended approval of an additional $575,000 to be appropriated from the Park Development Fund (Fund 250) for Project Construction Engineering and Administration. This amount included an additional contingency amount above the $480,000, if needed. |
| SUMMARY/FISCAL IMPACT |
The total approved budget for the Project was $2,591,473 with funding coming from a combination of the BOUSD ($250,000) (10%), Fund 560, Valencia Median Improvement Program savings ($1,200,000) (46%) and Fund 250, Park Development Fund ($1,141,473) (44%). Staff is requesting the City Council consider an additional $480,000 from the Park Development Fund (Fund 250) to cover the cost of the additional construction engineering efforts less the LDs. This request does not include funding for the BOUSD CCO at this time. However, staff fully expects to receive BOUSD approval of the CCO.
Therefore, a Resolution appropriating the added funds from the Park Development Fund (Fund 250) to the Project is attached for City Council's consideration and approval (see Resolution). There is no General Fund impact from this action. The following table provides a breakdown of the approved budget with the requested additional funds:
| Project Expenditure |
Approved Budget |
Requested Funds |
Amended Budget
Total |
| Design |
$221,900 |
$0 |
$221,900 |
| Construction Contract |
$1,799,000 |
$0 |
$1,799,000 |
| Contingency (10%) |
$180,000 |
$0 |
$180,000 |
| Shade Structure |
$28,452 |
$3,608 |
$32,060 |
| Playground |
$162,295 |
$0 |
$162,295 |
| Monument and Art Piece |
$32,500 |
$17,500 |
$50,000 |
| Subtotal |
$2,424,147 |
$21,108 |
$2,445,255 |
| Construction Engineering |
$162,295 |
$685,000 |
$847,295 |
| Deduct - Liquidated Damages |
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($206,000) |
($206,000) |
| Deduct - Testing and Inspection |
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($22,000) |
($22,000) |
| Remainder |
$5,031 |
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$5,031 |
| Total Budget |
$2,591,473 |
$478,108 |
$3,069,581 |
Note: Rounded to $480,000
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| RESPECTFULLY SUBMITTED |
William Gallardo, City Manager
Prepared by: Steve Kooyman, P.E., City Engineer
Concurrence: Tony Olmos, P.E., Public Works Director |
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