Agenda

FINANCE COMMITTEE AGENDA

Tuesday, March 28, 2017
8:30 AM
Executive Conference Room, Level Three
Brea Civic & Cultural Center, 1 Civic Center Circle, Brea, California

MEMBERS:
ALTERNATE:

Council Member Christine Marick and Council Member Marty Simonoff
Mayor Cecilia Hupp

Materials related to an item on this agenda submitted to the Finance Committee after distribution of the agenda packet are available for public inspection in the third floor lobby of the Civic and Cultural Center at 1 Civic Center Circle, Brea, CA during normal business hours. Such documents may also be available on the City’s website subject to staff’s ability to post documents before the meeting.


CALL TO ORDER / ROLL CALL

	1.	Matters from the Audience

CONSENT

	2.	Approval of Minutes of February 14, 2017 Meeting

		Attachments
		Minutes

	3.	Feasibility Study and Conceptual Plan for Western Extension to The Tracks at Brea Trail

	4.	Additional Appropriation For The Glenbrook Tract Water and Street Improvements, Project 7452

		Attachments
		Resolution to Appropriate Additional Funds

	5.	Approve Purchase of Two Police Interceptor Utility SUVs in the Amount of $60,993.72

		Attachments
		Quote

	6.	Amendment No. 1 to Agreement with U.S. Metro Group, Inc. for Janitorial and Related Services at Various City Facilities

		Attachments
		Original Agreement
		Amendment No. 1, Attachment A

DISCUSSION

	7.	Authorization for the Successor Agency to the Brea Redevelopment Agency for the Issuance and Sale of Tax Allocation Refunding Bonds to Refinance Outstanding 2003 Tax Allocation Bonds and 2011 Tax Allocation Bonds, Series A and Taxable Series B of the Former Brea Redevelopment Agency, Relating to Project Area AB; Requesting Certain Actions and Findings by the Oversight Board and Approving Related Matters

		Attachments
		Resolution
		Debt Service Savings Report

	8.	Schedule Next Meeting: April 11, 2017

cc:	Mayor Pro Tem Glenn Parker Council Member Steven Vargas

Special Accommodations
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at (714) 990-7757. Notification 48 hours prior to the meeting will enable City staff to make reasonable arrangements to ensure accessibility. (28 CFR 35.102.35.104 ADA Title II)


Finance Committee		2.
Meeting Date:	03/28/2017
FROM:	City Manager

Subject:
Approval of Minutes of February 14, 2017 Meeting

Attachments
Minutes


Finance Committee		3.
Meeting Date:	03/28/2017
FROM:	Kathie DeRobbio

Subject:
Feasibility Study and Conceptual Plan for Western Extension to The Tracks at Brea Trail
RECOMMENDATION
Approve recommendation of Feasibility Study and conceptual plan for western extension to The Tracks at Brea Trail.
BACKGROUND/DISCUSSION
The County of Orange is spearheading an effort to create a 66-mile active transportation corridor for people to bike and walk throughout the County called "The OC Loop." The Tracks at Brea is part of that loop. The City of La Habra is attempting to build a trail along railroad rights of way (ROW) in their city and is currently negotiating with Union Pacific Railroad (UP) to purchase an easement for that purpose along active ROW. UP has stated that while they are receptive to working with La Habra, they will only agree to an easement if Brea also agrees to purchase a similar easement on the portion of ROW within our city. The Brea easement would be from the western end of the current trail property, which is located at the Brea flood control channel west of Downtown to Palm Street, which is the border with La Habra. The easement width would be fifteen feet and the length is approximately 1.3 miles. The Brea and La Habra easement would close an important gap in the OC Loop and mean that bike commuters, joggers and walkers could connect between the two cities and points beyond. Historically, UP has not been receptive to working with cities for easements along active ROW, so this is an opportunity that may not come again for a very long time. There are, however, challenges to developing the trail on this section of ROW including grade changes, probable soil contamination and the high pressure gas line on the north side of the property. Therefore, staff is recommending that David Evans and Associates (DEA) conduct a feasibility study and develop a conceptual plan to determine if the trail could be built on a fifteen foot wide easement and if so, the specific location of that easement that would make a trail possible. Their study would also include a cost estimate to construct the trail. The results of their work would provide vital information the City would need to determine if the trail easement makes sense for Brea considering a cost/benefit analysis.
SUMMARY/FISCAL IMPACT
The cost estimate from DEA to provide the feasibility study and conceptual design is $25,525. Unfortunately, none of our current grants can be used for this purpose, so the City would need to provide the funds from the General Fund.
RESPECTFULLY SUBMITTED
William Gallardo, City Manager Prepared by: Kathie DeRobbio, Economic Development Manager Concurrence: David Crabtree, Community Development Director


Finance Committee		4.
Meeting Date:	03/28/2017
FROM:	City Manager

Subject:

Additional Appropriation For The Glenbrook Tract Water and Street Improvements, Project 7452

RECOMMENDATION

1. Adopt Resolution to appropriate an additional $314,000 from the Water Fund (Fund 420) for Project contingency and Project administration.
2. Increase construction contingency from 10% to 22%.

BACKGROUND/DISCUSSION

On March 22, 2016, City Council awarded a Contract to O’Duffy Bros., Inc. (Contractor) in the amount of $2,397,058 and approved a construction contingency of $239,706 for the Glenbrook Tract Water and Street Improvements, Project 7452 (Project). This Project will rehabilitate the existing pavement of the residential streets in the Glenbrook Tract neighborhood bounded by Birch Street to the north, Orange 57 Freeway to the west, Greenbriar Lane/Hillhaven Drive to the south, and the Brea Union Plaza to the east. In addition, the Project will replace approximately 12,700 linear feet of water main, services, gate valves, fire hydrants, and appurtenances. Finally, this Project will replace damaged and/or uplifted sections of sidewalk, curb and gutter and reconstruct curb access ramps to be in compliance with Americans with Disabilities Act (ADA) requirements. The improvements will be performed on Fig Avenue, Eucalyptus Street, Plum Avenue, Redbay Avenue, Camphor Circle, Valverde Avenue, Aurora Avenue, Holly Street (street and fire hydrant improvements only - water mains were replaced in 1989), Chevy Chase Drive, Hillhaven Drive, Greenbriar Lane, Eucalyptus Lane, Amberwick Circle, Windermere Circle, Heather Circle, Dover Avenue, Amberwick Lane, Heather Lane, and Devonshire Drive.

The installation of the water line improvements started in June 2016, and the Project was anticipated to be completed by February 2017. However, during construction, the Contractor encountered unforeseen conditions that resulted in significant delays and additional costs. Most of the unforeseen conditions related to numerous unmarked or mis-marked underground utilities (i.e. SCE, Gas, AT&T, street lighting and existing water main) which required additional potholing, deeper excavations, hand digging, realignment of water mains, and additional pipe fittings. Additionally, the Contractor encountered large concrete encasements to connect the new water main to the existing water main, thus it was necessary to install additional fittings and removal of concrete to complete the water main connections. These unforeseen conditions resulted in decreased daily production, which necessitated staff to direct the Contractor to proceed with the Change Order work on a time and materials basis in order to control costs and further reduce the potential time delays. Furthermore, staff requested to reconnect three additional water main connections in the existing easement by the Glenbrook Club House to provide less disruption to the residents during routine maintenance and fixing water leaks.

To date, staff has negotiated the cost of four (4) Change Orders with the Contractor in an amount of $367,360.88, which exceeds the staff Change Order authority of $239,706 by $127,654.88. Of this total, approximately $76,850 was related to the added water connections. Change Orders 1 and 2 totaling $145,434.65 have been paid, which are within staff's Change Order authority. Change Orders 3 and 4, totaling $221,926.23, have been approved by staff, but will exceed staff's Change Order authority. Therefore, they will be part of the pending Pay Estimate No. 9 payment. Although, Change Orders 1 through 4 have been approved by staff, there are some remaining work changes still under review (Change Order 5), which could bring the total Change Orders to $525,000 for this Project or roughly 22% of the Contract. Additionally, due to the extended time for this Project to be completed, staff is recommending an additional $29,000 for construction engineering (i.e. inspections/administration).

Therefore, due the Change Orders discussed with added construction engineering, staff is requesting the City Council consider appropriating an additional $314,000 to the Project budget. Staff is still evaluating the total cost and reimbursement process with respect to the Change Orders related to mis-marked/unmarked facilities (ie. Gas and AT&T), which could reduce the total Project cost incurred by the City. The new anticipated Project completion date is late April 2017; weather permitting. The following is summary of all Change Orders:

Description	Amount	Status
1. Realigned new water line at Fig Street due existing water line conflict; numerous utility conflicts at various locations; Additional water valves and fittings at Chevy Chase, Valverde and Glenbrook Clubhouse parking lot (Phase 1).	$77,170.33	Approved
2. Modifications to Water connection and various utility conflicts. Additional water valves and fittings at Chevy Chase, Valverde and Glenbrook Clubhouse parking lot (Phase 2).	$68,264.32	Approved
3. Complete additional water connections at Chevy Chase, Valverde and Glenbrook Clubhouse parking lot (Final Phase). Numerous utility conflicts at various locations.	$122,468.89	Approved
4. Realigned new water line due to fiber optic cable conflict and numerous utility conflicts at various locations.	$99,457.34	Approved
5. Unexpected deeper high pressure main line to be abandoned at Birch and Redbay. Numerous utility conflicts with house water services.	$125,000.00	Pending/Under Review
Subtotal	$492,360.88
Allowance for Unanticipated Conflicts	$32,639.12
Total	$525,000.00

As stated previously, in an effort to minimize costs and further time delays on the Project, the Contractor agreed with the City to complete the extra work on a time and materials basis. This required significant documentation and a lengthy review process. For instance, Change Orders 3 and 4 were performed in October 2016 through early December 2016 and the amounts were just finalized in mid-March 2017. To date, the Project has completed the following:

Replaced approximately 12,700 linear feet of water mains
Replaced damaged curb, gutter and sidewalk
Reconstructed curb ramps

The following work is remaining:

Pavement resurfacing to be constructed by late April 2017
Close out/Final

SUMMARY/FISCAL IMPACT

The total approved budget for the Project was $2,900,000 with funding coming from a combination of Measure M ($663,000), Sewer ($30,000), Urban Runoff ($7,000), and Water ($2,200,000) funds. Staff is requesting City Council consider an additional $314,000 from the Water Fund (Fund 420) to cover the cost of current approved Change Orders to date and the anticipated pending Change Order work as identified in the previous table. Therefore, a Resolution appropriating the added funds from the Water Fund (Fund 420) to the Project is attached for City Council consideration and approval. There is no General Fund impact from this action. The following table provides a breakdown of the construction and construction engineering budget with the requested additional funds:

Project Expenditure	Approved budget	Requested Funds	Total
Construction Contract	$2,397,058	$0	$2,397,058
Contingency	$239,706	$285,294	$525,000
Subtotal	$2,636,764	$285,294	$2,922,058
Construction Engineering (i.e. inspections, administration)	$263,236	$28,706	$291,942
Total	$2,900,000	$314,000	$3,214,000

The Project encountered unforeseen conditions including numerous utility conflicts and other unanticipated work as well as extra needed water connections that resulted in additional costs that exceeded the Project contingency and schedule delays. Therefore, staff is requesting City Council consider increasing the Project contingency for Change Orders from 10% to 22% ($525,000) and adding $314,000 to the Project budget.

RESPECTFULLY SUBMITTED

William Gallardo, City Manager
Prepared by: Raul Y. Lising, P.E. Assistant City Engineer
Concurrence: Steve Kooyman, P.E. City Engineer, Tony Olmos, P.E. Public Works Director

Attachments
Resolution to Appropriate Additional Funds


Finance Committee		5.
Meeting Date:	03/28/2017
FROM:	City Manager

Subject:

Approve Purchase of Two Police Interceptor Utility SUVs in the Amount of $60,993.72.

RECOMMENDATION

Authorize the City to Proceed with the Purchase of two Police Interceptor Utility SUVs in the Amount of $60,993.72 (see attached Quote). However, a 2% discount will be applied if payment is processed within 20 days of delivery of vehicles bringing the total amount to $59,773.85.

BACKGROUND/DISCUSSION

The City of Brea has small volume requirements for the number of Police patrol vehicles it typically purchases annually. The Purchasing Division endeavors to find the very best cooperative agreement that ultimately provides the City of Brea with the lowest vehicle cost obtainable. As such, there are essentially seven Ford dealerships in California that are major players and actively seek to respond to bid opportunities from large agency users. The table below highlights the opportunities that were available for our utilization from the purchase in August 2016:

Dealership	Location	Original Contracting Agency	Original Contracting Quantity	Per Unit Price	Brea Total Cost for Two Units
Downtown Ford Sales	Sacramento	City of Sacramento	36	$30,275.83	$60,551.66
Wondries Fleet Group	Alhambra	City of Los Angeles	81	$30,475.55	$60,951.10
Fritts Ford	Riverside	Riverside County	25	$31,595.91	$63,191.82
Fritts Ford	Riverside	City of Riverside	4	$35,085.53	$70,171.06
Fairview Ford Sales	San Bernardino	N/A
Hemborg Ford	Norco	N/A
Raceway Ford	Riverside	N/A

Brea Municipal Code (BMC) Section 3.24.170 Cooperative Purchasing Programs states, "Purchasing of...equipment...made under a cooperative purchasing program, utilizing purchasing agreements maintained by...other public agencies are exempted from the requirements of this chapter." The advantages of utilizing the cooperative contract from Downtown Ford Sales include:

Lowest unit cost of three dealerships that actively seek bidding opportunities.
The City of Brea has had at least seven years of successful experience in purchasing such vehicles through Downtown Ford Sales.
Based on the bid information listed above, the formal bidding process would add additional time and cost to the purchasing process (up to three months) and most likely not result in a more competitive price. For example, the City of Brea would most likely receive a bid similar to the City of Riverside, which recently (May 2016) purchased only four units, if it were to seek a competitive, sealed, advertised (formal) bids for only two units. Based on the purchase of two units under the Downtown Ford Sales cooperative contract, the City of Brea would save approximately $10,000 over the expected result from a stand-alone formal bid process.

SUMMARY/FISCAL IMPACT

The total cost to purchase two new 2017 Ford Interceptor Utility (Explorer) SUVs is $60,993.72. A 2% discount will be applied if payment is processed within 20 days of delivery of vehicles, bringing the total amount to $59,773.85. Sufficient funding has been included in the FY 2016-17 budget for the Public Works Equipment Maintenance Division in Account 480-51-5161-4641.

RESPECTFULLY SUBMITTED

William Gallardo, City Manager
Prepared by: Alex Escobar, Equipment Division Supervisor
Concurrence: Tony Olmos, Public Works Director

Attachments
Quote


Finance Committee		6.
Meeting Date:	03/28/2017
FROM:	City Manager

Subject:
Amendment No. 1 to the Agreement with U.S. Metro Group, Inc. for Janitorial and Related Services at Various City Facilities
RECOMMENDATION
Approve Amendment No. 1 to the Annual Agreement with U.S. Metro Group, Inc. for Janitorial Services.
BACKGROUND/DISCUSSION
In early 2014, staff solicited proposals from eight (8) janitorial contractors to provide annual janitorial services at various City facilities. U.S. Metro Group, Inc. (“Contractor”) was the lowest bidder with a base bid price of $296,400 plus two optional tasks which brought the total bid to $320,205, which was less than the second bidder’s total price of $350,422. Soon thereafter, staff successfully negotiated the total price of the Contractor’s bid down to $313,599.96. On March 6, 2014, an Agreement was awarded to the Contractor by the City Council for the janitorial and related services in the total amount of $313,599.96 (see Agreement) for the first term. The Agreement term commenced on May 1, 2014 for a one (1) year term with up to four (4) one year term extensions upon agreement by both parties. The Agreement allows for a cost-of-living adjustment at time of term extension pursuant to the Consumer Price Index (“CPI”) for all urban areas in Los Angeles-Long Beach-Anaheim area. However, the CPI for this area did not include any provisions related to the State of California (“State”) Mandated Minimum Wage Rate increases. The State’s minimum wage is scheduled to be increased as follows for the duration of the Agreement for employers that have 26 employees or more: Effective Date Minimum Wage Increase Amount January 1, 2017 $10.50/hr $0.50/hr January 1, 2018 $11.00/hr $0.50/hr January 1, 2019 $12.00/hr $1.00/hr January 1, 2020 $13.00/hr $1.00/hr Currently, the Agreement has been extended twice for a current annual amount of $360,601.56, which was related to the state minimum wage adjustments. The Agreement is nearing the end of the third term extension date on May 1, 2017. The Contractor has provided excellent services and is a company with a combination of experience, abilities and customer service orientation that best meets the needs of the City of Brea. Staff believes their experience allows them to facilitate the City’s goal of providing high-level customer service. The majority of the janitorial staff are paid minimum wage and have worked for various contractors here at the City of Brea for many years. Due to the State’s minimum wage increases, staff is recommending replacing the CPI cost adjustment calculations in Section B, Subsection 8, CONTRACT PRICE AND PAYMENT, of the Agreement to a set annual Agreement price per extended term. Additionally, to align the term of the annual renewal to the City’s Fiscal Year, Section B, Subsection 9, TERM; CONTRACT RENEWAL, of the Agreement will be amended to begin all subsequent terms on July 1. Therefore, this Amendment will increase the remainder of the third extended term from $360,601.56 to $367,164.06 up to June 30, 2017, to reflect the minimum wage increase that started in January. All subsequent extended terms will have a set price as indicated within the Amendment (see Amendment No. 1, Attachment A). Therefore, based on their excellent performance to date, staff is recommending amending the Agreement to include set cost increases based on the State minimum wage increases versus the CPI and modifying the subsequent extended term date to start on July 1.
SUMMARY/FISCAL IMPACT
The Amendment will be charged to the Building Occupancy Fund (490-51-5151-4263) and there are sufficient funds in the current budget to cover the additional expense for this Fiscal Year (“FY”). The remaining amount and future increases will be budgeted in FY 2017-18 and FY 2018-19. Due to the State minimum wage increases and to align the Agreement term to the City’s Fiscal Year, staff is recommending City Council consider approving Amendment No. 1 to the Agreement with the Contractor for Janitorial and Related Services at Various City Facilities.
RESPECTFULLY SUBMITTED
William Gallardo, City Manager Prepared by: Eric Aulls, Building & Facilities Administrator Concurrence: Tony Olmos, Public Works Director

Attachments
Original Agreement
Amendment No. 1, Attachment A


Finance Committee		7.
Meeting Date:	03/28/2017
FROM:	City Manager

Subject:

Authorization for the Successor Agency to the Brea Redevelopment Agency for the Issuance and Sale of Tax Allocation Refunding Bonds to Refinance Outstanding 2003 Tax Allocation Bonds and 2011 Tax Allocation Bonds, Series A and Taxable Series B of the Former Brea Redevelopment Agency, Relating to Project Area AB; Requesting Certain Actions and Findings by the Oversight Board and Approving Related Matters

RECOMMENDATION

Adopt the Resolution.

BACKGROUND/DISCUSSION

Pursuant to Assembly Bill (AB) 1484, successor agencies are permitted to refinance debt obligations of the former redevelopment agencies. Conditions subject to refinancing of these debt obligations would be the reduction in the annual debt payments; that no new debt be created; and that the term of the refunding bonds shall be the same as that of the debt proposed to be refinanced. Staff has identified such an opportunity which is presented in this staff report. In December 2013, Staff had previously refinanced outstanding Tax Allocation Bonds ("TABs") of the former Brea Redevelopment Agency secured by Project Area AB revenues. In November 2016, Staff had previously refinanced outstanding Tax Allocation Bonds of the former Brea Redevelopment Agency, secured by Project Area C revenues.

In July 2003, the Brea Redevelopment Agency issued $120,497,866 in Project Area AB Tax Allocation Bonds. The proceeds were used to fund redevelopment projects and refund the 1993 TABs. Currently, the outstanding balance on the 2003 Tax Allocation Bonds available for refunding is $14,180,000 (current interest bonds only). In June 2011, the Brea Redevelopment Agency issued $18,839,323 in Project Area AB Tax Allocation Bonds Series A and $10,295,000 Taxable Tax Allocation Housing Bonds Series B. The proceeds were used to fund Redevelopment Projects (Non-Housing and Housing) and refund the 2001 TABs. Currently, the outstanding balance on the 2011 Tax Allocation Bonds Series A and B available for refunding is $33,224,736.

Assembly Bill (AB 1484) permits successor agencies to refund outstanding bonds and other obligations a former redevelopment agency if such refunding results in savings which benefit the taxing entities. The Debt Service Savings Analysis indicates that the refinancing of the outstanding bonds will produce an average annual reduction in bond payments of $1,475,914. The same reduction in annual bond payments frees up additional property tax revenues for distribution to affected taxing entities. This will result in an annual increase to the City of approximately $182,570 based on current market conditions, subject to change. The following is a summary of the savings for each bond issue:

Bonds	Current Average Annual Debt Service	New Average Annual Debt Service	Total Average Annual Savings	Annual Distribution to the City
2003	$1,682,173	$1,522,274	$159,900	$19,779
2011	$3,897,544	$2,581,529	$1,316,014	$162,791
TOTAL	$5,579,717	$4,103,803	$1,475,914	$182,570

The first step in moving forward with the refunding bonds requires the Successor Agency to adopt the attached resolution which includes the Debt Service Savings Analysis, directing the Successor Agency to undertake proceedings for the proposed refunding of the outstanding bonds, approve the required legal documents and authorize all of the necessary actions relating to the proposed refinancing hiring bond counsel and other professional services and directing City officials to execute related documents.

Subsequent to adoption of the resolution by the Successor Agency, the Oversight Board has a meeting scheduled for April 14, 2017 for their consideration of adoption of the required resolution accompanied by the Successor Agency Resolution. Once the Oversight Board has approved their resolution, the next step is to forward the Oversight Board Resolution and the Successor Agency Resolution with all attachments to the California Department of Finance (DOF) who has up to sixty days to approve the Oversight Board Resolution. Staff will be requesting an expedited review of the Oversight Board Resolution by the DOF.

The final step will occur after the DOF approves the Oversight Board Resolution. Thereafter, the Successor Agency will adopt a resolution approving the Preliminary Official Statement (bond offering document) and other related bond documents. Based on the current schedule, staff anticipates this action would be scheduled for Successor Agency consideration on May 16, 2017.

SUMMARY/FISCAL IMPACT

The Successor Agency has a total of $47,404,736.40 in outstanding 2003 and 2011 Project Area AB Tax Allocation Bonds. Staff is recommending that the Successor Agency refinance the outstanding bonds in order to reduce the average annual bond payments by $1,475,914, resulting in a corresponding annual increase in property tax revenues to affected taxing entities. This will result in an average annual increase of approximately $182,570 in property tax revenues to the City's General Fund. These are estimated savings based on current market conditions and subject to change.

RESPECTFULLY SUBMITTED

Bill Gallardo, City Manager
Prepared by: Lee Squire, Fiscal Services Manager
Concurrence: Cindy Russell, Administrative Services Director

Attachments
Resolution
Debt Service Savings Report