HomeMy WebLinkAboutAgenda Bill 3.D 10/04/2004tv
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CITY OF PETALUMAi CALIFORNIA
AGENDA BILL OCT 4 -' 2004
Alzenda Title:
Meeting Date:
Resolution Rejecting All Bids for the Petaluma Municipal. Airport
Octo b 2004
Project No. C100103, and Deferring the Project Until Sufficient
Funding Becomes Available
Meeting. Time: X 3:00 PM
❑ 7:00 PM
Category (check one): Consent Calendar ❑ Public Hearing El New Business
❑ Unfinished Business ❑ Presentation
Departmen General
Director: Joe
C o ntact Person:
Phone Number:
Administrative Services
Nette r
4
Michael:Glose
778-4303
"_V Cost of Proposal: N/A
AccountNumbe
0100103
Amount Budgeted: N/A
Name of Fund:
N/A
Attachments to Agenda Packet Item:
1) Resolution rejecting all bids and postponing the project (Exhibit D)
2) Offer from North., Bay Construction to hold their bid firm
Summary Statement: The City Received three bids on july'22, 2004 to build 55 new hangars for the
Petaluma Municipal Airport Project No,. 0100103, ranging from •S4,78-3,245.10 to $4,906,448.00. The
Engineer's Estimate for construction 'Was $4,066,858. The'unexpected high bids were mainly attributed to
the high costs of steel, concrete and energy.
In light of these high bids, the apparent low,bidder, North , Bay Construction, offered to hold their bid firm
until - Spring 2005 in order to allow• the City time to secure the -needed additional funding (see Exhibit 1).
However, there is sufficient reason to expect that a mid- winter re -bid of the project will produce a
comparable or lower bid, and with a difference of only $5,000 between the lowest and second lowest bid,
staff feels that a protest would be likely, Were we to accept North Bay's .offer.
At this time, staff is recommending that all bids be rejected. - In,'pTeparation for a re-bid, the airport is
pur�sqing a low-interest loan from Cal'trans to secure any needed additional funding for construction,
including project contingency, as Well as conditions of the' City, such as overhead administrative costs,
impact fees and building permits. -
Recommended,City.; C ouncil Action /Suggested Motion:
Adoptthe resotufiorirejecting all bids and deferring the Petaluma Municipal Airport Project No. C100103
until additional funding becomes available, at which time it will be re-bid.
Wvi ed by Finance Director:
Reviewe
AvvrovM�by City Manner:
Date:
, *1
J
D at '2
SEP' .2
16d4G
Revision # and YhVe e. 'sed.:
'File, Code:
944/0 ff
9/14/04 s\pfs\airport\agenda\hangar project
'CITY OF PETAL.UMA, CALIFORNIA
OCTOBER 4,.2
AGENDA REPORT
FOR
RESOLUTION REJECTING BIDS FOR THE PETALUMA'MUNICIPAL AIRPORT PROJECT No.
C100103, AND DEFERRING THE,PROJECT UNTIL SUFFICIENT= FUNDING BECOMES AVAILABLE
1. EXECUTIVE SUIV MARY
The City Received three bids on July 22, 2004 to build 55 new hangars for the Petaluma
Municipal Airport. Project No. C100103, ranging from $4,783,245.10 to $4,906,448.00.
The Engineer's Estimate for construction was $4,066,858. The unexpected high bids
were mainly attributed to the high costs of steel, concrete land energy..
In light of these high bids, the 'apparent low. bidder, North Bay Construction, offered to
hold their bid firm until Spring 2005 in order to allowthe City time to secure the needed
additional funding (see Exhibit 1). However, there is sufficient reason to expect that a
mid- winter re -bid of the project will produce a. :comparable or lower bid, and with a
difference of only . between the lowest and ,second _lowest .bid, staff feels that a
protest would be likely, were we to accept North Bay's offer.
At this time; staff is. recommending that all bids be rej ected. In preparation for a re -bid,
the airport is pursuing a low- interest loan from Caltrans to secure any needed additional
funding -for construction, including project contingency; as.well as conditions of the City,
such as overhead administrative costs, impact fees and building - permits.
2. BACKGROUND
The lowest bid carne in more than $700,00.0 over the Engineer's Estimate, which has
been attributed to the rising costs of steel, concrete and energy.' I_n spite of the :excellent
bid package produced by consultants Mead & Hunt,'it was,later learned, that, there may
have been some confusion about the role of the hangar building subcontractor-, Nunoz,
Which contributed to higher than expected bids in that area.. Also the cost of water to
prepare the ground during this dry season inflated the 'bids substantially.
Staff has, learned from ,Mead & Hunt that there were a number of contractors within the
hangar constructionndustry who expressedkeen interest in the project, but who did not
bid because of the difficult timing (the end of the construction season).
• In light of the unexpected bids, John Barella Owner and Partner of North Bay
Construction (the apparent low bidder), spoke to the Airport Commission at their August
5th meeting to extend an offer to hold their bid firm,':until. Spring 2005 in order to allow
the airport time secure the extra funding needed,for the project: Their subcontractors
have also agreed to hold firm. He strongly urged the Commission to hang on to this bid
;in light of the rising costs of steel' and fuel, which are uncertain at this point. In addition,
he felt °that Nunoz, who came in $600 below the next bidder, would not come back
with the same low bid a second timer With 139 ;people on the hangar'wai°ting list, he
'expressed confidence in the success of the project.
In looking at the options, staff _has .agreed that,, although,rising costs are;_an unknown,
there are other factors which weigh in favor of re- bidding the proj ect this winter.
"Hangar- specialists" will most likely come forward to bid in the winter months when the
timing is more favorable forthe airport. Steel and energy costs appearto be leveling out,
and in any event, the high cost of ground preparation will be mitigated in •the spring by
recent rains. Clarification of Nenoz' role in hangar construction could also reduce the bid
costs in that area:
As'important, there is good reason to believe-that were,we`to notifyybidders that-current
bids are to be extended through the winter, the.second low bidder, who was $5;000 over
the low' bid, would likely protest.
3. ALTERNATIVES
1. ;:Reject all bids and re -bid the project'this winter:
2. 'Award project to the low bidder and reduce the scope of the project, which would
reduce = potential revenue, imperiling the airport's ability to 'repay ,current loans.
3. Accept the low bidder's offer to hold the bid firm until. Spring 2005,: (The
repercussion could be a protest from the second low bidder.)
4. 'Cancel theproject, leaving a, growing number; of people, on the waiting list, and
depriving the airport of a future source of revenue.
4. FINANCIAL IMPACTS
The proj ect, .as .originally bid, wa& basically covered by funds from the FAA's Airport
Improvement (AIP) Grants Nos 3 -06- 0186.12 and =13„ in addition to $3:227.million
from the City's recently refinanced 20' =year Certificates of ` Participation (from 1993),
which now include previous, hangar ect State Aviation loans (at a much lower rate, of
:interest)".. Current hangars generate more -than sufficient revenue to repay these previous
State loans incurred in 1996.,
Since ongoing draw - downs+ on the AIP .grants are necessary in order to 'avoid losing the
funds, the design costs, ofthe project have already_been paid for.
The airport strove hard to get the project underway this fall, in anticipation of the first
COP•payrnetit due this past August 2Q04,, so cost.factors are running. Staff has contacted
Caltrans regarding a low - interest iStaw Aviation loan to cover any funds needed for:
higher -than- expected bids, as well as project contingency and various conditions of the •
C;.
City, such as overhead administrative costs, impact fees and building permits. They have
been informed that sufficient funds are available, and authorization for application is
before the Council
S. CONCLUSION
The low bid for the: airport. hangar expansion project was in excess of $700,000 over the
Engineer's Estimate. The airport needs to secure ad'd'itional funding to proceed with the
project, as originally bid. Staff recommends rejecting all bids'at this time, and re- bidding
the project once additional;funds are secured.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR
COMPLETION: -
Rejection of all current bids, and•re -bid of the project this winter, after additional needed
funding is secured.
7. RECOMMENDATION
Adopt the resolution;rejecting all bids and deferring the Petaluma Municipal Airport
Project No. C 100103 until_ additional funding becomes available, at which time it will be
re -bid.
S\PF &S \airport\agenda\hangar project
• V
REJECTING ALL BIDS FOR THE PETALUMA MUNICIPAL AIRPORT PROJECT
NO. C100103, AND DEFERRING THE PROJECT UNTIL SUFFICIENT FUNDING
BECOMES AVAILABLE .
WHEREAS, three (3) bids were received for the Petaluma Municipal Airport Project No.
C 100103 on July 22, 2004; and; .
WHEREAS, the'apparent low bidder, North Bay Construction, was more than $700,000
over the Engineer's Estimate; and
WHEREAS, additional funding must be secured in order to proceed with the project; and
WHEREAS, staff has weighed the options and recommends rejecting all bids at this
time, and re- bidding the project this winter, thereby allowing time to secure needed additional
funding.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma
that all current bids are rejected for the Petaluma Municipal, Airport Project No. C100103, and
the project is to be deferred and re =bid at such time that sufficient funding is secured.
!�Orth Bay Construction. . Inc.
Mr. Barry Lawrence, Chairman
Petaluma Airport Commission
11 English Street
Petaluma, CA 94952
Regarding: New airport hangar project
Dear Mr. Lawrence:
Thank you for allowing me to address you and your fellow commissioners at Thursday nights
commission meeting. -
As a follow up to my presentation, I would like to reiterate our proposal that North Bay
Construction (NBC) and it's subcontractor and suppliers will hold the prices that were
submitted at bid time until April 15, 2005, while the City of Petaluma and the Airport
Commission pursue the various, funding opportunities, available in order to build this project as
originally designed. If the _process takes longer than expected and exceeds April 15, 2005, NBC
will meet with the airport commission and negotiate a new extension period:
NBC would also like to offer its support in helping the :commission by attending any meeting
• necessary to obtain this funding and E by evaluating and. identifying potential cost saving changes
to the project.
We feel this is the most practical and cost effective way to proceed, with this, project as any rebid
would not guarantee any reduction in pricing and would most likely end up with an increase in
price due to the risin g costs of materials, as well asAe'cost to actually rebid the project.
I hope this helps with your decision on how to proceed with this project. Should you have any
questions or comments please feel free. to contact me.
Sincerely,
NORTH BAY CONSTRUCTION, INC.
John; a` 'Ila.
Presi nt
Mike Bierman City Alanager
Mike O'Brien, City Cotuncil
431 Payran St., P.O. Box 6004_ Petaluma CA 94953 Telephone: (707) 768 -2891 — License No. 357560
:FAX: (107) 765 -6417