HomeMy WebLinkAboutAgenda Bill 4.A 10/18/2004CITY OF PETALUMA, CALIFORNIA
OCT 1 200
AGENDA BILL ,
enda Title:
Meeting Date:
esolution Rejecting All Bids for the Petaluma Municipal Airport
Octoberl8, 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 El Public Hearing ❑ New Business
® Unfinished Business ❑ Presentation
Department General
Director
Contact Person
Phone Number
Administrative Services
Jos . NeA
Michael Glose /
778 -4323
ose h D. Netter
Cost of Proposal N/A V
Account Number
C100103
Amount Budgeted N/A
Name of Fund:
N/A
Attachments to Agenda Packet Item
1) Resolution rejecting all bids and postponing the project (Exhibit 1) or
2) Resolution Awarding Bid to Lowest Responsible Bidder — North Bay Const. (Exhibit 2)
3) Offer letter from North Bay Construction to hold their bid firm until April 15, 2005 (Exhibit 3)
4) Building and Development Fees Summaries w /without waivers (Exhibit 4)
5) Airport Hanger Project Costs and Sources of Funds (Exhibit 5)
6) Statement of Revenues & Expenditures - support additional debt for Airport expansion (Exhibit 6)
4
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Summary Statement 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 and energy.
In light of these high bids, the apparent low bidder, North Bay Construction, offered to hold their bid firm
until Spring 2005 (April 15, 2005) in order to allow the City time to secure the needed additional funding
(see Exhibit 3).
This item was discussed at the City Council meeting of October 4 2004, with the Council directing staff
to look at the project closely to see if the project could be "valued engineered" to save costs. In addition,
Council was positive in the consideration of waiving certain development fees and the City's 5%
administrative charge to assist in the success of the project. They directed staff to provide a complete
summary of costs and recommended fee waivers for the Council meeting of October 18, 2004, along with
details on proposed funding sources for the additional debt necessary to support the project, and a
summary of the options available to the City to advance this project.
Staff `s original recommendation was to reject all bids and to re -bid the project in the mid - winter where the
City may secure additional bidders with comparable or lower bids. This would allow the City to rework the
project with various changes (value engineering) and re- submit the plans & specs for a new bid process.
In preparation for a re -bid, the airport would pursue a low - interest loan from Caltrans to secure any needed
additional funding for construction, including project contingency, building and development fees.
The other two available options are as follow:
A) Award the bid to North Bay Construction for the total amount of $4,783,245.10 and attempt to
save costs by change order as the project proceeds. This option would require award of the project
to North Bay Construction at the bid price and post -award negotiation of change orders. SuclA
post -award change order negotiations may put the City at a disadvantage as cost savings may be
more limited than those that may result from revision of the project scope and rebidding of the
project . In addition, if this option is selected, the City must identify an appropriation for the
funding shortfall. It is estimated that even if the City Council authorizes a fee reduction on
approx. $401,000; that the project still has a shortfall of $1.382 million dollars. The City is
pursuing the State ( Caltrans) grant for approx. $1.4 million dollars, but will not hear the results for
several weeks or months. Therefore, in order to achieve the necessary funding (appropriation)
requirement, the City must be willing to fund the shortfall with an internal loan from either the
General Fund or one of the City's enterprise funds. This could be a "bridge loan" until the state
loan is received. However, the "bridge loan" funding could be at risk if state loan funds are not
available. This option is the only option that would allow immediate start of the project.
B) The third option is to "Take No Action." Under this option, the Council would take no action,
either to award the project or to reject all bids, but instead defer action on the project and direct
staff to return to the council at a later date with an update concerning project ftmding, and a
recommendation to either award the project based on the offer of the low bidder — North Bay
Construction - to honor or keep open its bid until April 15, 2005, or to reject all bids. This option
would offer no bidder an unfair advantage since the low bidder offered the extension voluntarily,
and any other bidder, had they been the low bidder, could have made the same offer. This option
would allow the City to secure the additional funding. Once confirmation of the additional
funding is received, the City Council could award the low bid or reject all bids as the City Council
deems appropriate (up to April 15, 2005). This option would not allow for immediate start of th
project — the project would be on hold until the award of a contract.
Recommended City Council Action /Suggested Motion
Adopt the resolution rejecting all bids and deferring the Petaluma Municipal Airport Project No. C100103
until additional funding becomes available, at which time it will be re -bid.
�ReyUwed bv Finance Director:
Reviewed by City Attorney
Date:
Approvad by City Manager:
Date:
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O 1 4 ,
Revision # and Date Revised:
File Code:
#
10/ 11 /04
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• CITY OF PETALUMA, CALIFORNIA
OCTOBER 18, 2004
AGENDA REPORT
FOR
RESOLUTION REJECTING ALL BIDS FOR THE PETALUMA MUNICIPAL AIRPORT PROJECT NO.
0100103, AND DEFERRING THE PROJECT UNTIL SUFFICIENT FUNDING BECOMES AVAILABLE
1. EXECUTIVE SUMMARY
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 and energy.
In light of these high bids, the apparent low bidder, North Bay Construction, offered to
hold their bid firm until April 15, 2005 in order to allow the City time to secure the
needed additional funding (see Exhibit 3). However, there is sufficient reason to expect
that a mid- winter re -bid of the project will produce a comparable or lower bid with
• hopefully a larger number of bidders interested.
At this time, staff is recommending that all bids be rejected. 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, building permits and
development fees.
This item was discussed at the City Council meeting of October 4 2004, with the City
Council directing staff to research the concept of "value engineering" of the project to
save costs. In addition, the City Council was positive in its consideration of reducing or
waiving certain development and administrative costs charges by the City. Staff was also
directed to prepare detailed sources and uses of funds to facilitate this project and to
outline various options for consideration. These detailed summaries are provided as
exhibits to this staff report.
As for options, the following three have been identified:
Reject all bids, complete "value engineering" on the project to save costs and re -bid
the project in mid - winter. Concurrently, apply for the State ( Caltrans) loan to
provide for the additional funding needed. This is staff s recommendation.
• 2. Award the bid to the low bidder — North Bay Construction for the total amount of
$4,783,245.10. Then attempt to save costs through the change order process. Such
post -award change order negotiations may put the City at a disadvantage as cost
savings may be more limited than those that may result from revision of the project
scope and rebidding of the project. Under this option, the City would have to •
identify a revenue source to fund the shortfall in project resources. The City would
have to authorize a bridge loan (internal loan) that would support the appropriation
until such time the state loan is received. The "bridge loan" funding could be at risk
if state loan funds are not available. This option is the only option that would allow
immediate start of construction of the project.
The third option is to "Take No Action." Under this option, the Council would take
no action, either to award the project or to reject all bids, but instead defer action on
the project and direct staff to return to the council at a later date with an update
concerning project funding, and a recommendation to either award the project based
on the offer of the low bidder — North Bay Construction - to honor or keep open its
bid until April 15, 2005, or to reject all bids. This option would offer no bidder an
unfair advantage since the low bidder offered the extension voluntarily, and any
other bidder, had they been the low bidder, could have made the same offer. This
option would allow the City to secure the additional funding. Once the additional
funding is awarded, then the City Council could accept or reject the bid/bids as the
City Council deems appropriate (up to April 15, 2005). This option would not allow
for immediate start of the project. The project construction could not start until the
award of contract.
The following exhibits are provided: •
1. Building and Development Fees
2. Project Costs and Sources of Funds (with and without fee waivers)
3. Statement of Revenues and Expenditures to support the additional debt requirements
2. BACKGROUND
The lowest bid came in more than $700,000 over the Engineer's Estimate, which has
been attributed to the rising costs of steel, concrete and energy. In 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 construction industry who expressed keen 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
5 th meeting to extend an offer to hold their bid firm until April 15, 2005 in order to allow
the airport time to 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 $600,000 below the next bidder, would not come back
with the same low bid a second time. With 139 people on the hangar waiting 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 project this winter.
"Hangar specialists" will most likely come forward to bid in the winter months, when the
timing is more favorable for the airport. Steel and energy costs appear to 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.
3. ALTERNATIVES
1. Adopt the resolution rejecting all bids and direct staff to re -bid the project this winter
or once sufficient funding is confirmed.
2. Award project to the low bidder for the amount bid and direct staff to reduce costs of
the project through the change order process.
3. By motion take no action to award the project or to reject all bids, defer such action to
a later date, and direct staff to return to the council at a later date with an update
concerning project funding, and a recommendation to either award the project based
on the offer of the low bidder — North Bay Construction - to honor its bid until April
15, 2005, or to reject all bids.
4. Adopt the resolution rejecting all bids and cancel the project, leaving a growing
number of people on the waiting list, and depriving the airport of expansion and a
future source of revenue.
4. FINANCIAL IMPACTS
The project, as originally bid, was 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 project 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 of the project have already been paid for.
•
The airport staff worked hard to get the project underway this fall, in anticipation of the •
first COP payment due this past August 2004, so cost factors are running. Staff has
contacted Caltrans regarding a low- interest State Aviation loan to cover any funds needed
for higher- than- expected bids, as well as project contingency and various conditions of
the 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 additional 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. Consideration of other options are
explained above.
C. 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. C100103 until additional funding becomes available, at which time it will be
re -bid.
S\PF &S \airport\agenda\hangar project
•
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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.
•
Fxh'�' f v
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AWARDING A CONSTRUCTION CONTRACT FOR THE PETALUMA
MUNICIPAL AIRPORT HANGAR CONSTRUCTION (AIP 3 -06- 0186 -12 AND 13)
PROJECT NO. C100103
WHEREAS, the plans and specifications for the Petaluma Municipal Airport
Hangar Construction (AIP 3 -06- 0186 -12 and 13), Project No. C100103 have been
prepared, and bids solicited by Mead & Hunt, Inc. of Santa Rosa, for construction of five
(5) aircraft storage hangar buildings; and
WHEREAS, three (3) bids were received on July 22, 2004 with the low bid being
submitted by North Bay Construction, 431 Payran Street, Petaluma, CA 94954 , CA, in
the amount of $4,783,245.10.
NOW BE IT RESOLVED by the City Council of the City of Petaluma,
• California that the Contractor is hereby authorized to begin work, as directed by the City
of Petaluma once the bonds, insurance and agreement have been approved by the
Director of Public Facilities and Services, City Attorney and the Director of Human
Resources/Risk Management, but prior to the execution of the agreement by the Director
of Finance, the City Manager and the City Clerk.
BE IT FURTHER RESOLVED that the Petaluma City Council awards the
construction contract to North Bay Construction, 431 Payran Street, Petaluma, CA 94954
, CA, in the amount of $4,783,245.10 , and authorizes the City Manager to execute the
contract, subject to review and approval of all contract documents, insurance certificates
and bonds by the City Attorney.
•
Ex4.e.r3
North Bay C
• August 9, 2004
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 tim until April 15, 2005, while the City of Petaluma and the Airport
Commission pursue the various riding 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 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 re
would not guarantee any reduction in pricing and would most likely end up with an increase in
price due to the rising costs of materials, as well as the 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 B Y CONS�TRUCTION, INC.
John lla
Presi nt
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Mlke Bierman. City Manager
Mike 01rien, City Council
431 Payran St., P.O. Box 6004 Petaluma, CA 94953
Telephone: (707) 763 -2891 — License No. 357560
FAX: (707) 799 17
City of Petaluma Airport Hangar Project C100103
Building and Development Impact Fees
asumaiea auuaing rermii tees
yranc ,
bUl 6Kyranc5, bUl 6Kyranch
yranc
yranc ,
B Address & #
building #14
building #15; building #16
building #17;
building #18
Ap plication #
20040135
20040134'
20040133
20040132
20040131
Build Area
(
8,7 ft. sq
16480 ft. s .
15360. ft, sq.;
15360 ft. s .
4985 ft. s .
Job Value _ ^�
66,250.
3 ,
644,368.00
$ 609,960.00. $
60 9,960.00 f85,913.
00
Bwldmg Perm $'
7,313.
$
11,872.58
�_ �
$ 11,331.43 $
.��.�
11 331.43 $
10,957.71
Sanitary Sewer
Connection Fee
_ _ s _
$
-
! $
3,200.00
$ - $
7Va�e - 9ervice Connection
—�
Fee (est. based on 2"
meter)
$
18,518.00
$.
18,518.00
Sub -Total Building (
P ermit Fees f $
7,313
$
33,590.58
$ 11,331.4 3
�$ 11 ,331.43 $
32,675.71
Estimated Develolpment Fes
;
Aquatic Facilities
$
_
$
_
$ - -_
$
- -- -- - $
_
Communit y Facilities
$
-
$
_
$ _
$
_ $
_
Fire Supp Faciliti
$
477.72
$
840.48
$ 795.60
i $
795.60 $
764.24
In -Lieu Hosing
$
- )
$
_
$ _
i$
Libra Facilities $
_
$
_
$ _
$
_ i $
_
P d Acquisition and
D I s
_
i
ent
6.90
$
12.15
$ 11.50
$
11.50 $
11.04 ;
Po lice Faciliti _ $
468. ,
$
824.00
$ 780.00
$
78 $
' 749.25 ;
Pub Facili tiesf $
2426.05
$
4,268.32 I
$ 4,040.40 `
$
4,04 0 $
3,881.1 ;
Storm Drainage _$11,322.00
$
11,322.00
$ 11,322.00
$
11,322.00 ' $
11,322.0O
Traffic NLffigation� t $
51,677.74
$
90,920.16 i
$ 86,065.20
$
86,065.20 $
82,672.25 ;
Administra Fe es $
2,752.84
$
4,843.26
$ 4,584.63
$
4,584.63 $
4,403.89
Sub -Total Development `
Impact Fees $
66,378.76 " $
108,187.11 ' $ 103.014.70 $
103.014.7f) $
99,399.90 F $
'Ex4 t 41 +- �
P ro pose fuse
TOTAL FEES Fee Waiverl Fees
$ 2,816,451.00
$ 52,806.53 $0.00 $52,806.53
$ 6,400.00 $0.00 $6,400.00
$ 37,036.00 $0.00 $37,036.00
6 96,242.53 $0.00 $96,242.53
i 3,673.64 $184.00 $3,489.64
I -
53.09 $30.00 $23.09
3,601.60 $ 180.00 $3,421.60
18,656.29 $ 933.00 $17,723.29
56,610.00 $ 2,830.00 $53,780.00
397,400.55 $ 397,400.55 $0.00
21,169.25
479,995.17 $401,373.55 $78,621.62
TOTAL ALL FEES $ 73,692.14 $ 141,777.69 $ 114,346.13 $ 114,346.13 $ 132,075.61 $ 576,237.70 $401,373.55 $174,864.15
Total Fees less Adm $ 70,939.30 $ 136,934.43 $ 109,761.50 $ 109,761.50 $ 127,671.72 $ 555,068.45
' - includes building permit fee; Fire Dept. plan check fee; incremental records fee, CSIFO; microfilm (8.5 "x11
microfilm (large); seismic mapping by state; electrical (shell building); mechanical (shell); plan check fee;
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CITY OF PETALUMA AIRPORT HANGER PROJECT
Project: C100103
PROJECT COSTS:
North Bay Construction (Low Bid)
Design
Inspection & Testing
Estimated Building Permit Fees
Estimated Development Fees
Estimated School Impact Fees (N /A)
City Adm. Charge (5 %)
Contingency @ 5%
Estimated Total Project Costs
SOURCES:
•
•
COPS (Bond Issue)
$3,250,000
FAA Funding Infrastructure
$565,000
FAA Hanger Grant (04,05)
$316,000
Total Sources to date...
$4,131,000
Estimated Balance Needed
Proposed Funding of Balance:
1. State FAA Loan: $1.4 Million @ 5%
Amortized over 17 years
Annual Costs: Approx. $125,000 (P &I)
2. General Fund or Enterprise Fund
Loan @ 5% (Bridge Loan until
State Loan is funded)
Original Costs
$4,783,245
$150,000
$165,000
$96,243
$458,826
$25,000
$21,169
$240,000
$5,939,483
$1,808,483
With Proposed
Fee Waiver
$4,783,245
$150,000
$165,000
$96,243
$78,622
$0
$0
$240,000
$5,513,110
$1,382,110
Reductions
$0
$380,204
$25,000
$21,169
.
OF PETALUMA AIRPORT HANGER PROJECT
$650,000
• CITY
Project: C100103
Additional Fuel Costs
$45,800
Statement of Revenues and Expenditures
Additional Salaries
$20,000
to Support Additional Debt for Airport Expansion
Existing Loan Payments
Existing
New Proposed
Proposed
Revenues:
Fuel Loan 99
Increases
New
Fuel
$435,300
$60,700
14% $496,000
T- Hanger Rent
$400,000
$44,000
11% $444,000
Misc. Revenues
$114,700
$0
$114,700
Personal Property Tax
$45,000
$6,300
14% $51,300
Totals....
$995,000
$111,000
$1,106,000
New Hanger Rents
$0
$296,000
$296,000
New Totals...
$995,000
$407,000
$1,402,000
Expenditures:
Existing...
$650,000
$650,000
Additional Fuel Costs
$45,800
$45,800
Additional Salaries
$20,000
$20,000
Existing Loan Payments
• Fuel Loan 96
$9,261
$9,261
Fuel Loan 99
$6,956
$6,956
Hanger Loan 96
$101
$101,600
Total Existing Loans...
$117,817
$117,817
Total Existing Expenditures...
$767,817
$65,800
$833,617
Estimated Income (Fund Surplus)..
$227,183
$341,200
$568,383
NEW DEBT
COPS (Bond P &I)
$438,000
$438,000
New State Loan @ 5% 17yrs
$125,000
$125,000
Estimated Income (deficit)....
$227,183
($221,800)
$5,383
•