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CITY COUNCIL AGENDA REPORT
City of Anaheim
DEPARTMENT OF PUBLIC WORKS
DATE: JANUARY 27, 2026
FROM: DEPARTMENT OF PUBLIC WORKS
SUBJECT: CLOSE-OUT CHANGE ORDER AGREEMENT FOR THE
HEATING, VENTILATION, AND AIR CONDITIONING
REHABILITATION AND REPLACEMENT PROJECT AT
ANAHEIM WEST TOWER
ATTACHMENT (Y/N): YES ITEM # 09
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion:
1) Approve the Close-Out Change Order (Change Order) between the City of Anaheim and Allison Mechanical, Inc. (Allison Mechanical) for the Heating, Ventilation, and Air Conditioning (HVAC) Rehabilitation and Replacement Project (project) at Anaheim West Tower (AWT), in the amount of $42,000, which includes the settlement of any City of Anaheim (City) and Allison Mechanical outstanding claims; and
2) Authorize the Director of Public Works, on behalf of the City, to execute the Change Order and take such actions as are necessary or required to implement and administer the Change Order.
DISCUSSION:
On February 15, 2022, the City Council approved a contract award to Allison Mechanical in the amount of $5,096,259 for construction related to the HVAC Rehabilitation and Replacement Project at AWT. Project scope was divided and submitted as three separate bids, from the bidders to the City. The contract award was for Phase I (Base Bid) and Phase II (Additive Bid A). Phase I scope included the replacement of cooling towers, particle separator, packaged units, and upgrading split units serving critical rooms and related work. Phase II scope included the replacement and upgrades to the chillers, heat exchanger, and related equipment.
The project was placed on hold in October 2024 due to unforeseen conditions requiring additional engineering effort to redesign the building’s critical wiring distribution from the basement to the roof, so it converged to a location for a portable generator to provide power while the building was disconnected from the power grid. The development of an auxiliary power plan to operate critical systems was required to maintain seamless continuity of services for the City at large and Orange County 911 emergency response Close-Out Change Order Agreement for the Heating, Ventilation, And Air Conditioning Rehabilitation and Replacement Project at Anaheim West Tower January 27, 2026
while project modifications to the building infrastructure took place. During the project hold, Allison Mechanical demobilized their personnel and equipment and incurred delay expenses. The delay impacted project scope, contractor yard costs, remobilization, time and material costs that resulted in an additional change order.
To date the project has utilized contingency funds under the authority delegated by Council Resolution No. 2024-096 which allows for Change Orders which collectively don’t exceed 10% of the contract amount. The 10% contingency for this project equals $509,625.90. Currently, the project has expended
9.99% of the contract amount in Change Orders, totaling $508,958.97 and requires an additional .82% or $42,000. Approval of this additional authority would increase the total project contingency to 10.81% or $550,958.97, exceeding the 10% limit authorized by the Resolution.
Public Works staff carefully reviewed the Change Order proposal, negotiated in the best interest of the City based on the current cost environment, and recommend the approval of the proposed Change Order for .82% of the original contract amount. This recommendation conforms to City construction contract guidelines. This Change Order is also a release from outstanding claims which either Allison Mechanical or the City may have on this project, totaling a final payment amount of $42,000.
IMPACT ON BUDGET:
Adequate funding is available in Public Utilities Fiscal Year 2025/26 capital reserve fund allocated for the Anaheim West Tower.
Respectfully submitted, Concurred by,
Rudy Emami Dukku Lee
Director of Public Works Public Utilities General Manager Attachment:
1. Close-Out Change Order No. 1