City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: May 19, 2025
FROM: Patrick Dobbins, Public Works Director/City Engineer THROUGH: Carmen Gil, City Manager
SUBJECT: Resolution No. 2025-22 Awarding Contract to Gateway Pacific Contractors to Construct the Industrial Wastewater Treatment Facility
RECOMMENDATION
Staff recommend that the City Council Adopt Resolution No. 2025-22, A Resolution of the City Council of the City of Gonzales Awarding a Contract to Gateway Pacific Contractors to Construct the Industrial Wastewater Treatment Facility on the Amount of $23,584,000 Including a Contingency Budget of $1,646,000.
BACKGROUND
The City’s Municipal Wastewater Treatment Plant (MWWTP) operates under a Waste Discharge Permit from the Central Coast Regional Water Quality Control Board (Regional Board). The MWWTP has a permitted capacity of 1.3 million gallons/day (MGD) and current sewer flows to the plant are approximately 1.2 million MGD. Therefore, the MWWTP is near its permitted capacity and for several years has struggled to meet the 2006 discharge permit requirements as the MWWTP wasn’t designed to treat the amount of ag-wash water it receives. The ag-wash water is approximately 75% of the wastewater treated at the MWWTP and the ag-wash water contains cleansers and sanitizers that disrupt the biological treatment process.
Through the preparation of a Long-Term Wastewater Management Plan, the City determined that construction of an Industrial Wastewater (IW) System was the most cost effective and expedient approach to expand the City’s wastewater system. The System will collect the ag-wash water discharged from the three large processing facilities in the Business Park and convey it to a new IW Treatment Facility to be constructed on City-owned property just east of the MWWTP.
AGENDA
ITEM
22 In April 2023 the Regional Board issued a new Waste Discharge Permit (WDR) that contains requirements the MWWTP is not capable of meeting. Therefore, in addition to constructing the IW System, the City needs to upgrade the MWWTP to comply with the new RWQCB WDR permit.
The City will expand the wastewater system through the following phases:
Phase 1 – The IW System will be delivered under three contracts:
1. Construct the IW Pipeline along Fermin Lane and to the Business Park
2. Construct the IWTF.
3. While the IWTF is under construction, issue a contract to rehabilitate the existing 21-inch sewer main constructed in 1981 by shifting sewer flows to the new IW Pipeline.
The CEQA-Plus document for the IW System was completed in October 2021 and construction documents (plans, technical specifications, and cost estimate) were completed in September 2022.
The IW Pipeline Contract was issued for bid on June 27, 2024. On July 16, 2024 City staff received the fully executed $29M State Revolving Fund (SRF) loan for project construction. Five bids for the IW Pipeline Contract were opening on August 6, 2024 and the contract was awarded to Sierra Construction and Excavating at the September 3, 2024 Council meeting. The contractor began field operations on November 4, 2024 and will complete the project in June 2025.
Phase 2 - Upon completion of the IW System, 800,000 gallons of ag-wash water will be shifted from the MWWTP to the IW Treatment Facility. The City will then rehabilitate the MWWTP which includes removing accumulated sludge, lining the treatment ponds, upgrading the aeration system and constructing a new treatment process. When this phase is completed, the MWWTP will meet the Regional Board new permit requirements.
Phase 3 - Add additional treatment processes at the MWWTP to expand the wastewater system capacity to 2.9MGD which will accommodate projected housing growth through 2050.
Phase 4 - Expand the IW System treatment capacity to 3.5 MGD to accommodate additional processing facilities in the City’s Industrial Business Park and add a recycled water component.
REVIEW & ANALYSIS
The construction documents (plans, technical specifications, and cost estimate) for the “Industrial Wastewater Treatment Facility Project” were prepared by Dudek Consulting.
The project was issued for public bid on January 15, 2025, which included a legal notice in the Salinas Valley Tribune and construction documents were provided to the various Builders Exchange for review by contractors. A pre-bid meeting was held on January 24, 2025, to allow bidders to hear a presentation and opportunity to ask questions and view the project alignment. On February 26, 2025, the City received bids from the following contractors:
BIDDER BID AMOUNT
1 Gateway Pacific Contractors (low bidder) $21,938,000
2 Specialty Construction $22,219,663
3 Clark Brothers $22,447,500
4 Sierra Construction and Excavation $22,813,420
5 Mountain Cascade $24,640,726
6 Anderson Pacific $27,968,100
City staff and MNS Engineers (WW/IW Program Manager) reviewed the bids and determined that the lowest responsive and responsible bid was submitted by Gateway Pacific Contractors. Therefore, staff is recommending the City Council award the construction contract for this project to Gateway Pacific Contractors and that the City Council reject the other submitted bids.
The project team updated the anticipated project costs based on the status of the Collection System project and the IWTF low bid of $21,938,000. The following table provides a breakdown of anticipated costs. As shown, the City anticipates a funding gap of approximately $6,000,000 to complete the project.
Anticipated Project Costs
Construction
Collection System $7,991,000 (1)
IWTF $23,584,000 (2)
Other Ancillary Work $175,000
Subtotal Construction = $31,750,000
Consultant Costs
Planning/Design Phase
Pretreatment Program $20,000
Finalize Design $60,000
Engineering Services During Bid $220,000
Land Easements $260,000
Construction Phase
Engineering Services During Construction $1,472,000
Program Management $400,000
Construction Management $2,860,000
Environmental $350,000
Subtotal Consultants = $5,642,000
City Costs
Legal and Financial $200,000
TOTAL = $37,592,000
SRF Loan $28,884,000
Sewer Impact Fees $2,750,000
Deficit = $5,958,000
(1) Includes 5.0% Contingency
(2) Includes 7.5% Contingency
The City’s rate consultant, Lechowicz & Tseng Consultants, were consulted and confirmed the sewer rates effective on January 1, 2024 will provide the City with a net operating revenue sufficient to cover the required 1.20 debt service ratio. On March 17, 2025, City Council approved Resolution 2025-08, stating its intention and expectation to reimburse expenditures incurred by the City incurred on the Industrial Wastewater Project as approved by the State Revolving Fund (SRF), requesting a $6,000,000 amendment to fully fund the project.
On March 18, 2025, the $6M loan amendment request was submitted to the State Water Resources Control Board to supplement the City’s $29M State Revolving Fund (SRF) loan to cover the total expected cost of the Project. The amendment request is currently being reviewed by SRF financial staff.
City staff recommends the Notice to Proceed for construction of the IWTF not be issued until the amendment is fully executed.
The schedule for the project is on the table below:
How Recommendation Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small town charm.
Explain: This project supports our vision by making improvements to the wastewater system to increase its capacity for residential and industrial development.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ____ No____ N/A
Explain: Maintaining and improving the wastewater treatment plant enhances the community’s quality of life by providing for treatment and safe disposal of the City’s wastewater.
City services will be delivered in a cost-effective, respectful and friendly manner to ensure the safety and well being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. X Yes ____No ____ N/A Explain: See Vision explanation above.
Date/Time
Award Construction Contract at City Council Meeting May 19, 2025 Construction Contract Executed June 10, 2025
Preconstruction Meeting / Notice to Proceed (tentative) September 1, 2025 Contractor Mobilization (tentative) September 15, 2025
Construction Complete (tentative) June 2027
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes No N/A
• Housing X Yes No N/A
• Recreation X Yes No N/A
• Environment X Yes No N/A
• Education X Yes No N/A
Explain: See Vision above.
ALTERNATIVES
• Direct staff to not construct this project
• Direct staff to re-advertise and re-bid the project
• Amend or modify staff recommendation.
BUDGET IMPACT
This contract will be funded with the Sewer Rates and Sewer Impact funds.
CONCLUSIONS
Staff recommend that the City Council Adopt Resolution No. 2025-22, A Resolution of the City Council of the City of Gonzales Awarding a Contract to Gateway Pacific Contractors to Construct the Industrial Wastewater Treatment Facility on the Amount of $23,584,000 Including a Contingency Budget of $1,646,000.
Attachments:
1. Resolution No. 2025-22
2. Agreement with Gateway Pacific Contractors