Agenda Item No. 5
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 10, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: Erin Wiggin, CIP Manager
SUBJECT: West Grand Avenue Streetscape Project Bid Rejection (CIP 2287)
RECOMMENDATION
Reject the bid for construction of the West Grand Avenue Streetscape Project (CIP 2287) and receive information on the next steps in advancing this project.
BACKGROUND
The City has placed significant emphasis on improving the West Grand Avenue corridor as part of the “Economic Development and Community Promotion” Major City Goal along with the West Grand Avenue Master Plan. Previous enhancements to West Grand Avenue included work from Highway 1 west to the beachfront area and sections from 2nd to 4th Street and from 8th to 11th Street. These improvements included landscaped medians, street trees, corner ramps and streetlights consistent with the Master Plan. The Council reviewed the Master Plan on February 9, 2021 and provided direction to focus the next phase of improvements on the section from 4th to 8th Street to include a landscaped center median and street trees and other streetscape improvements along with pavement rehabilitation. The Council reaffirmed this direction on October 21, 2021 and directed staff to proceed with the 4th to 8th Street West Grand Avenue Streetscape Project (CIP 2287) in FY 2022-23 given the significant redevelopment planned on this section of West Grand Avenue.
On June 27, 2022, the Council awarded a design contract to BKF Engineers to develop the project design and bid documents for this project. In August, the City was awarded a $1.5 million Community Betterments Grant from the San Luis Obispo Council of Governments (SLOCOG) in recognition of the development opportunities related to this project, particularly with housing. Staff recently learned that the amount of this grant award has been increased to $1.8 million. This grant helped provide funding for the project and allowed for expanding the scope to include the design and construction of storm drains on this section of West Grand Avenue. Staff worked with BKF Engineers to develop the design while using the West Grand Avenue Master Plan as a guide.
The project design scope includes the following items:
• Pedestrian improvements such as curb ramps, bulb outs, pedestrian beacons and sidewalk improvements at select locations
• Class 2 bike lanes including green lanes at intersections • Decorative concrete at crosswalks
• Drought-tolerant landscaped center medians and street trees • Pedestrian level streetlights
• Pavement rehabilitation
• Storm drain installation
Staff Report: West Grand Avenue Streetscape Project Bid Rejection (CIP 2287) Page 2 October 10, 2023
The streetscape project is intended to create a sense of place and an enticement for residents to live, shop and stay within their community as well as attract visitors to the city. West Grand Avenue is also an emerging hub for new multi-family housing and commercial development in Grover Beach and the streetscape improvements will support these developments. As an example, there are pending mixed-use housing developments at 402 West Grand Avenue and 401 West Grand Avenue that include nearly 100 new housing units and ground-level retail space. The mixed-use project at 402 West Grand Avenue was approved by the Planning Commission in early 2023 with construction anticipated to begin this fall while the project at 401 West Grand Avenue was approved by the Commission on October 3rd.
Staff solicited construction bids for the streetscape project on August 17, 2023 with bids due on September 28, 2023. The engineer’s estimated cost for construction for this project was $4.5 million (including bid additives) which already exceeded the amount budgeted for the project though staff had identified unallocated Local Transportation Funds (LTF) to augment project funding. However, the City received only one bid from Papich Construction that was $5.9 million (including bid additives). When budgeting for a construction contingency of 15% and construction management services, the estimated total project cost is nearly $7.3 million or nearly $3.4 million over the amount budgeted for the project.
Staff has performed a bid evaluation and met with contractors and design professionals to better understand the reasoning for the increased costs of construction. The cost of labor, materials, and trucking have greatly increased in the last 12 to 24 months which has impacted prices across the construction industry. Additionally, contractors throughout the county are currently busy with projects related to the winter storms. Staff reached out to other agencies with recent bid openings and confirmed these cost increases are prevalent though there are signs that these costs may be plateauing.
The receipt of only one bid makes it difficult to evaluate the reasonableness of the bid particularly given the scope and cost of this project. Given this situation, staff recommends formally rejecting the one bid received for construction of the West Grand Avenue streetscape project. Staff intends to return to Council at the October 23rd meeting to review options for advancing this project, including rebidding the project at a later date which may result in more bids as contractors complete current projects.
FISCAL IMPACT
There is no fiscal impact of this action.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Reject all bids and provide staff direction to return with additional options to advance the project, including by rebidding the project; or
2. Provide staff with alternative direction.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.