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CONSENT CALENDAR
City of San Bernardino
Request for Council Action
Date: November 5, 2025
To: Honorable Mayor and City Council Members
From: Eric Levitt, City Manager
Department: City Manager's Office
Subject: Approve Amendment No. 1 to the Agreement with
Mandeville Modular for the Navigation Center’s Modular
Units Extending the Contract Term Date Through
December 31, 2026, and Increasing the Not-To-Exceed
Amount by $224,406.14; Approve Change Order No. 2; and
Authorize an Additional Allocation of $214,420 in Project Contingencies (Ward 1)
Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California,
1. Approve Amendment No. 1 to the Agreement for Design Services and Purchase and Delivery of Goods with Mandeville Modular extending the term of the Original Agreement through December 31, 2026, and increasing the not-to-exceed amount by $224,406.14 for a new total contract amount not to exceed $10,317,433.14; and
2. Approve Change Order No. 2 with Mandeville Modular in the amount of $1,239,668 for structural steel cost increases; and
3. Authorize additional project contingencies in the amount of $214,420, increasing the total project budget for the modular units to $10,531,853.14; and
4. Authorize the City Manager, or designee, to expend the contingency fund, if necessary, to complete the project.
City Manager's Comments
The City Manager recommends approval. This will provide for additional contingency subject to the City Manager review and approval of construction costs. One of the major unknowns at this time is the construction for the cost for the site development.
Executive Summary
The development of the City’s Navigation Center has incurred additional expenses totaling $1,540,888.14 in change orders from Mandeville Modular, exceeding the 3 0
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contingency budget by $224,406.14. These change orders resulted from inflation- related cost increases for steel that occurred during the design process (Change Order 2), and the inclusion of additional design enhancements directed by the City (Change Order 3). To maintain the design development progress of the project, the City approved Change Order 3 utilizing the existing contingency budget while Change Order 2 was still undergoing review. Due to the insufficient contingency funding to absorb both change orders, Change Order 2 now requires Council approval. To fully cover the costs of Change Order 2, Amendment No. 1 increases the agreement’s not- to-exceed amount by $224,406.14. Additionally, staff recommend an additional contingency of $214,420 as a separate budget allocation for any future unforeseen costs. Combined, these two amounts increase the total project contingency from 15% to 20%. These increases have no impact on the City’s General Fund; Amendment No. 1 will be funded by the Inland Empire Health Plan Grant (IEHP), and the additional contingency by the Molina Healthcare Grant, both of which are already allocated to the Navigation Center’s Capital Improvement Program (CIP) development budget.
Background
The SB HOPE Campus, also known as the Navigation Center, is a 200-bed hybrid congregate/non-congregate shelter that serves as a cornerstone of the City’s strategy to address homelessness. The facility will provide interim housing, recuperative care, and an extensive range of onsite supportive services designed to promote stability and self-sufficiency, including case management services, homeless diversion programs, and workforce development programs.
To support the design and construction of the SB HOPE Campus, a total of $21,970,382 in restricted grant funds has been allocated to the project’s overall development budget. Of this amount, $11,810,624.13 has been spent and/or obligated through contracts and purchase orders, resulting in a remaining available budget of $10,159,757.87. It is important to note that this figure represents only the approved funding that is currently available for development-related expenses; it does not include funding for operations or other administrative-related costs.
Design and Construction Funding Sources
Source Total
Funding
Spent and/or
Obligated
Amount
Available
Expenditure
Deadline
ARPA $11,344,785 $11,344,785 $0 Dec. 31, 2026
CDBG $3,397,541 $0 $3,397,541 April 30th*
Dignity Health $250,000 $0 $250,000 June 30, 2026
HHAP-3 $808,385 $465,839.13 $342,545.87 June 30, 2026
HOME-ARP $4,299,671 $0 $4,299,671 Sept 30, 2030
Inland Empire Health $1,500,000 $0 $1,500,000 June 30, 2026 Loma Linda University $70,000 $0 $70,000 N/A
Molina Healthcare $300,000 $0 $300,000 March 4, 2027
TOTAL $21,970,382 $11,810,624.13 $10,159,757.87
*For CDBG timeliness, the City cannot carry over 1.5x of its annual allocation in unspent CDBG funds to the following fiscal year. 3 0
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Mandeville Modular Contract
On December 4, 2024, the Mayor and City Council approved a hybrid Design Services and Goods Purchase Agreement with Mandeville Modular in the amount of $10,093,027 using American Rescue Plan Act (ARPA) funds. This agreement combines a traditional Design Services Agreement with a Goods Purchase Agreement, where Mandeville Modular is both the project designer for the SB HOPE Campus and the modular manufacturer. Of the contract amount, $8,776,545 is for the design and modular manufacturing costs of the campus and $1,316,482 is for a 15% project contingency. The purpose of the project’s contingency is to cover unforeseen expenses and to provide the City with additional flexibility in exploring expanded design and engineering options that may increase the overall costs. Since the contingency budget for this project utilizes ARPA funds, the contingency amount was incorporated directly into the agreement itself so that these funds would be formally obligated by December 31, 2024, as required by the United States Treasury. The agreement with Mandeville Modular is set to expire on December 31, 2025, unless otherwise amended.
Change Orders
During the design development phase of the SB HOPE Campus, inflation and other market forces affecting the supply and demand for domestic steel resulted in a 30% cost increase for these materials. These increased costs resulted in Change Order 2 totaling $1,239,668. In addition, City staff identified opportunities to enhance the project by adding a flexible space to support expanded onsite services and by enlarging the security screening and intake area for improved functionality. These enhancements resulted in Change Order 3 totaling $301,220.14. To maintain the design development progress of the project, the City approved Change Order 3 utilizing the existing contingency budget while Change Order 2 was still undergoing review. Currently, there are insufficient funds to approve Change Order 2 without a contract amendment, which now requires Council approval. In total, the project has incurred $1,540,888.14 in change orders, which exceeds the existing 15% contingency budget by $224,406.14.
Mandeville Modular Agreement
Design & Manufacturing Costs $8,776,545.00
15% Contingency (Contract) $1,316,482.00
Total Contract Funding $10,093,027.00
15% Contingency (Contract) $1,316,482.00
Change Order 1 No Cost (time extension)
Change Order 2 $1,239,668.00
Change Order 3 $301,220.14
Total Change Orders $1,540,888.14
Contingency Balance $ (224,406.14)
Discussion
Amendment No. 1 to the Agreement with Mandeville Modular extends the term of the agreement through December 31, 2026, and increases the agreement’s not-to-exceed amount by $224,406.14. This raises the contingency budget that was incorporated 3 0
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into the original agreement to $1,540,888.14 and brings the total contract not-to- exceed amount to $10,317,433.14. This additional contract funding will fully fund the outstanding change order and help ensure project completion.
Staff also recommend the allocation of $214,420 in additional project contingencies to absorb any future unforeseen costs. This additional contingency amount will be a separate budget allocation for the project and will only be utilized by the City Manager if necessary. When combined with the contingency amounts that are incorporated into the agreement, including the increase in Amendment No. 1, the total contingency amount for the project will be 20%. Mandeville Modular has stated that they do not have any other change orders pending for materials, and that all necessary components to complete the project have been procured, indicating that future change orders are unlikely.
Amended Mandeville Modular Agreement and Project Budget Design & Manufacturing Costs $8,776,545.00
15% Contingency (Contract) $1,316,482.00
Additional Contingency (Amendment 1) $224,406.14
New Total Contract Funding $10,317,433.14
Separate Project Contingency $214,420.00
Total Project Budget $10,531,853.14
Total Contingency (20%) $1,755,308.14
Change Order 1 No Cost (time extension)
Change Order 2 $1,239,668.00
Change Order 3 $301,220.14
Total Change Orders $1,540,888.14
Contingency Balance $214,420.00
Expenditure Strategy and Future Budget Actions
The City currently has a balance of $10,159,757.87 in available funding dedicated to the development of the SB HOPE Campus. Due to the multiple layers of funding sources associated with the project, each with their own rules and deadlines, it is important to weigh known and anticipated expenditure timeframes against expenditure deadlines. To fund both Amendment No. 1 and the separate project contingency, the City will utilize the IEHP and Molina Healthcare grants as follows:
Additional Project Funding
Project Component Funding Source Amount
Amendment No. 1 IEHP Grant $224,406.14
Separate Project Contingency Molina Healthcare Grant $214,420.00 Total Increase: $438,826.14
The IEHP Grant has an expenditure deadline of June 30, 2026, and the outstanding change order is an eligible expense under the grant terms. Utilizing this grant for 3 0
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Amendment No. 1, which addresses the additional $224,406.14 in funding needed to pay the outstanding change order, will help ensure that the City meets the grant’s expenditure deadline.
The additional project contingency budget of $214,420.86 will be funded with the Molina Healthcare Grant. This grant has an expenditure deadline of March 4, 2027, and is eligible to be used for both construction and post-construction activities. As a result, this funding source provides for more flexibility in its utilization, allowing the City to more easily reallocate any unspent contingency funds from this source to other agreements in the development of the SB HOPE Campus.
Approval of Amendment No. 1 and the additional project contingency allocation will increase the project budget for the modular units by $438,826.14, for a new total project budget of $10,531,853.14. As a result, the remaining available development budget for the Navigation Center will be $9,720,931.73. The City anticipates that these remaining funds will be fully utilized by the contract award for a general contractor, who will perform the on-site improvements for the SB HOPE Campus, and through a contract amendment with CREDE Construction Advisory in order to continue their construction management and inspection services. City staff are also exploring other funding sources for the development budget in the event that additional funds are needed.
Project Timeline Update
The City is currently anticipating for the project to be completed prior to December 31, 2026. The next major milestone will be the contract award for a general contractor; currently, City staff are drafting a formal request for bids for the procurement of a general contractor, which is scheduled to be released on November 6, 2025, with an anticipated contract award date in January 2026.
Following the selection of a general contractor and the commencement of on-site construction, the modular units will finish production and are anticipated to be delivered to the site in April or May 2026. Once delivered, the general contractor will perform the final installation of the units, including anchoring the modular units to the foundation, performing the utility hookups, and completing a “punchlist” of any final corrections.
This is anticipated to last through October 2026. Additionally, the General Contractor will perform the final site improvements such as concrete paving, landscaping, and irrigation installation, which are expected to be completed in December 2026.
Modular Unit Manufacturing Update
The modular units are currently in full production at Mandeville Modular’s Palmdale facility. The non-congregate units are the furthest along in production, with drywall and plumbing being installed. On the following pages are pictures showing the status of the modular unit manufacturing at Mandeville Modular’s Palmdale facility. The pictures were taken by CREDE Construction Advisory during an inspection visit on October 21, 2025.
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2021-2025 Strategic Targets and Goals
Approving Amendment No. 1 to the Agreement with Mandeville Modular aligns with Key Target No. 3: Improved Quality of Life. The successful completion of the SB HOPE Campus will provide the City’s unhoused population with interim housing, recuperative care, and an extensive range of onsite supportive services designed to promote stability and self-sufficiency.
Fiscal Impact
The fiscal impact associated with this item is $438,827, which will be funded by $224,406.14 in IEHP Grant Funds for Amendment No. 1 and $214,420.86 in Molina Healthcare Grant Funds for the separate project contingency allocation. There is sufficient budget available in the FY25/26 Capital Improvement Program (CIP) budget under the Navigation Center CIP project to fully cover the costs associated with this item’s actions.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California,
1. Approve Amendment No. 1 to the Agreement for Design Services and Purchase and Delivery of Goods with Mandeville Modular extending the term of the Original Agreement through December 31, 2026, and increasing the not-to-exceed amount by $224,406.14 for a new total contract amount not to exceed $10,317,433.14; and
2. Approve Change Order No. 2 with Mandeville Modular in the amount of $1,239,668 for structural steel cost increases; and
3. Authorize additional project contingencies in the amount of $214,420, increasing the total project budget for the modular units to $10,531,853.14; and
4. Authorize the City Manager, or designee, to expend the contingency fund, if necessary, to complete the project.
Attachments
Attachment 1 – Amendment No. 1 to the Agreement with Mandeville Modular Attachment 2 – Original Agreement with Mandeville Modular Attachment 3 – Change Order No. 2 with Mandeville Modular Attachment 4 – Change Order No. 3 with Mandeville Modular Ward:
First Ward
Synopsis of Previous Council Actions:
December 4, 2024 Mayor and City Council approved an Agreement for Design Services and Purchase and Delivery of Goods with Mandeville Modular in the amount of $10,093,027.
CC: Eric Levitt, City Manager