TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Matt Loesch
John Ristow
SUBJECT: See Below DATE: April 14, 2025
Approved Date:
4/22/25
CO
UNCIL DISTRICT: 6
S
UBJECT: A ctions Related to the 8820 – Milligan Parking Lot Project
RECOMMENDATION
A
pprove an increase to the construction contingency from 15% to 25% for the 8820 – Milligan Parking Lot Project in the amount of $400,000 for a total contingency of $1,011,646.
SUMMARY AND OUTCOME
Appr
oval of a contingency increase of $400,000 will provide the funding necessary to compensate the contractor for additional work encountered in the last five months of construction of the 8820 – Milligan Parking Lot Project (Project), including the discovery of subsurface contaminated soils and unforeseen site conditions requiring additional hazardous material abatement. The increase in contingency will also provide sufficient remaining contingency funds for any unanticipated work necessary for the proper completion of the Project.
BACKGROUND
O
n June 11, 2024, the City Council awarded the contract for construction to Joseph J.
Albanese, Inc. in the amount of $4,077,638 with a 15% contingency in the amount of $611,646. The Project is located at 150 North Autumn Street at the intersection of North Autumn Street and West St. John Street (Attachment – Location Map – 8820 – Milligan Parking Lot Project). The scope of the Project includes the demolition of existing buildings, structures and paving on-site, and the construction of a new surface parking lot. The Project will provide a total of 315 parking spaces, which includes seven accessible vehicle parking stalls, two van accessible stalls, and 13 motorcycle parking COUNCIL AGENDA: 5/6/25
FILE: 25-466
ITEM: 2.9
HONORABLE MAYOR AND CITY COUNCIL
April 14, 2025
Subject: Actions Related to the 8820 - Milligan Parking Lot Project
stalls. Additional Project information is identified in the award memorandum approved by City Council on June 11, 2024.1,2
The City issued a Notice to Proceed to Joseph J. Albanese, Inc. on September 23, 2024. The contractor began onsite operations on November 5, 2024, and the Project is expected to reach beneficial use in July 2025.
ANALYSIS
To ensure successful completion of the Project, an additional contingency amount of $400,000 is required beyond the original $611,646 contingency allocation. This additional funding is necessary to address unforeseen conditions encountered during demolition, including the discovery of subsurface concrete structures and Class 1 hazardous soil on-site. The requested amount will cover the costs associated with the demolition and removal of the subsurface concrete structures, as well as the removal and proper disposal of the contaminated soil identified after the demolition of the existing asphalt paving.
Thus far, one contract change order has been issued for the Project for unforeseen work that is not in the original scope of work. The contract change order, totaling $463,330, included costs for demolition and off-haul of friable hazardous materials resulting from a structure fire onsite and for costs associated with the implementation of biological and cultural mitigation measures as required by the California Environmental Quality Act. The added contingency amount of $400,000 in addition to the remaining $148,316 contingency balance will result in a balance of $548,316, which will cover the anticipated contract change orders needed to complete the Project, as summarized below:
1) Subsurface concrete structures demolition and removal $80,000 2) Subsurface Class 1 contaminated soil removal and disposal $350,000 Total $430,000
A remaining contingency amount of $118,316 will cover any unforeseen issues that may arise prior to completion of the Project. Any excess funds not used in contingency will remain in the project funding source.
San José Municipal Code Section 27.04.050 provides for a standard contingency of 10% on Public Works contracts except those involving the renovation of a building or
1 Award Memorandum: https://sanjoseca.primegov.com/Portal/viewer?id=0&type=7&uid=2cb75b38- bdec- 4ef5-9b30-504c7efb35ed
2 Supplemental Memorandum:
https://sanjoseca.primegov.com/Portal/viewer?id=0&type=7&uid=321e3956-8ad4-41c8-aa17- af1ccdb2db48
HONORABLE MAYOR AND CITY COUNCIL
April 14, 2025
Subject: Actions Related to the 8820 - Milligan Parking Lot Project
buildings. However, for this Project, a contingency of 15% was initially requested and approved because of the higher potential to encounter unforeseen conditions during the demolition and construction due to unknown existing sub-surface utility connections and components. Under this memorandum request, staff recommends increasing the contingency from $611,646 to $1,011,646, which is 25% of the approved contract amount.
As part of the 2026-2030 Proposed Parking Capital Improvement Program, subject to the appropriation of funds, an additional $391,000 has been requested to be added to the Project for additional project delivery costs, which include consultant fees for hazardous material monitoring and sampling of stockpiled contaminated soil, geotechnical monitoring and observation, and additional consultant design fees to redefine surface grades and elevations. Staff does not anticipate requesting a City Council action for these additional project delivery costs outside of the recommendations.
EVALUATION AND FOLLOW-UP
No additional follow-up action with City Council is expected at this time.
COST SUMMARY/IMPLICATIONS
This recommendation is to increase the Project contingency from 15% to 25%, resulting in a total contingency amount of $1,011,646. The costs associated with this work will be funded from the Greater Downtown Parking Inventory appropriation included in the Transportation Department 2024-2025 Adopted Operating Budget.
1. TOTAL COST OF PROJECT:
Project Delivery* $1,572,716
Additional Project Delivery** 391,000
Construction 4,077,638
Contingency 611,646
Additional Contingency 400,000
Total Project Costs $7,053,000
Prior Year Expenditure and Encumbrances $1,114,148
TOTAL REMAINING PROJECT COSTS $5,938,852
*Current project delivery cost includes $1,291,590 for design services and bidding, and $281,126 for construction management and inspection services.
HONORABLE MAYOR AND CITY COUNCIL
April 14, 2025
Subject: Actions Related to the 8820 - Milligan Parking Lot Project
**Additional project delivery costs of $391,000 will be recommended as part of the 2026-2030 Proposed Parking Capital Improvement Program, subject to the appropriation of funds.
BUDGET REFERENCE
The table below identifies the fund and appropriation to fund the contract recommended as part of this memorandum and remaining Project costs, including project delivery, construction, and contingency costs.
Fund
#
Appn
#
Appropriation
Name
Total
Appropriation
Amount for
Contract
2024-2025
Adopted
Capital
Budget Page
Last Budget
Action (Date,
Ord. No.)
559 7885 Greater
Downtown
Parking Inventory
$4,714,000* $400,000 840 10/22/24,
31133
*The additional project funding will be recommended as part of the 2026-2030 Proposed Parking Capital Improvement Program, subject to the appropriation of funds, and will be approved as part of the 2026- 2030 Adopted Parking Capital Improvement Program.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office, the City Manager’s Budget Office, and the Department of Planning, Building and Code Enforcement.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the May 6, 2025 City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Milligan Parking Lot Project Final Supplemental Environmental Impact Report (FSEIR) (Resolution No. 2024-233), and Addenda thereto.
HONORABLE MAYOR AND CITY COUNCIL
April 14, 2025
Subject: Actions Related to the 8820 - Milligan Parking Lot Project
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/ /s/
MATT LOESCH JOHN RISTOW
Director of Public Works Director of Transportation
For questions, please contact Sal Kumar, Deputy Director, Public Works, at [email protected]
.
ATTACHMENT – Location Map – 8820 – Milligan Parking Lot Project Locaon Map
8820 – Milligan Parking Lot Project
Project
Loca
on
Location Map
8820 - Milligan Parking Lot Project
N
Project
Location