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CITY OF SAN JUAN BAUTISTA
CITY COUNCIL STAFF REPORT -
REVISED
DATE: AUGUST 3, 2023
DEPARTMENT: ENGINEER / CITY MANAGER
FROM: DON REYNOLDS, CITY MANAGER
BY: DOUG PIKE, CITY ENGINEER
TITLE: AWARDING A CONTRACT FOR CITY OF SAN JUAN
BAUTISTA SANITARY SEWER FORCE MAIN TO HOLLISTER
PROJECT TO SPECIALTY CONSTRUCTION, INC., OF SAN LUIS
OBISPO, CALIFORNIA, AND TAKING CERTAIN OTHER RELATED
ACTIONS
RECOMMENDED ACTION:
It is recommended that City Council approve the attached Resolution 2023-XXX and take the following actions:
1. Awards, contingent upon receipt prior of approval from the United States Department of Agriculture (USDA) of the Project Budget approved herein (Item 10), a Contract to Specialty Construction, Inc. of San Luis Obispo, California, for the City of San Juan Bautista Sanitary Sewer Force Main to Hollister Project (the “Project”) in the Base Bid Amount of $18,632,399 less Deductive Bid Items C, D, F and G in the total amount of $2,113,650 less Deductive Contract Change Order $391,676 for a total award amount of $16,127,073.
2. Authorizes the City Manager to execute the above-referenced Deductive Contract Change Order reducing the cost of the Project by Amount of $391,676.
3. Agrees to Amendment #1 dated August 3, 2023, to the USDA Letter of Conditions dated November 30, 2023.
4. Authorizes the City Manager to take all actions necessary to accept a USDA Rural Utilities Service subsequent grant not to exceed the amount of $2,224,000 (the “Subsequent Grant”).
5. Ratifies the City Manager’s execution and delivery to the USDA of Form RD 1942- 46 “Letter of intent to Meet Conditions: and Form RD 1940-1 “Request for Obligation of Funds” in connection with the Subsequent Grant.
6. Authorizes a Construction Contingency Fund and authorizes the City Manager to execute Additive Contract Change Orders in an amount not to exceed $862,185.
7. Authorizes and delegates to the City Manager, contingent upon the City’s receipt of Page | 2
the Subsequent Grant, authority to rescind any deductive or additive contract change orders and/or to execute any additive or deductive contract change orders, including restoring deductive bid items C, D, F or G, in whole or in part, to the scope of work of the Contract with Specialty Construction, Inc. in a total amount not to exceed the amount of the Subsequent Grant.
8. Authorizes the City Manager to enter into an amendment to the On-Call Agreement with MNS Engineers, Inc. for the construction inspection and materials testing for the Project, in an amount not to exceed $897,800 and for on-going City engineering services in an amount not to exceed $250,000 for a total not to exceed amount of $1,147,000.
9. Authorize the City Manager to enter into agreement with Stantec Consulting Services, Inc., for design support services during the construction phase, biological monitoring, programmable logic controller, “PLC” and supervisory control and data acquisition, “SCADA” and construction management services in an amount not to exceed $880,882.
10. Approve the attached Project Budget Summaries.
BACKGROUND
On June 2019, the City’s wastewater treatment facilities were inspected by the Environmental Protection Agency, and the State's Regional Water Quality Control Board (RWQCB), in October of 2019, the results of this inspection and findings were put into a letter which indicated the City was polluting Waters of the United States from the wastewater treatment facility.
On August 8, 2020, theCity Council adopted Resolution 2020-42, and theCity and EPA subsequently executed an Administrative Order on Consent (AOC), agreeing to resolve the City's National Pollution Discharge Elimination System (NPDES) violations by December 2023, setting forth a schedule by which certain milestones will be reached.
On October 15, 2020, the City Council approved Resolution 2020-51, and agreed to two compliance projects from the analysis provided in the Preliminary Engineers Report: (1) "Alternative 3: Regionalization with Hollister WWTP and Off-Site Source Control (Hollister Water Treatment Plant operated by the City of Hollister", and (2) "West Hills Water Treatment Plant operated by the San Benito County Water District)"; On November 17, 2020, the City of San Juan Bautista adopted a Wastewater Master Plan for transitioning wastewater treatment from San Juan Bautista Wastewater Treatment Plant to the Hollister Wastewater Reclamation Facility via a new pump station and force main to achieve NPDES permit compliance (the “Project”)..
In December 2020, the City issued an request for proposalsfor engineering services and in February 2021 the City Awarded a Consulting Services Agreement to Stantec Consulting Services, Inc.
Since that award revisions to the original concept alignment were made during the design phase through decisions of risk analysis and meetings with adjacent jurisdictions. The original alignment included crossing a multitude of private properties that could have significantly impacted the delivery schedule and added uncertainty to the cost. The alignment was subsequently revised to be located within the County right of way. Stantec Consulting Services completed the design of the Page | 3
project by preparing engineering plans and specifications.
In April of 2023, the City Approved the Plans and Specifications and authorized the issuance of invitation to bidders.
DISCUSSION
The Project was publicly advertised and bids were received from four contractors.
Ranger Pipeline, Inc $24,797,972
Mountain Cascade, Inc. $23,724,744
Garney Pacific, Inc. $22,327,101
Specialty Construction, Inc. $18,632,399
The updated Engineers Opinion of Construction Cost was $18,986,007. On June 7, 2023, Stantec Consulting Services, Inc., completed review of the bids and recommended the City enter into agreement with Specialty Construction, Inc. The review is included as an attachment to this report.
MNS will provide Resident Inspector services as described in the as part of the Second Attachment- USDA Check List. These documents present MNS as the Construction Manager.
However, the arrangement has changed since preparing the attached documents. Stantec Consulting Services will provide Construction Management services; MNS will continue to provide inspection services.
In October of 2022, City Council approved an On-Call Services Agreement with MNS Engineers, Inc., which listed the Force Main Project as one of the potential projects that would include Construction Management and Inspection Services. The recommended action includes an amendment to that agreement for the purposes of inspection and materials testing of the Force Main, on-going City Engineering services which will assist with facilitation of this Project as well as a variety of other on-going City engineering and public works services. The cost of these services is in an amount not to exceed $1,147,000 as first listed as number “8” above.
In February 2021 the City Awarded a Consulting Services Agreement to Stantec Consulting Services, Inc., The recommended action includes amending the Stantec Agreement to include service needed during the construction phase of the project. Those services include reviewing submittals, requests for information, attending meetings with the contractor, preparing conforming drawings and record drawings, Programmable Logic Controller, and Supervisory Control and Data Acquisition and biological monitoring and construction management. The cost for these services is in an amount not to exceed $880,882 as first listed in number “9”: above.
FISCAL IMPACT
To ensure that the City has sufficient funding for the contracted work, Stantec Consulting Services, Inc., has reviewed the bid items for work that could be deferred temporarily in order to award the contract to Specialty Construction, Inc. with the available funding. The deferred items from this Page | 4
contract are listed in the Contract Change Order along with this award.
The City Council publicly discussed Force Main Project budget and the constraints at its regular meeting July 18, 2023. The “Value Engineering,” deferrals and change order were described and discussed in detail. Specialty Construction guarantees its pricing for 60-days when bids were due June 2, 2023, until August 1, 2023, and has agreed to extend that guarantee to the end of August, 2023 for the sake of receiving the award.
On August 2, 2023, Stantec received information from the United States Department of Agriculture (USDA) Rural Development agency that the USDA reviewed the bid information and concurred with the City Engineer’s recommendation to award a contract to Specialty Construction, Inc. in the amount of $16,127,073, and directed that the executed contract and certain other documents including payment and performance bonds be submitted to the USDA Rural Development for the USDA’s concurrence.
On August 3, 2024, the City received a letter amending the USDA’s Letter of Conditions dated November 30, 2022, stating that the City’s application for additional funds can be processed based upon a subsequent grant from USDA Rural Development Office of Rural Utilities Service in an amount not to exceed $2,224,000 (the “Subsequent Grant”) and directing that certain actions be taken by not later than August 3, 2023, in order to for the City’s application for the additional funds to receive further consideration.
The total Project budget after the Contract Change Order Adjustments is currently estimated at $23.7 million, which will be funded through a combination of funding sources:
• USDA Grant and Loan: The City has been working closely with the USDA on the long-term funding solution and received approval for a $4.3 million grant and a $10.3 million 40-year low interest rate loan. The USDA required the City to obtain interim Project financing. In January 2023, the City Council selected First Foundation Bank as the Interim Financing Lender for the Project. The USDA will provide the take-out financing once the Project costs, after all other grant funds, reach the approved USDA loan amount. • EPA State and Tribal Assistance Grant: $1 million.
• The State of California Direct Budget Appropriation: $3 million. • County of San Benito Pavement Contribution: $4 million. • Surface Transportation Block Grant Program: $410,000. • The balance of the project cost is expected to be funded with the Subsequent Grant (still needs to be obtained).The City’s Wastewater Fund previously made a contribution in the amount of $502,000 to cover a portion of the Project design costs. The combined amount of the additional USDA grant is estimated at approximately $2,224,0000. The amount of any additional City’s contribution will depend on the final amount of additional grant funding received from the USDA.
• The request to the USDA for additional funding for the deferred project costs is pending as described in the foregoing.
• If the Subsequent Grant is received in the amount of $2,224,000 the attached Resolution provides Page | 5
authority to the City Manager to restore deferred components of the Project. We will update the Council once we have a response from the USDA.
ATTACHMENTS
1. Resolution 2023-XX Awarding the Force Main Construction Project to Specialty Construction, proposed change order, contingency, and associated support services.
2. USDA Checklist Items:
a. Engineer's letter of recommendation to the owner for contract award. Included a discussion of the contractor's qualifications and any bid irregularities. b. Bid Tabulation Summary of all bids received.
c. Included a copy of the Engineer's estimate.
d. Copy of the recommended bidder's proposal with all applicable attachments, including but not limited to:
• Bid Bond with associated Power of Attorney.
• Form RD 400-6, "Compliance Statement/Certification of Non-Segregated Facilities".
• Form AD-1048, "Certification Regarding Debarment"
• RD Instruction 1940-Q,A-1, "Certification for Contracts, Grants, and Loans". e. Owner's written acceptance of the Resident Inspector. (include a copy of the inspector's resume/statement of qualifications.)
f. Letter from Engineer discussing the status of any permits required for construction. g. Updated total project budget based upon the actual bid showing all costs associated 1 RESOLUTION 2023 – XX [Revised]
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
JUAN BAUTISTA AWARDING A CONTRACT FOR CITY OF SAN JUAN BAUTISTA
SANITARY SEWER FORCE MAIN TO HOLLISTER PROJECT TO SPECIALTY CONSTRUCTION , INC., OF SAN LUIS OBISPO, CALIFORNIA, AND TAKING
CERTAIN OTHER RELATED ACTIONS
WHEREAS, in June 2019, the city’s wastewater treatment facilities were inspected by the Environmental Protection Agency, and the State's Regional Water Quality Control Board ("RWQCB"), in October of 2019, the results of this inspection and findings were put into a letter of which indicated the City was polluting Waters of the United States from the wastewater treatment facility; and
WHEREAS, on August 8, 2020, the City Council adopted Resolution 2020-42, and the City and EPA subsequently executed an Administrative Order on Consent (AOC), agreeing to resolve the City's National Pollutant Discharge Elimination System (NPDES) violations by December 2023, setting forth a schedule by which certain milestones will be reached; and WHEREAS, on October 15, 2020, the City Council approved Resolution 2020-51, and agreed to two compliance projects from the analysis provided in the Preliminary Engineers Report : (1) "Alternative 3: Regionalization with Hollister WWTP and Off-Site Source Control (Hollister Water Treatment Plant operated by the City of Hollister," and (2) "West Hills Water Treatment Plant operated by the San Benito County Water District)"; and WHEREAS, on November 17, 2020, the City of San Juan Bautista adopted a Wastewater Master Plan for transitioning wastewater treatment from San Juan Bautista Wastewater Treatment Plant to the Hollister Wastewater Reclamation Facility via a new pump station and force main to achieve NPDES permit compliance (the “Project”); and WHEREAS, in December 2020, the City issued an request for proposals for engineering services and in February 2021 the City Awarded a Consulting Services Agreement to Stantec Consulting Services, Inc.; and
WHEREAS, in the Spring of 2023, Stantec Consulting Services completed the design of the Project by preparing engineering plans and specifications and the Project was publicly advertised and bids for construction of the Project were received from four contractors; and WHEREAS, in July 2023, Stantec reviewed and analyzed the bids and recommended the lowest and most responsive bid was the bid received from Specialty Construction, Inc with the Base Bid Amount of $18,632,399 and the City and consultants reviewed the budget and recommended in order to have sufficient funding for the work deductive bid items C, D, F and G would be reduced from the base bid in the amount of $2,113,650 and a deductive contract change order be entered into further reducing the cost by $391,676, and recommended the amount of $513,742 be made available for construction contingency; and 2 WHEREAS, in October 2022 City Council approved an On-Call Services Agreement with MNS Engineers, Inc., which listed the Project as one of the potential projects that would include Construction Management and Inspection Services by MNS and it is recommended by the City Manager that Inspection services for the Project and on-going City engineering services are required in amounts not to exceed $897,800 and $250,000 respectively; and WHEREAS, in February 2021 City Council approved agreement with Stantec Consulting Services for the design phase of the Project and it is now recommended to have Stantec provide services during the construction phase of the Project including design support services during the construction phase, biological monitoring, programmable logic controller, “PLC” and supervisory control and data acquisition, “SCADA”, and construction management services in an amount not to exceed $880882; and
WHEREAS, on July 18, 2023, at a regular meeting the City Council publicly reviewed the project budget and budget constraints; and
WHEREAS, on August 2, 2023, Stantec received information from the United States Department of Agriculture (USDA) Rural Development agency that the USDA reviewed the bid information and concurred with the City Engineer’s recommendation to award a contract to Specialty Construction, Inc. in the amount of $16,127,073, and directed that the executed contract and certain other documents including payment and performance bonds be submitted to the USDA Rural Development for the USDA’s concurrence; and WHEREAS, on August 3, 2024, the City received a letter amending the USDA’s Letter of Conditions dated November 30, 2022, stating that the City’s application for additional funds can be processed based upon a subsequent grant from USDA Rural Development Office of Rural Utilities Service in an amount not to exceed $2,224,000 and directing that certain actions be taken by not later than August 3, 2023, in order to for the City’s application for the additional funds to receive further consideration.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Juan Bautista hereby:
1. Awards, contingent upon receipt prior of approval from the United States Department of Agriculture (USDA) of the Project Budget approved herein (Item 10), a Contract to Specialty Construction, Inc. of San Luis Obispo, California, for the City of San Juan Bautista Sanitary Sewer Force Main to Hollister Project (the “Project”) in the Base Bid Amount of $18,632,399 less Deductive Bid Items C, D, F and G in the total amount of $2,113,650 less Deductive Contract Change Order $391,676 for a total award amount of $16,127,073.
2. Authorizes the City Manager to execute the above-referenced Deductive Contract Change Order reducing the cost of the Project by Amount of $391,676.
3. Agrees to Amendment #1 dated August 3, 2023, to the USDA Letter of Conditions dated November 30, 2023.
3 4. Authorizes the City Manager to take all actions necessary to accept a USDA Rural Utilities Service subsequent grant not to exceed the amount of $2,224,000 (the “Subsequent Grant”).
5. Ratifies the City Manager’s execution and delivery to the USDA of Form RD 1942-46 “Letter of intent to Meet Conditions: and Form RD 1940-1 “Request for Obligation of Funds” in connection with the Subsequent Grant.
6. Authorizes a Construction Contingency Fund and authorizes the City Manager to execute Additive Contract Change Orders in an amount not to exceed $513,742.
7. Authorizes and delegates to the City Manager, contingent upon the City’s receipt of the Subsequent Grant, authority to rescind any deductive or additive contract change orders and/or to execute any additive or deductive contract change orders, including restoring deductive bid items C, D, F or G, in whole or in part, to the scope of work of the Contract with Specialty Construction, Inc. in a total amount not to exceed the amount of the Subsequent Grant.
8. Authorizes the City Manager to enter into an amendment to the On-Call Agreement with MNS Engineers, Inc. for the construction inspection and materials testing for the Project, in an amount not to exceed $897,800 and for on-going City engineering services in an amount not to exceed $250,000 for a total not to exceed amount of $1,147,000.
9. Authorize the City Manager to enter into agreement with Stantec Consulting Services, Inc., for design support services during the construction phase, biological monitoring, programmable logic controller, “PLC” and supervisory control and data acquisition, “SCADA” and construction management services in an amount not to exceed $880,882.
10. Approve the attached Project Budget summaries.
PASSED AND APPROVED by City Council of the City of San Juan Bautista at a special meeting held on the 3rd day of August 2023 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN: _________________________
Leslie Q. Jordan, Mayor
ATTEST:
_________________________
Elizabeth Soto, Deputy City Clerk