____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting:
Disposition:
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: City Manager/Community Services
Division
Prepared by: Preya Nixon, Senior Management
Analyst
City Manager Approval: ___
TOPIC: 350 MERRYDALE INTERIM SHELTER SITE PREPARATION
SUBJECT: RESOLUTION AUTHORIZING THE CITY MANAGER TO WAIVE COMPETITIVE
BIDDING, NEGOTIATE AND EXECUTE AN AGREEMENT FOR THE SITE PREPARATION OF 350 MERRYDALE TO GHILOTTI BROTHERS, INC. IN THE AMOUNT OF $989,825; AUTHORIZING THE CITY MANAGER TO AMEND THE CONTRACT AMOUNT USING CONTINGENCY FUNDS OF $98,983, FOR A TOTAL AMOUNT NOT TO EXCEED $1,088,808; AND APPROVING THE PLANS AND
SPECIFICATIONS FOR THE INTERIM SHELTER PROJECT, DEEMED
REASONABLE BY THE CITY ENGINEER, FOR COUNTY GRANT WITH THE CITY,
ON FILE IN THE DEPARTMENT OF PUBLIC WORKS
RECOMMENDATION:
Staff recommends that the City Council adopt the above-referenced resolution to move forward with the site preparation of the 350 Merrydale interim shelter project.
BACKGROUND:
On November 17, 2025, the City Council took a series of actions to advance the City’s response to homelessness and enable the development of an interim shelter at 350 Merrydale Road. These actions included declaring a shelter crisis pursuant to Government Code section 8698 et seq.; adopting an urgency ordinance and introducing a related ordinance establishing local standards and procedures for homeless shelters; authorizing the City Manager to negotiate and execute an $8 million grant agreement and affordable housing agreement with the County of Marin; and authorizing the acquisition of the property at 350 Merrydale Road for use as an interim shelter followed by permanent affordable housing.
With these approvals in place, the project has transitioned into its implementation phase. The interim shelter is intended to serve up to 70 individuals over time in 65 units on a temporary basis and requires coordinated site preparation, utility service upgrades, permitting, and construction activities to be completed within a defined timeframe. Advancing this work involves multiple City departments, external consultants, utility providers, and construction contractors, and requires sequencing tasks that must occur in parallel to maintain the project schedule.
Agenda Item No:2.j
Meeting Date: July 20, 2026
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
ANALYSIS:
On February 17, 2026, the City Council authorized an amendment to the LCA Architects professional services agreement to design the interim shelter project. In addition, the City Council authorized an amendment to the service provider, FS Global, on April 20, 2026. After discussions between the design team and the service provider, it was determined that the structures FS Global plans to lease to the city must be designed by a licensed architect and structural engineer. Since FS Global and its manufacturer Connex do not provide these services, city staff asked LCA Architects to provide a proposal to add this scope to their contract. A contract amendment was approved at the May 18, 2026 City Council meeting.
Site preparation work - including electrical infrastructure upgrades, fencing, and building modifications - is required and necessary for 350 Merrydale, and must be completed prior to installation of the tiny home units. The new electrical service, including the 1600A main switchboard, distribution panels (DPA, DPB, DPC), and underground homerun conduits, must be in place to support power delivery to each tiny home location. Similarly, required tenant improvements for the existing buildings include bathroom upgrades (staff only), corridor wall/door work (to limit use of building), and accessible drinking fountain installation must be substantially complete before the site can support occupancy. Without this preparatory work, the site cannot safely or legally support the placement and operation of the tiny home units.
Ghilotti Brothers, Inc. (GBI), a local contractor, has agreed to perform the site preparation work at cost, without markup or profit margin, while operating under the City's standard public works construction contract terms and conditions. GBI is passionate about finding solutions to homelessness in the community, and when approached by the City, viewed this project as an opportunity to help address that need directly. Given the 12-week lead time on the new main switchboard, timely contract award is necessary to keep the project on schedule.
Because GBI is performing the work at cost, there is no competitive advantage to be gained through a formal bidding process - the price reflects the actual cost of labor, materials, and equipment. GBI provided the City with a cost proposal that included a deduction for profit margin and excluded markups on subcontractors' estimates.
A full competitive bidding process would also delay commencement of work, which would delay opening the site before the winter months. This delay also carries direct cost consequences: continued holding/carrying costs, escalation in labor and material costs. The City was able to verify that GBI’s proposal was less than the engineer's estimate provided by a cost estimating specialist on the LCA Architects design team.
Therefore, staff recommends the waiver of competitive bidding for the work described above, as described in section 11.50.090 (B) San Rafael Municipal Code, because the following circumstances exist:
1. There would be no competitive advantage to requiring bidding for the contract as the price reflects the actual cost of labor, materials, and equipment;
2. GBI’s proposal includes a deduction for profit margin and excludes markups from the subcontractors’ estimates; therefore, performing a competitive bidding process at this stage would result in delays in the project schedule and would not result in cost savings for the City; and
3. There exist other specific considerations justifying the waiver of the bidding requirements.
FISCAL IMPACT:
The recommendation in this staff report would result in committing costs totaling $1,088,808, including contingency. Appropriations to support this contract are provided within the FY 2026-27 Adopted Budget in the City’s Capital Improvement Program Project G350Merry (Capital Fund 401).
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
ENVIROMENTAL REVIEW:
Per Resolution Nos. 15479 and 15480, the City Council has previously found that use of the 350 Merrydale as an interim shelter is exempt from CEQA.
OPTIONS:
The City Council has the following options to consider relating to this item:
1. Adopt the proposed resolution to move forward with the site preparation work.
2. Do not adopt the resolution and provide further direction to staff. This option would delay this project.
RECOMMENDED ACTION:
Staff recommends that the City Council adopt the above-referenced resolution to move forward with the site preparation of the 350 Merrydale interim shelter project.
ATTACHMENTS:
1. Resolution
RESOLUTION NO.
RESOLUTION AUTHORIZING THE CITY MANAGER TO WAIVE COMPETITIVE
BIDDING, NEGOTIATE AND EXECUTE AN AGREEMENT FOR THE SITE PREPARATION OF 350 MERRYDALE TO GHILOTTI BROTHERS, INC. IN THE AMOUNT OF $989,825; AUTHORIZING THE CITY MANAGER TO AMEND THE CONTRACT AMOUNT USING CONTINGENCY FUNDS OF $98,983, FOR A TOTAL AMOUNT NOT TO EXCEED $1,088,808; AND APPROVING THE PLANS AND
SPECIFICATIONS FOR THE INTERIM SHELTER PROJECT, DEEMED
REASONABLE BY THE CITY ENGINEER, FOR COUNTY GRANT WITH THE CITY,
ON FILE IN THE DEPARTMENT OF PUBLIC WORKS
WHEREAS, on November 17, 2025, the City Council took a series of actions to advance the City’s response to homelessness and enable the development of an interim shelter at 350 Merrydale Road, including declaring a shelter crisis pursuant to Government Code section 8698 et seq.; adopting an urgency ordinance and introducing a related ordinance establishing local standards and procedures for homeless shelters; authorizing the City Manager to negotiate and execute an $8,000,000 grant agreement and affordable housing agreement with the County of Marin; and authorizing the acquisition of the property at 350 Merrydale Road for use as an interim shelter followed by permanent affordable housing; and
WHEREAS, the interim shelter is intended to serve up to 70 individuals over time in 65 units on a temporary basis, and requires coordinated site preparation, utility service upgrades, permitting, and construction activities to be completed within a defined timeframe, involving multiple City departments, external consultants, utility providers, and construction contractors; and
WHEREAS, the City Council found those actions taken on November 17, 2025, to be exempt from the California Environmental Quality Act and the City is now ready to move to the implementation phase of the 350 Merrydale interim shelter project; and WHEREAS, the City of San Rafael requires site preparation work at 350 Merrydale Road — including electrical infrastructure upgrades, fencing, and building modifications, and without such work the site cannot safely or legally support the placement and operation of the tiny home units; and
WHEREAS, Ghilloti Brothers, Inc. (GBI) has agreed to perform the site preparation work at cost, without markup or profit margin, while operating under the City's standard public works construction contract terms and conditions, and has the expertise, immediate availability, and capacity necessary to successfully perform these required services; and WHEREAS, as a chartered city, the San Rafael Municipal Code Section 11.50.090 permits the City Council to waive formal competitive bidding requirements upon findings that certain circumstances exist, and City staff has determined that such circumstances exist here because:
(1) there is no competitive advantage to be gained through a formal bidding process, as GBI is performing the work at cost and the price reflects the actual cost of labor, materials, and equipment; (2) GBI's proposal includes a deduction for profit margin and excludes markups on subcontractors' estimates, such that a competitive bidding process at this stage would delay the project schedule without resulting in cost savings to the City; and (3) other specific considerations, including the delay-related cost consequences of continued holding and carrying costs and escalation in labor and material costs, and the urgency of opening the shelter before winter, justify waiver of the bidding requirement; and
WHEREAS, City Staff has reviewed the proposal provided by GBI, and determined the pricing to be fair, reasonable, and competitive for the scope of work required; and WHEREAS, the City verified that GBI's cost proposal is less than the engineer's estimate prepared by a cost estimating specialist on the LCA Architects design team; and WHEREAS, the City Engineer has reviewed the plans and specifications for the 350 Merrydale interim shelter site preparation project, on file with the Department of Public Works, and has deemed them reasonable; and
WHEREAS, compliance with formal competitive bidding procedures would be of no competitive advantage to the City, would increase the cost of the work significantly or delay its completion significantly, and otherwise the public’s interest would not be served through competitive bidding; and
WHEREAS, funding to support this contract is included in the FY 2026-27 Adopted Budget through Capital Fund (401) appropriations within the 350 Merrydale Interim Housing Project.
WHEREAS, pursuant to City Council Resolution Nos. 15479 and 15480, the City Council has previously found that use of 350 Merrydale Road as an interim shelter is exempt from the California Environmental Quality Act (CEQA).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Rafael as follows:
1. The City Council finds and determines that the foregoing recitals are true and correct.
2. Pursuant to San Rafael Municipal Code Section 11.50.090, the City Council hereby waives the formal competitive bidding requirements for site preparation for the 350 Merrydale Interim Shelter Project for the reasons set forth in the recitals.
3. The City Manager is authorized to negotiate and execute an agreement, in a form approved by the City Attorney, with Ghilotti Brothers Inc., for the site preparation of 350 Merrydale Road, in an amount not to exceed $989,825 under the City's standard public works construction contract terms and conditions.
4. The City Manager is further authorized to approve contract amendments or contingency funds up to an additional amount of $98,983 to cover unforeseen project expenditures.
5. The plans and specifications for the 350 Merrydale Interim Shelter Project, which are on file in the Department of Public Works, are hereby approved.
6. The Director of Public Works is hereby authorized to take any and all such actions and make changes as may be necessary to accomplish the purpose of this resolution.
I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of said City held on the 20th day of July 2026, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS: