City Council
Report
City Council Meeting: November 11, 2024
Agenda Item: 5.H
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Architecture Services Heather Averick, Director, Housing and Human Services Department Subject: Award Bid Modification for the Virginia Avenue Park Commercial Kitchen and Thelma Terry Center Improvements Project
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of Categorical Exemptions pursuant to Sections 15301 (Existing Facilities) and 15302 (Replacement/Reconstruction) of the California Environmental Quality Act (CEQA) Guidelines;
2. Approve Bid #SP2644 award modification for the Virginia Avenue Park Commercial Kitchen and Thelma Terry Center Improvements Project for the Public Works Department;
3. Authorize the City Manager to negotiate and execute a contract with SMA Builders Inc. in an amount not to exceed $1,974,000 (including a 20% contingency);
4. Authorize the Director of Public Works to issue any necessary change orders to complete additional work within contract authority;
5. Approve the Amended 2024-25 CDBG and HOME Annual Action Plan (Attachment G);
6. Authorize the City Manager to submit all documents required to submit the Amended 2024-25 CDBG and HOME Annual Plan to the U.S. Department of Housing and Urban Development (HUD); and
7. Authorize budget amendment as outlined in the Financial Impacts & Budget Actions section of this report (requires 5 votes).
Summary
The Virginia Avenue Park Commercial Kitchen and Thelma Terry Center Improvements Project (Project) would replace the Thelma Terry Center building’s existing prep kitchen, office, and storage space with an all-electric, shared kitchen and food storage area, as well as renew community spaces with refreshed wall and floor finishes, new media 2 of 9
equipment, new energy-efficient lighting, a new roof, access control, and a security system. On August 27, 2024, Council awarded a construction contract to SMA Builders Inc. for the Project in an amount not to exceed $1,534,500 (including a 10% contingency). However, staff now recommends a bid award modification and construction contract with SMA Builders Inc. in an amount not to exceed $1,974,000 (including a 20% contingency). With this bid award modification, staff is also seeking Council approval to proceed with a 20% contingency rather than the typical 10% contingency for construction contracts. The additional contingency would be used for any necessary additional scope associated with relocating Virginia Avenue Park programming and/or mitigating construction impacts to the neighborhood during construction. Staff anticipates needing up to two temporary trailers during construction to accommodate the Virginia Avenue Park after school program based out of the Thelma Terry Center building and currently serving 65 youth.
The Project is funded with a combination of Community Development Block Grant (CDBG) Funds and General Funds. Construction would begin winter 2024 and be completed within six months.
Council approved the original 2024-25 Annual Action Plan allocating $2.15 million in Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) funds on April 23, 2024. To allocate an additional $639,237 in CDBG funds to the Project, the City must submit an Amended 2024-25 Action Plan to the U.S.
Department of Housing and Urban Development (HUD). Communities that receive CDBG funds are required to use their funds in a timely manner. Further delay of the Project and the failure to draw down funds will result in noncompliance with HUD’s timeliness requirement and could jeopardize the City’s future CDBG funding. Staff is now recommending that Council approve the Amended FY 2024-25 Annual Action Plan (Attachment G) so that the Project may move forward.
Discussion
Virginia Avenue Park, located at 2200 Virginia Avenue, is recognized as a community hub that empowers families, shapes programming, celebrates culture and tradition, and 3 of 9
maintains the vibrant spirit of the Pico Neighborhood. The Virginia Avenue Park Commercial Kitchen and Thelma Terry Center Improvements Project (Project) would be implemented at the Thelma Terry Center building, in the heart of Virginia Avenue Park.
The Project would replace the building’s underutilized prep kitchen. The renovation of the existing prep kitchen, office, and storage space would accommodate an all-electric, shared kitchen and food storage area that would cultivate the Pico Neighborhood and surrounding community food entrepreneurs and support ongoing programming by providing affordable shared commercial kitchen space, mentorship, and market opportunities. The Project would also renew community spaces with refreshed wall and floor finishes, new media equipment, new energy-efficient lighting, a new roof, access control, and a security system in the one-story Thelma Terry Center building.
On August 27, 2024, Council awarded a construction contract to SMA Builders Inc. for the Project in an amount not to exceed $1,534,500 (including a 10% contingency).
However, before the contract could be fully executed, SMA Builders Inc. informed City staff on September 17, 2024, that their original bid was $250,000 short (underbid) because 1) several sub-contractors increased their bids, and 2) SMA Builders Inc. did not include the full cost for Labor & Material Payment and Performance Bonds in their original bid. SMA Builders Inc. provided the following detailed explanation for the $250,000 shortfall:
• Plumbing – Original plumbing subcontractor, Roov Plumbing, unable to perform under original bid of $75,000. SMA Builders Inc. received revised bid of $220,000 from Suttles Plumbing, resulting in a bid increase of $145,000. • Electrical – Original electrical subcontractor increased bid by $45,000. • Low Voltage/ADT – Original low voltage subcontractor increased bid by $25,000. • Bond – SMA Builders Inc. did not include the full cost for Labor & Material Payment and Performance Bonds in the original bid, resulting in a bid increase of $35,000.
Staff acknowledges that SMA Builders Inc. had opportunities to communicate the shortfall prior to September 17, 2024. SMA Builders Inc. submitted their bid on April 24, 4 of 9
2024, and received two follow-up emails via OpenGov Procurement: 1) an “Award Recommendation” email stating the Project had been recommended to SMA Builders Inc. on July 9, 2024, and 2) a “Project Awarded” email on September 5, 2024, (following Council’s award). However, in the interest of those who would be served by this Project, to avoid further delay which could jeopardize the City’s future CDBG funding, and given that SMA Builders Inc.’s revised bid price remains significantly lower than the next lowest bidder, City staff accepts SMA Builders Inc.’s explanation for the bid increase and still recommend SMA Builders Inc. as the best and lowest bidder based on bid price and experience. Additionally, if the services were rebid, it would add more time and likely increase costs due to inflation.
To ensure SMA Builders Inc. does not exceed the revised award amount, staff will communicate clear expectations regarding the not to exceed award amount and the importance of managing costs, schedule regular budget and performance reviews with SMA Builder Inc. to evaluate their adherence to the budget and identify any potential budget concerns proactively, and implement a strict change order process that closely examines any scope changes or additional costs for reasonableness and necessity.
Bidder Recommendation
Best Bidder SMA Builders Inc.
Evaluation Criteria Price, Experience
Municipal Code SMMC 2.24.180
Submittals Received
Vendor Total
(base bids and alternate bids)
SMA Builders Inc. $1,645,000*
MZN Construction, Inc. $2,659,000
* Revised base bid.
Bid Data
Date
Posted Posted On
Advertise In
(City Charter & SMMC)
Vendors
Downloaded
Date
Publicly
Opened
2/29/2024 City's Online
Bidding Site
Santa Monica Daily
Press
94 4/24/2024
Best Bidder Justification
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Staff recommends SMA Builders Inc. as the best bidder based on bid price and experience. The recommended bidder has demonstrated the ability to perform and complete quality work on past projects in Los Angeles.
To allocate additional CDBG funds to the Project, the City must submit an Amended 2024-25 Action Plan to HUD. Council approved the original 2024-25 Annual Action Plan allocating $2.15 million in Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) funds on April 23, 2024. The Amended FY 2024-25 Annual Action Plan (Attachment G) proposes to allocate an additional $639,237 in CDBG funds to the Project. This amount consists of $500,000 originally allocated to the 19th Street Parcel Development - Phase II project and $139,267 in savings from CDBGfunded capital projects completed in FY 2023-24. After purchasing the vacant 2018 19th Street parcel with CDBG and General Funds back in FY 2019-20, the City remains obligated to transform the site into a community amenity, in this case an agricultural space that will benefit neighborhood residents. With construction for 19th Street Phase I on track to begin in Spring 2025, the delay in Phase II funding is not expected to have significant impacts on the project’s overall timeline. CDBG funding for 19th Street Phase II would be prioritized for FY 2025-26 to ensure that the project continues to move forward as planned.
Public Participation
Pursuant to Municipal Code Section 2.68.050, and in alignment with HUD regulations, the City is required to hold a public hearing prior to Council approval of a substantial amendment to the Annual Action Plan. To meet the requirement, staff advertised a public hearing on the Amended 2024-25 Annual Action Plan, which was held at the October 17, 2024, meeting of the Recreation and Parks Commission (RPC). The amended plan was also made available for a 30-day public review period beginning October 4, 2024. Both the public hearing and the public review period were advertised in the Santa Monica Daily Press and on the City’s CDBG/HOME page. Invitations to participate also went out via email to local service providers, neighborhood associations, and Housing and Human Services boards, commissions, and workgroups. 6 of 9
Notices invited participation from Spanish speakers and offered accommodations for people with disabilities upon request. Taken together, these outreach and engagement strategies are part of a concerted effort to obtain meaningful public input during preparation of the amended plan.
During the public hearing, the RPC voted unanimously to recommend that Council approve the Amended 2024-25 Action Plan, contingent on prioritization of funding for 19th Street – Phase II in the 2025-26 Annual Action Plan, with funds being available for use on July 1, 2025. The totality of all public comments received to-date, including additional input from individual RPC commissioners, is included in the Summary of Public Comments and Input on the final page of the attached Proposed Amended FY 2024-25 Annual Action Plan. Any additional input received or submitted in response to this Council agenda item would be incorporated into the final version of the Annual Action Plan prior to submittal to HUD.
Environmental Review
The project is categorically exempt from CEQA pursuant to Section 15301 and Section 15302 of the CEQA Guidelines. Section 15301 exempts Class 1 (Existing Facilities) projects from CEQA, which include the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. Section 15302 exempts Class 2 (Replacement or Reconstruction) projects which include the replacement or reconstruction of existing structures and facilities where the new structure would be located in the same site as the structure replaced and would have substantially the same purpose and capacity as the structure replaced. The project would renovate the existing city facility at 2200 Virginia Avenue, and therefore, it has been determined that the project would fall within the Class 1 and Class 2 categorical exemptions. Furthermore, none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2, apply to this project.
Past Council Actions
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Meeting Date Description
12/10/19 (Attachment A) Request of Councilmembers Jara, Morena, and O’Day to identify ways to streamline and accelerate community
economic development – Item 13.D
06/22/21 (Attachment B) FY 21-23 Biennial Capital Improvement Program Budget – Addendum to FY 20-22 CIP Budget – Virginia Avenue
Park Commercial Kitchen
06/28/22 (Attachment C) FY 22-24 Biennial Capital Improvement Program Budget – Thelma Terry Center Improvements
06/27/23 (Attachment D) FY 23-25 Biennial Capital Improvement Program Budget – Addendum to FY 22-24 CIP Budget – Virginia Avenue
Park Commercial Kitchen
04/23/24 (Attachment E) Approval of FY 2024-25 Annual Action Plan 08/27/24 (Attachment F) Award of Construction Contract to SMA Builders Inc.
Financial Impacts and Budget Actions
The Amended FY 2024-25 Annual Action Plan proposes to reallocate a total of $639,267 in CDBG funds to the Project, which includes $500,000 originally allocated to 19th Street Parcel Development - Phase II and $139,267 in savings from CDBG-funded capital projects completed in FY 2023-24. Funding for 19th Street - Phase II will be prioritized for inclusion in the FY 2025-26 Action Plan, ensuring that the funds are available for use by July 2025 when they are needed.
Further, the Project was originally budgeted as two separate CIPs: VAP Commercial Kitchen (C1908130) and Thelma Terry Center Improvements (C1908490). As the construction contract combines work for both components, staff recommends consolidation of all funding for the Project under a single CIP, Thelma Terry Center Improvements (C1908490). This includes both appropriation of the additional $639,267 in CDBG funds detailed above, and the transfer of $650,000 currently budgeted to the VAP Commercial Kitchen (C1908130), per the table below.
Approval of the recommended actions requires the following budget amendment (5 votes):
FY 2024-25 Budget Amendment
Release Funds Appropriate Funds
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Account Number Amount Account Number Amount
C1908820.689000
19th St Open Space Project
- Phase 1
$500,000 C1908490.689000
Thelma Terry Center
Improvements
$1,289,267
19.366595
CDBG restricted funds
$139,267
C1908130.689000
VAP Commercial Kitchen
$650,000
With Council approval of the above budget amendment and bid award modification, staff seeks authority to approve available funding from the CDBG Fund and General Fund to execute a contract with SMA Builders Inc. in an amount not to exceed $1,974,000 (including a 20% contingency).
Contract Request
Funding
Source
FY 2024-25
Request Amount
Department/CIP
Account #
Total Contract
Amount
CDBG Fund $1,654,500
C1908490.689000
Thelma Terry Center
Improvements
$1,654,500
General
Fund $174,500
C0104580.689000
Citywide Facilities
Renewal Program
$174,500
General
Fund $145,000 01500003.552010 Professional Services $145,000 Total $1,974,000
Prepared By: Linda Cogswell, CIP Project Manager
Approved Forwarded to Council
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Attachments:
A. December 10, 2019 Staff Report (Web Link)
B. June 22, 2021 Staff Report (Web Link)
C. June 28, 2022 Staff Report (Web Link)
D. June 27, 2023 Staff Report (Web Link)
E. April 23, 2024 Staff Report (Web Link)
F. August 27, 2024 Staff Report (Web Link)
G. 2024-25 Action Plan Amendment
H. Oaks Initiative Form - SMA Builders Inc.
I. Levine Act Disclosure Form - SMA Builders Inc.