Special Notice / Hearing: None
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Sam Lin, Project Development Unit Director
Subject: Amendment to Agreement with Skanska for the Cordilleras Health Campus Project and Revised Project Budget
RECOMMENDATION:
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Adopt a resolution authorizing:
A) The County Executive or designee to execute a settlement and an amendment to the agreement with Skanska USA for the construction of the Cordilleras Health Campus Project, increasing the amount payable under the agreement by $6,495,048 above prior authority, establishing a total contract value of $135,780,486; and
B) The County Executive Officer or designee to issue future change orders and amendments increasing the agreement with Skanska USA by no more than 5 percent, or $6,789,024 for a new maximum fiscal obligation not to exceed $142,569,510; and
C) A total budget for the Cordilleras Health Campus Project of $174,000,000.
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BACKGROUND:
The Cordilleras Health Campus is located on a twenty-acre site at 200 Edmonds Road near Redwood City on County-owned land in unincorporated San Mateo County. The site is wooded and contains a creek that is flanked by steep hills on both sides.
The existing facility was constructed in 1952, originally serving as a tuberculosis hospital. It was adapted in 1978 for its current use for treatment of people who experience mental illness. It contains a licensed locked 68-bed Mental Health Rehabilitation Center (MHRC) and a licensed 49-bed Adult Residential Facility serving adult and older adult County residents who have long histories of mental illness. The residents of the MHRC are conserved, dependent adults, who meet legal criteria for grave disability, and the majority have been admitted to the program involuntarily.
The existing facility itself is maintained at significant annual cost and its configuration is poorly suited to current treatment practices for behavioral health care for this population. A building condition assessment conducted in 2014 determined that the facility required significant costly repairs and upgrades and the decision was made that it should be replaced.
In March 2017, following a study session, the Board of Supervisors directed the County Manager’s Office and its Project Development Unit (PDU) to move forward with the Cordilleras Health Campus Project (Project).
On June 26, 2018, this Board approved a construction manager agreement (Agreement) with Skanska USA Inc. to provide the Construction Manager services for the Project. Following competitive letting of subcontracts, the Board adopted a resolution that set a maximum amount authorized to be expended under the agreement with Skanska of $129,285,438. The County separately established a Project Budget of $160,134,904 which covers the cost of the agreement with Skanska as well as various non-construction costs including design, engineering, project management, furniture, fixtures, equipment, inspections, permitting, and employee parking services.
The Project consists of construction of multiple new residential facilities that create a smaller scale, homelike setting that will be more conducive to patient treatment and recovery. The new facilities are arrayed on the site to allow the existing building to remain in operation throughout construction and construction of all new buildings in a single phase, followed by demolition of the existing building and final site improvements. The Project includes the following elements:
Four MHRC buildings, each housing 16 residents for a total licensed bed capacity of 64. The 16-bed limit per separately licensed building, when run by separate operators, allows Medicaid reimbursement of up to 50 percent of treatment costs, promoting improved care at reduced cost.
A Co-Housing Unit for 57 residents in a single three-story building that will provide residents an independent supportive living environment creating an onsite continuum of care for clients.
A Campus Center containing an art room, chapel, conference rooms, administrative offices, and other support spaces.
A variety of outdoor areas to include multiple secure courtyards at each MHRC, communal gathering spaces, sheltered outdoor seating, community gardens, sport courts, a pottery kiln, walking labyrinth, and other functions.
A 318,000-gallon supplemental water tank and other fire resiliency improvements to increase fire safety for the campus and surrounding area.
The Project will preserve the beauty and serenity of the existing natural environment while providing a safe and attractive setting for patient care and family engagement. Its design reflects the core values identified by this Board in granting Project approval: (1) a focus on wellness; (2) the promotion of respect and optimism for clients, their families, and staff; (3) building of community for clients, families, staff, and visitors; (4) healing through nature; and (5) striving for recovery through a world-class model of care. Consistent with the County Municipal Green Building Policy, Cordilleras is designed to operate at Zero Net Energy (ZNE) and to achieve certification in Leadership in Energy and Environmental Design (LEED).
The Project has required substantial and complex environmental permitting and coordination, including submission for permits and approvals through the Regional Water Quality Control Board, United States Department of Fish and Wildlife, California Department of Fish and Wildlife, United States Army Corps of Engineers, Bay Area Air Quality Management District, San Mateo County Department of Building and Planning, CalFire, the local sanitation district, and the San Francisco Public Utilities Commission. The County has also executed various easements, deed restrictions, and agreements to complete robust environmental mitigation measures including measures related to the California Red-Legged Frog and Dusky-Footed wood rat.
The construction of the four MHRC Buildings, Co-Housing Building, Campus Center, and the 318,000-gallon supplemental water tank is now complete. The buildings have received required permits including the license to operate issued by the California Department of Health Care Services. The operators have staffed the facilities, and the clients will move-in during November 2024. The demolition of the old facility and remaining site work will start thereafter.
Final Project completion, which is slated for the end of 2025, will occur after abatement, demolition, removal of underground storage tanks, completion of landscaping, installation of site amenities, and photovoltaic installation.
DISCUSSION:
The accompanying resolution authorizes execution of a settlement between the County and Skanska in the amount of $13,850,000, a corresponding Project budget increase, and an amendment to the Agreement with Skanska reflecting the claims settlement that would increase the amount to be expended on the Agreement by $6,485,048 above prior authority. The amendment will include revised completion dates.
The increase in the Agreement amount results from, inter alia, schedule extensions, design and site coordination issues, County-initiated changes and enhancements, unanticipated changes required by authorities having jurisdiction including licensing, and unforeseen conditions. Additional impacts stem from the inherent complexity of the Project due to the adjacent operational facility, live utilities, sensitive environmental conditions, and the sequential and interdependent nature of the work needed to complete the Project.
Unanticipated conditions, reasonable scope modifications, post-permit requests by authorities having jurisdiction, and associated schedule extensions are common in highly complex construction projects involving multiple reviewing authorities. The Project Team, in collaboration with the Health System and County partners, have worked diligently to maintain project momentum despite these complexities and to, in collaboration with counsel, resolve related claims while minimizing costs and exposure.
The County Attorney and outside counsel specializing in construction-related disputes were involved in assisting to review claims and negotiate the settlement agreement, which will be in a form substantially similar to the attached. The County Attorney has reviewed and approved the Resolution and accompanying materials as to form.
FISCAL IMPACT:
The Revised Project Budget of $174,000,000 requires an increase of $13,850,000, which will be managed through future Board approved allocations during the budget process.