Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Ann M. Stillman, Director of Public Works
Subject: Increase the Not-to-Exceed Amount of the Agreement with Sbay Construction, Inc. for the East Palo Alto City Hall Improvements Project (Project No. P25J1)
RECOMMENDATION:
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Adopt a resolution increasing the authority of the Director of Public Works and/or designee(s) to execute change orders to the construction agreement with Sbay Construction, Inc. for the East Palo Alto City Hall Improvements Project, to increase the not-to-exceed amount of $9,790,000 by an additional $250,000 for a new not-to-exceed amount of $10,040,000.
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BACKGROUND:
On December 13, 2022, this Board adopted Resolution No. 079394 authorizing an Agreement with Sbay Construction, Inc. for the East Palo Alto City Hall Improvements Project (Project) in the amount of $8,900,000 and authorized the Director of Public Works to execute subsequent change orders to grant time extensions for project completion and payment up to a maximum amount not-to-exceed $9,790,000.
The Project’s scope included the installation of new all-electric heating, ventilation, and air conditioning (HVAC) equipment, light emitting diode (LED) lighting, modern digital controls, fire alarm systems, abatement, ceiling systems, paint, and flooring throughout the building. Construction started in early 2023 and continued throughout 2024 with substantial completion on February 14, 2025. Commissioning of the new systems is ongoing and expected to be completed by June 30, 2025.
The East Palo Alto Government Center was required to be open and fully operational to the community during construction. The Project was planned in three phases to reduce impacts to the tenants and the community. Additional phases were added to the Project during construction to further reduce the impacts to services provided at this facility. Tenants were relocated throughout the building for each construction phase which extended the duration of construction longer than originally anticipated and increased the Project cost. Additionally, unanticipated conditions were encountered during construction requiring additional work to be performed.
DISCUSSION:
As authorized by Resolution No. 079394, the Department of Public Works (Department) issued Change Orders for the Project up to the previously authorized amount of $890,000, or 10 percent of the original agreement amount. The Department has negotiated all final change order requests, credits, and contract extension costs with Sbay Construction, Inc. and requests an additional $250,000 to complete the closeout of the Project for a not-to-exceed total amount of $10,040,000.
The Department recommends that this Board consider these unanticipated conditions and approve the recommended contract increase amount to facilitate completion of the Project. Construction issues or conflicts arise during construction which must be addressed immediately to keep projects moving forward. In some cases, these issues require additional compensation. The Department worked diligently through construction of the
Project to minimize additional costs and develop solutions that were timely, effective, and financially responsible, while being responsive to the building tenants and the services provided.
The County Attorney has reviewed and approved the resolution as to form.
COMMUNITY IMPACT:
The work included in this Project aligns with the County’s commitment to supporting the wellness and recovery of the communities in San Mateo County. The Project modernized a facility that provides City of East Palo Alto and County services to East Palo Alto and surrounding communities. This Project supports the provision of public services to those who require and/or seek such services.
FISCAL IMPACT:
The County appropriated $8,362,560 for planning, design, permitting, and initial contracting in the FY 2021-22 Capital Projects Budget. An additional $7,237,440 was appropriated in FY 2022-23 Capital Projects Budget for the remainder of the Project. These appropriations included cost of the construction contract, professional services, construction administration, special inspection services, and County project management (total appropriated budget is $15,600,000). Sufficient funding for the increase in the Agreement not-to-exceed amount is included in the FY 2024-25 Capital Improvement Plan.
There is no additional impact to the General Fund.