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HomeMy WebLinkAboutItem 2j - Morlan Place Underground Utility District DATE: July 18, 2017 TO: Honorable Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director Philip A. Wray, Deputy Director of Development Services/City Engineer SUBJECT: CONTRACT WITH HOT LINE CONSTRUCTION, INC. FOR THE MORLAN PLACE UNDERGROUND UTILITY DISTRICT IN THE AMOUNT OF $475,875.50; AUTHORIZE THE ASSOCIATED UTILITY COMPANY COSTS TO BE PAID; ACCEPT $166,162.50 FROM SANTA ANITA LLC (RUSNAK MERCEDES-BENZ DEALERSHIP) FOR THEIR SHARE OF THE PROJECT; AND FIND THE PROJECT IS CATEGORICALLY EXEMPT PURSUANT TO SECTION 15301 CLASS 1(B) FROM THE REQUIREMENTS OF THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (“CEQA”) Recommendation: Approve SUMMARY In 2015, representatives of the Rusnak Mercedes-Benz Dealership, under construction at the time, approached the City with an interest in pursuing the undergrounding of the overhead utility lines adjacent to their property on the north side of Morlan Place, from Santa Anita Avenue to Huntington Drive. Rusnak had previously received an estimate from Southern California Edison Company (“SCE”) of $250,000 to relocate the lines to the south side of Morlan Place. In lieu of relocation, Rusnak offered to contribute the $250,000 to the City to underground the lines. A utility undergrounding project on Morlan Place qualifies for benefits under the California Public Utilities Commission’s Rule 20B program. While this program requires funding from sources other than the utility companies, it does provide for some utility company credits. SCE estimated the cost of the project at $1 million originally. On December 15, 2015, the City Council formed the Morlan Place Underground Utility District to be eligible for the Rule 20B Program, and entered into an Agreement with Santa Anita LLC (Rusnak Mercedes-Benz Dealership) for sharing the cost of the project. Based on the agreement with Rusnak, they are responsible for 25% of project costs ($166,162.50) and the City is responsible for 75% of project costs ($498,487.50). Rusnak has deposited its share with the City, and signed and submitted the promissory Contract regarding Morlan Place Underground Utility District July 18, 2017 Page 2 of 5 note. It is recommended that the City Council approve, authorize, and direct the City Manager to execute a contract with Hot Line Construction, Inc. for the Morlan Place Underground Utility District in the amount of $475,875.50 with a 10% contingency, authorize the associated utility company costs to be paid, and accept $166,162.50 from Santa Anita LLC (Rusnak Mercedes-Benz Dealership) for their share of the project. BACKGROUND In 1968, the Public Utilities Commission established a program, entitled Rule 20, to convert overhead utility lines to underground facilities in an effort to reduce overhead cables and equipment, and increase public safety and aesthetics. The Rule 20 program has two significant subsections: Subsection A applies to Utility Company funded projects, and Subsection B applies to projects funded by others. The Rule 20A program requires the utility companies to annually set aside funding in an equitable manner for city projects. The Rule 20 program requires cities to form specific Underground Utility Districts for each project. Over the years, the City has benefited from the Rule 20A program with 15 major underground district projects on streets like Santa Anita Avenue, Baldwin Avenue, and Duarte Road. However, the last Rule 20A project completed in 2008 mortgaged future Rule 20A funding to cover the costs, and the City will not accrue sufficient funds for another project for many years. In 2015, representatives of the Rusnak Mercedes-Benz Dealership approached the City with their interest in pursuing the undergrounding of the overhead utility lines on Morlan Place from Santa Anita Avenue to Huntington Drive. The overhead lines are on the north side of Morlan Place and are now directly in front of the newly constructed Mercedes-Benz Dealership building. The undergrounding of these lines had been the focus of several City efforts over the years, including the planned vacation of Morlan Place at one point, and earlier plans to redevelop this area. These projects never went forward. More recently, Rusnak considered funding the relocation of the overhead lines to the south side of the street, and SCE gave them an estimate of $250,000 for this work. Instead of paying for the relocation, Rusnak approached the City with a request for the City to pursue the undergrounding, and Rusnak would contribute their share up to $250,000. Through discussions with SCE, it became apparent that Morlan Place meets the eligibility requirements for a Rule 20B Underground Utility District project. Rule 20B projects require credits to be provided from electrical and communications utility companies with overhead lines in the district for an amount equal to the cost of an equivalent overhead electric system, and the removal cost of the current facilities. Cable companies do not participate in the Rule 20B program credits and there are no costs required of adjacent property owners. Contract regarding Morlan Place Underground Utility District July 18, 2017 Page 3 of 5 SCE preliminarily scoped out the Morlan Place Underground Utility District project with limits from Santa Anita Avenue to Huntington Drive, at a cost of approximately $1 million. The project scope includes undergrounding all overhead lines in the public right-of-way and portions of the service lines to the adjacent buildings, removing nine (9) wood poles, and installing four (4) new streetlights on concrete poles. With Rusnak’s offer to pay 25% of the cost of an undergrounding project, up to a cost of $250,000, the City would be responsible for the remaining 75%, up to $750,000. On December 15, 2015, the City Council adopted Resolution 7103 establishing the Morlan Place Underground Utility District, and approved an Agreement with Santa Anita LLC (Rusnak Mercedes-Benz Dealership) for cost sharing of the undergrounding of the overhead utilities, and approved an appropriation for the City’s share of $750,000 (75% of the $1 Million estimate) with an increase of up to $200,000 (20% of total cost) for updated estimates. The Agreement with Rusnak includes a promissory note for the reimbursement of the City’s share from future local sales tax revenues from the Rusnak Dealership in excess of the $800,000 annual commitment agreed to in the Covenants, Conditions, and Restrictions with Rusnak at the time of their property purchase. In addition, the Agreement states that if, at the end of a 10-year operating period, the City’s costs are not fully reimbursed, Rusnak will immediately pay any outstanding balance. An underground utility district project like this is typically administered in two phases. The first phase is to install all the underground facilities to house the utility lines. This phase will be administered and paid for by the City as a Capital Improvement Project. The second phase is the removal of all overhead facilities and the installation of new underground lines. This phase is performed by the utility companies and paid for by the City. There are four utility companies with overhead lines in the Morlan Place Underground Utility District: SCE, AT&T, Giggle Fiber, and Spectrum/Time Warner Cable. For the past year and a half, regular meetings have been held with representatives of these four companies, and they have prepared their underground facilities’ plans and estimates. The utility company information was recently consolidated into one comprehensive set of plans, specifications and bid documents. DISCUSSION In May of 2017, the project was advertised for bids, and on June 29, 2017, two bids were received as follows: Company Amount Hot Line Construction $475,875.50 Comet Electric Inc. $867,469.00 Contract regarding Morlan Place Underground Utility District July 18, 2017 Page 4 of 5 It should be noted that this is not work that is typically contracted by cities. After following the normal noticing and posting for solicitation of bids, only six (6) general contractors purchased bid packages. Of the six, only two submitted bids. With the difference in bids, it does raise the question of whether one was unreasonably low or unreasonably high. Hot Line Construction contacted the City several times during the bidding period to ask for clarifications on the plans, whereas Comet Electric did not. It appears that Hot Line Construction did their research to become familiar with and understand the details of the project. Therefore, the low bid appears to be reasonable. Hot Line Construction is qualified in this field, has similar experience, and has a valid contractor’s license. A meeting was held with the four utility companies to review the bids, and all participants are comfortable with Hot Line Construction’s low bid. The costs for the Utility Company work are as follows: Company Total Credit Net Total SCE $213,918 $122,792 $91,126 AT&T $53,456 $30,328 $23,129 Spectrum $15,915 N/A $15,915 Giggle Fiber $11,017 N/A $11,017 TOTAL $141,187 It should be noted that the SCE preliminary estimate of $1 Million is for the entire project, including the work by the individual utility companies. Now that all the costs are known, the total cost of the Morlan Place Underground Utility District Rule 20B project, including a 10% contingency, and accounting for the credits, is $664,650. The 10% contingency is applied only to the Hot Line Construction contract; the utility company costs are included as is. According to the Agreement with Rusnak, they are responsible for 25% of the cost, or $166,162.50, and the City is responsible for the remaining 75%, or $498,487.50. Rusnak has signed and submitted their Promissory Note and deposited their contribution with the City. If the contingency is not necessary, Rusnak will be refunded the associated amount. ENVIRONMENTAL IMPACT The project is categorically exempt per Section 15301 class 1(b) from the requirements of the California Environmental Quality Act (“CEQA”). FISCAL IMPACT The total cost of the Morlan Place Underground Utility District is $664,650. The City and Rusnak have agreed to share the cost on a 75%-25% basis, respectively. In December of 2015, the City Council agreed to the cost share with Rusnak, and based on SCE’s preliminary estimate of $1 million, appropriated $750,000 in reserve funds for Contract regarding Morlan Place Underground Utility District July 18, 2017 Page 5 of 5 the City’s share. Now that the City’s actual share has been determined to be $498,487.50, there are sufficient funds to cover the cost. Rusnak has deposited their share of $166,162.50 with the City, and signed and submitted their promissory note. RECOMMENDATION It is recommended that the City Council: a. Find the project is categorically exempt pursuant to Section 15301 Class 1(b) from the requirements of California Environmental Quality Act (“CEQA”); b. Approve, and authorize and direct the City Manager to execute a contract with Hot Line Construction, Inc. for the Morlan Place Underground Utility District in the amount of $475,875.50, with a 10% contingency; and a. Authorize the associated utility company costs to be paid; accept $166,162.50 from Santa Anita LLC (Rusnak Mercedes-Benz Dealership) for their share of the project. Attachments: Proposed Contract with Hot Line Construction, Inc. Agreement with Rusnak dated January 11, 2016 C ITY OF A RCADIA MORLAN PLACE RULE 20B UNDERGROUND UTILITY DISTRICT PROJECT NO. 41857816 CONTRACT BETWEEN CITY OF ARCADIA AND HOT LINE CONSTRUCTION, INC. RVPUB\\DRD\\570015 GB - STATE & LOCAL (505/507/660) (7/24/00) (PROJECT NO. 41857816) CONTRACT FOR THE CITY OF ARCADIA MORLAN PLACE RULE 20B UNDERGROUND UTILITY DISTRICT 1. P ARTIES AND D ATE. This Contract is made and entered into this ______ day of _________, 2017, by and between the CITY OF ARCADIA (hereinafter called the "Owner") and HOT LINE CONSTRUCTION, INC. (hereinafter called the "Contractor"). 2. R ECITALS. 2.1 The Owner is a charter City organized under the laws of the State of California, with power to contract for services necessary to achieve its purpose; 2.2 Contractor, in response to a Notice Inviting Bids issued by Owner on June 2017 has submitted a bid proposal for construction the Morlan Place Rule 20B Underground Utility District described in the Contract. 2.3 Owner has duly opened and considered the Contractor's bid proposal, and duly awarded the bid to Contractor in accordance with the Notice Inviting Bids and the other Bid Documents, and has given written notice to Contractor on \[**INSERT DATE**\]. 2.4 Contractor has obtained, and delivers concurrently herewith, Performance and Payment Bonds and evidences of insurance coverage as required by the Contract. 3. T ERMS. 3.1 Incorporation of Documents. This Contract includes and hereby incorporates in full by reference the following documents, including all exhibits, drawings, specifications and documents therein, and attachments and addenda thereto: a. Notice Inviting Bids b. Instructions to Bidders c. Contract Bid Forms d. Contract e. Contract Appendix Part "A" - General Conditions Part "B" - Supplementary General Conditions Part "C" - Special Provisions Part "D" - Specifications Part "E" - Drawings (under separate cover) Part “F” - Performance Bond Part “G” - Payment Bond Part “H” - Escrow Agreement for Security Deposits (optional) RVPUB\\DRD\\570015 GB - STATE & LOCAL (505/507/660) (7/24/00) CONTRACT - 1 (PROJECT NO. 41857816) f. ADDENDUM NO. 1 dated June 19, 2017 ADDENDUM NO. 2 dated June 20, 2017 The above documents, including the General Conditions, are an integral part of the Contract Documents. In addition to signing this Contract, Contractor shall initial this paragraph immediately below acknowledging that he or she has read, understood and agrees with all of the terms of the Contract Documents, including, but not limited to, provisions of the General Conditions relating to indemnification, insurance, standards of performance, termination, compensation and time of the essence performance. Contractor shall not disclaim knowledge of the meaning and effect of any term or provision of the Contract Documents, and agrees to strictly abide by their meaning and intent. In the event that Contractor fails to initial below, the Owner shall have the right to declare the Contract unexecuted and to award the Contract to another contractor in accordance with state law. ____________________________ Contractor’s Initials 3.2 Contractor's Basic Obligation. Contractor promises and agrees, at its own cost and expense, to furnish to the Owner all labor, materials, tools, equipment, services, and incidental and customary work for the construction project necessary to fully and adequately complete Morlan Place Rule 20B Underground Utility District, including any alternates selected by the Owner, and all structures and facilities described in the Contract (hereinafter the "Work"), for a total of four hundred seventy five eight hundred seventy five dollars and fifty cents ($475,875.50), as specified in the Contract Bid Forms submitted by the Contractor in response to the above referenced Notice Inviting Bids. Such amount shall be subject to adjustment in accordance with the applicable terms of this Contract. All Work shall be subject to, and performed in accordance with the above referenced documents. 3.3 Standard of Performance. Contractor shall perform all Work under this Contract in a skillful and workmanlike manner, and consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Contractor represents and maintains that it is skilled in the professional calling necessary to perform the Work. Contractor warrants that all employees and subcontractors shall have sufficient skill and experience to perform the Work assigned to them. Finally, Contractor further represents that it, its employees and subcontractors have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Work, and that such licenses and approvals shall be maintained throughout the term of this Contract. RVPUB\\DRD\\570015 GB - STATE & LOCAL (505/507/660) (7/24/00) CONTRACT - 2 (PROJECT NO. 41857816) 3.4 Period of Performance. Contractor shall perform and complete all Work under this Contract within 35 working days, beginning ten (10) calendar days after the date on which the Notice to Proceed is sent by the Owner to the Contractor. Moreover, Contractor shall perform its Work in strict accordance with any completion schedule, construction schedule or project milestones developed pursuant to provisions of the Contract, including but not limited to the Project Schedule located in the Specifications. Contractor agrees that if such Work is not completed within the aforementioned period and/or pursuant to any such completion schedule, construction schedule or project milestones developed pursuant to provisions of the Contract, including but not limited to the Project Schedule located in the Specifications, it is understood, acknowledged and agreed that the Owner will suffer damage. Pursuant to Government Code Section 53069.85, Contractor shall pay to the Owner as fixed and liquidated damages the sum of one thousand dollars ($1,000) PER DAY as provided by the applicable provisions of the General Conditions, found in Part "B" of the Contract Appendix. 3.5 Owner's Basic Obligation. Owner agrees to engage and does hereby engage Contractor as an independent contractor to furnish all materials and to perform all Work according to the terms and conditions herein contained for the sum set forth above. Except as otherwise provided in the Contract, the Owner shall pay to Contractor, as full consideration for the satisfactory performance by the Contractor of the services and obligations required by this Contract, the above referenced compensation in accordance with compensation provisions set forth in the Contract. 3.6 Contractor's Labor Certification. Contractor maintains that he is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Work. A certification form for this purpose is attached hereto as Exhibit “A” and incorporated herein by reference, and shall be executed simultaneously with this Contract. 3.7 Attorneys' Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Contract, the prevailing party in such action shall be entitled to have and recover from the losing party reasonable attorneys' fees and all other costs of such action. 3.8 Successors. The parties do for themselves, their heirs, executors, administrators, successors, and assigns agree to the full performance of all of the provisions contained in this Contract. Contractor may not either voluntarily or by action of law, assign any obligation assumed by Contractor hereunder without the prior written consent of the Owner. RVPUB\\DRD\\570015 GB - STATE & LOCAL (505/507/660) (7/24/00) CONTRACT - 3 (PROJECT NO. 41857816) 3.9 Notices. All notices hereunder and communications regarding interpretation of the terms of the Agreement or changes thereto shall be provided by the mailing thereof by registered or certified mail, return receipt requested, postage prepaid and addressed as follows: Contractor Surety Hot Line Construction, Inc. __________________________ 9020 Brentwood Blvd., Suite H __________________________ Brentwood CA 94513 __________________________ Attn: Troy D. Myers Attn: ____________________ President ____________________ Owner With Copies To: City of Arcadia __________________________ 240 West Huntington Drive __________________________ Arcadia CA 91007 __________________________ Attn: Philip A. Wray Attn: ____________________ City Engineer ____________________ Any notice so given shall be considered received by the other party three (3) days after deposit in the U.S. Mail, first class postage prepaid, addressed to the party at the above address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service. CONTRACTOR CITY OF ARCADIA By: ____________________________ By: ______________________________ Name Dominic Lazzaretto, City Manager ____________________________ ______________________________ Title Date By: ____________________________ Attest: Name ____________________________ By: ______________________________ Title City Clerk Tax I.D. Number: Contractor’s License: ____________________________ Number______________________________ Number Class________________________________ Approved as to Form: By: ______________________________ Stephen P. Deitsch, City Attorney CONTRACT - 4 RVPUB\\DRD\\570015 GB - STATE & LOCAL (505/507/660) (7/24/00) (PROJECT NO. 41857816) EXHIBIT “A” CERTIFICATION LABOR CODE - SECTION 1861 I, the undersigned Contractor, am aware of the provisions of Section 3700 et seq. of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of the Code. I agree to and will comply with such provisions before commencing the Work governed by this Contract. CONTRACTOR: Name of Contractor: HOT LINE CONSTRUCTION, INC. By: Signature: __________________________ Name: __________________________ Title: __________________________ Date: __________________________ CONTRACT (EXHIBIT A) RVPUB\\DRD\\570015 GB - STATE & LOCAL (505/507/660) (7/24/00)