Memorandum \[\<<\\* /7/ TO: HONORABLE MAYOR AND CITY COUNCIL. FROM: Barry Ng Jennifer A. Maguire
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1 CITY OF fir *3 SAN JOSE CAPITAL OF SILICON VALLEY TO: HONORABLE MAYOR AND CITY COUNCIL COUNCL AGENDA: 1/31/17 ITEM: Memorandum FROM: Barry Ng Jennifer A. Maguire /7/ SUBJECT: SEE BELOW DATE: January 12, 2017 Approved -jvpsul Date \[\<<\\* COUNCIL DISTRICT: 3 SUBJECT: REPORT ON BIDS AND ADOPTION OF APPROPRIATION ORDINANCE AMENDMENTS IN THE CONVENTION AND CULTURAL AFFAIRS FUND FOR THE SAN JOSE CIVIC AUDITORIUM HVAC REHABILITATION PROJECT RECOMMENDATION (a) (b) Report on bids for the San Jose Civic Auditorium HVAC (Air Conditioning) Rehabilitation Project, and approval of a 15 percent contingency if City Council awards a construction contract; and Adopt the following Appropriation Ordinance amendments in the Convention and Cultural Affairs Fund: (1) Increase the San Jose Civic Auditorium HVAC Rehabilitation appropriation to the Public Works Department by $2,229,000; (2) Decrease the Ending Fund Balance by $1,700,000; and (3) Decrease the Capital Reserve by $529,000. OUTCOME Award of low bid design-build this construction contract will allow the San Jose Civic Auditorium HVAC (Air Conditioning) Rehabilitation Project to be constructed and utilized during events at the facility. If the City Council awards a construction contract, the 15 percent contingency would provide funding for unanticipated work necessary for the proper completion of the project. BACKGROUND The City National Civic Auditorium is located at 135 W. San Carlos Street, near the intersection of Market Street, within a commercial business area. The theater is bordered by the San Jose McEnery Convention Center to the south, Market Street to the east, the Tech Museum to the north, and the Hyatt Place Downtown to the west (map attached).
2 HONORABLE MAYOR AND CITY COUNCIL January 12, 2017 Subject: San Jose Civic Auditorium HVAC Rehabilitation Project and Related Appropriation Actions Page 2 The City National Civic Auditorium was constructed in 1932 and opened to the public in The original auditorium was equipped with ventilation only. Team San Jose (TSJ), the City's operator, rents large diesel-powered temporary air conditioning chillers that are parked on Market Street near the Tech Museum to provide temporary cooling during events. Included in the Adopted Capital Budget and Capital Improvement Program is the installation of permanent modern energy efficient air conditioning system to enhance TSJ's ability to stage shows during the popular summer months without the costly logistics of providing temporary air conditioning and the ongoing equipment rental charges of approximately $300,000 annually. The scope of work for the San Jose Civic Auditorium HVAC (Air Conditioning) Rehabilitation Project is to provide new modern energy efficient chillers, air handlers, ductwork, and control systems to increase the marketability of the City National Civic Auditorium as a competitive venue at any time of the year. The project will utilize a low bid design-build procurement delivery method. The bid package consists of project criteria documents prepared by Advance Design Consultants, a local City consultant. Construction is scheduled to begin in February 2017 with completion in October ANALYSIS The remaining project cost is estimated at $6.57 million, which is 34% higher than the $4.34 million is currently budgeted. The prior estimate of $4.34 million was developed a year earlier and contained a 6% cost escalation. The overactive construction market in the Bay Area produced an escalation factor that was closer to 20%. The prior budget estimate developed by another City consultant was based on a preliminary engineering report. The report did not anticipate the relocation of major equipment to accommodate the additional needs of the Tech Museum. Furthermore, the actual design proposal uncovered a higher level of work space difficulty previously not anticipated during the preliminary reporting phase. This memorandum includes a recommendation to increase the project allocation by $2.23 million, from $4.34 million to $6.57 million, to ensure sufficient funding is available to award the construction contract. Council Policy provides for a standard contingency of 15 percent on public works projects involving renovation, and remodel of existing City facilities. Staff considers a 15 percent contingency appropriate for this project. The recommended sources of the funding increase are the Unrestricted Ending Fund Balance ($1.7 million) and the Capital Reserve ($529,000) within the Convention and Cultural Affairs Fund. Due to relatively strong performance of the Convention Center and cultural facilities in , including the City National Civic, the actual operating subsidy paid to Team San Jose in came in at approximately $2.5 million less than estimated. Even with the reinvestment of a portion of that savings, along with other savings in the fund, into several deferred maintenance projects at the Convention Center and cultural facilities as part of the
3 HONORABLE MAYOR AND CITY COUNCIL January 12, 2017 Subject: San Jose Civic Auditorium HVAC Rehabilitation Project and Related Appropriation Actions Page Annual Report, the current Unrestricted Ending Fund Balance of $3.2 million is approximately $1.7 million greater than the original Adopted Budget amount. The actions recommended in this report to shift $1.7 million from the Unrestricted Ending Fund Balance to this project would continue the reinvestment operating savings into previously deferred capital projects. The reallocation of $529,000 from the Capital Reserve to fund a portion of the project is also recommended as this reserve was established to help fund critical capital projects. Should the City Council approve the recommended appropriation adjustments, the Convention and Cultural Affairs Fund will retain sufficient capacity to address other capital needs as they arise with an Unrestricted Ending Fund Balance of $1.5 million and a remaining Capital Reserve of $771,000. EVALUATION AND FOLLOW-UP A supplemental memo will be provided after bids are opened on January 12, No other follow-up is anticipated at this time. PUBLIC OUTREACH To solicit contractors, this project was listed on Bidsync and advertised in the San Jose Post Record. The complete bid package and project information for all Department of Public Works construction projects are available on BidSync for interested contractors, contractor organizations and builders' exchanges. This placeholder award memo will be posted on the City's website for the January 24, 2017, Council agenda, and the supplemental memo will also be posted on line prior to the January 24, 2017, meeting. COORDINATION This project and memorandum have been coordinated with the Finance Department, Planning, Building and Code Enforcement Department, and the City Attorney's Office. COMMISSION RECOMMENDATION/INPUT This project was not coordinated with any board or commission. FISCAL/POLICY ALIGNMENT This project is consistent with the Council approved Budget Strategy to continue with capital investments that spur construction spending in our local economy.
4 HONORABLE MAYOR AND CITY COUNCIL ' January 12, 2017 Subject: San Jose Civic Auditorium HVAC Rehabilitation Project and Related Appropriation Actions Page 4 COST SUMMARY/IMPLICATIONS 1. AMOUNT OF RECOMMENDATION/COST OF PROJECT: Project Delivery $ 780,000 Construction (Engineer's Estimate) 5,200,000 Contingency 15% 780,000 TOTAL PROJECT COSTS $6,760,000 Prior Year Expenditures (187,084)* REMAINING PROJECT COSTS $6,572,916 *A total of $187,084 was expended/encumbered through for project delivery costs. 2. COST ELEMENTS OF CONSTRUCTION CONTRACT: This information will be included in the supplemental memo. 3. SOURCE OF FUNDING: 536-Convention and Cultural Affairs Fund 4. OPERATING COSTS: Once the new HVAC system is in place, temporary cooling equipment during warm months will no longer be needed, yielding an annual savings of $300,000 in the Convention and Cultural Affairs Fund. BUDGET REFERENCE The table below identifies the fund and appropriation proposed to fund the contract recommended as part of this memorandum and remaining project costs, including project delivery, construction, and contingency costs. Fund # Appn # Appn. Name Total Appn Remaining Project Costs $6,572,916 Current Func ing Available San Jose Civic Auditorium HVAC Rehabilitation Rec. Budget Action Total Current Funding Available $4,344,000 New Funding to be Appropriated $2,229,000 TC ITAL FUNDING $6,573, Adopted Capital Budget Page Last Budget Action (Date, Ord. No.) $4,344,000 $2,229,000 V /18/2016, Unrestricted Ending Fund Balance $3,210,793 ($1,700,000) N/A* 6/21/2016, Capital Reserve $1,300,000 ($529,000) N/A* 10/18/2016, *The full Source and Use Statement for the Convention and Cultural Affairs fund is in the Adopted Operating Budget document on page X-27.
5 HONORABLE MAYOR AND CITY COUNCIL January 12, 2017 Subject: San Jose Civic Auditorium HVAC Rehabilitation Project and Related Appropriation Actions Page 5 CEOA Negative Declaration, Exempt PP /s/ BARRY NG Director of Public Works JENNIFER A. MAGUIRE Senior Deputy City Manager/ Budget Director Attachments: 1. Project Site Location Map 2. Statement of Exemption PP For questions please contact Michael O'Connell, Deputy Director, Department of Public Works, at (408)
6 7664-CIVIC AUDITORIUM AIR CONDITIONING PROJECT SAN JOSE CIVIC NATIONAL CIVIC AUDITORIUM 135 W. SAN CARLOS STREET LOCATION MAP NOT TO SCALE n NORTH
7 SANjOSE _ Department of Planning, Building and Code Enforcement CAPITAL OP SILICON VALLEY city of C: iss STATEMENT ()F EXEMPTION HARRY FREITAS. DIRECTOR FILE NO, LOCATION OF PROPERTY PROJECT DESCRIPTION CERTIFICATION PP West San Carlos Street (also bordered by S. Market Street), San Jose, CA 95113, Public Project Exemption for a design-build project to provide air conditioning for the Civic Auditorium that would include installing equipment in the chiller yard located between the Tech Museum and the Civic Auditorium. Under the provisions of Section of the State Guidelines for Implementation of the California Environmental Quality Act (CEQA) as stated below, this project is found to be exempt from the environmental review requirements of Title 21 of the San Jose Municipal Code, implementing the California Environmental Quality Act of 1970, as amended Replacement or Reconstruction Class 2 consists of replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site as the structure replaced and will have substantially the same purpose and capacity as the structure replaced, including but no limited to: (c) Replacement or reconstruction of existing utility systems and/or facilities involving negligible or no expansion of capacity. Section Historical Resource Restoration/Rehabilitation Class 31 consists of projects limited to maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the Secretary of the Interior's Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings (1995), Weeks and Grimmer. ANALYSIS The proposed project is to install a new air conditioning system for the Civic Auditorium uses. The work will include installation of the equipment in the chiller area located on South Market Street side between the auditorium and the Tech Museum. The Montgomery Theater - City National Civic Theater is designated as a City Landmark under the name "Civic Auditorium," This work qualifies for an exemption under Section 15302(c) and Section in that the work is limited to replacement and upgrade of an existing utility system, Furthermore, the project will not significant change the exterior of the building and the work is mainly changing the function of the
8 interior. The proposed project will not conflict with the Interior's Standards for Treatment of Historic Properties. The work will not change size, scale, and appearance with respect to the historic resource, and the new air conditioning equipment is a separate section outside and in the corner of the building in order to not create an appearance of faux historicism. The project is located in Downtown and the installation and operation of the new air conditioning system would not substantially increase noise or traffic to the area. The proposed modifications would not damage the historic resource. The essential form and integrity of the historic resource would be unimpaired should the new construction be removed in the future. Any other future changes to the physical environment of this lot not analyzed in this exemption will require further environmental review, as appropriate per the San Jose Municipal Code. Exceptions: CEQA Guidelines Section provides exceptions to the use of Categorical Exemptions where the use of a Categorical Exemption is prohibited under certain circumstances. The City has considered the projects applicability to all of the exceptions under Section An analysis of each of these exceptions in reference to this specific project is provided below, (a) Section (a) does not apply to the Class 2 or Class 31. Even so, the proposed project will not impact an environmental resource of hazard or critical concern. (b) Based on the above analysis, there is no evidence of a potential significant cumulative impact on the environment from the proposed project. (c) The proposed project will not result in any significant effects on the environment due to unusual circumstances. The proposed project sites does not have any unusual circumstances that will negatively impact the environment. (d) The proposed project sites is not located adjacent to or visible from a designated scenic highway, ' Therefore the project is not subject to (d). (e) The proposed project sites are not included on any list complied pursuant to Section of the Government Code. Therefore the project is not subject to (e). (f) The proposed project site is a historical resource. However, the proposed project would be of minor alteration to the existing utility system and would not adversely change the significance of a historical resource. HARRY FREITAS, Director Planning, Building and Code Enforcement Thai-Chau Le Environmental Manager
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