SAN IPSE CAPITAL OF SILICON VALLEY

Transcription

1 CITY OF 5CT ZmSk SAN IPSE CAPITAL OF SILICON VALLEY TO: HONORABLE MAYOR AND CITY COUNCIL COUNCIL AGENDA: 01/31/17 ITEM: 4.1 Memorandum FROM: Barry Ng Jennifer A. Maguire SUBJECT: SEE BELOW DATE: Approved Date l(zo/i? COUNCIL DISTRICT: 3 SUBJECT: REPORT ON BIDS AND AWARD OF CONSTRUCTION CONTRACT FOR THE CONVENTION CENTER EXHIBIT HALL LIGHTING AND CEILING UPGRADES PROJECT RECOMMENDATION (a) Report on bids and award of a design-build construction contract for the Convention Center Exhibit Hall Lighting and Ceiling Upgrades Project to the sole bidder, Stronghold Engineering, Inc., in the amount of $17,787,177 and approval of a 15 percent contingency in the amount of $2,668,077. (b) Adopt a resolution authorizing the Director of Public Works to issue any change orders up to the amount of the contingency. (c) Adopt the following Appropriation Ordinance and Funding Source Resolution amendments in the Convention Center Facilities District Revenue Fund: (1) Establish the estimate for Financing Proceeds in the amount of $15,000,000; and (2) Increase the Convention Center Exhibit Hall Lighting and Ceiling Upgrades appropriation to the Public Works Department by $15,000,000. OUTCOME Approval of this low-bid design-build construction contract will allow for the design and construction of the Convention Center Exhibit Hall lighting and ceiling upgrades project. Approval of a standard fifteen percent contingency would provide funding for any unanticipated work necessary for the proper completion of the project.

2 January 19,2017 Page 2 BACKGROUND San Jose Convention Center exhibit halls 1, 2 and 3 were built with the original Convention Center completed in Upgrades to exhibit halls were not included in the San Jose Convention Center expansion and renovation projects in 2009 to 2013 due to funding constraints. The ceiling of the Convention Center's main exhibit hall is showing its age. Some of the tiles are stained while others are damaged or crumbling from having to be removed and replaced to allow for rigging. This is a disadvantage when dealing with corporate tech customers who overwhelmingly prefer a more industrial look of an exposed structural ceiling, typically painted black, with numerous hang points on the steel to attach chain motors and fly overhead rigs. Ceiling tiles, which once were considered a nicer finish for an exhibit hall, have become almost obsolete. Since completion of the expansion project in 2013, the Convention Center has seen several shifts in its client makeup. The first is that Team San Jose, the City's operator of the Convention Center, has been successful at attracting a significant amount of new corporate clients and largescale conferences that have helped drive local economic activity, including hotel room nights, and help improve the financial position of the Convention and Cultural Affairs Fund that supports Convention Center and cultural facilities operations. The second is that these types of events have seen a dramatic rise of large-scale, complex rigging that is often suspended from the ceiling/roof to support lights, speakers, decoration, and other large-scale equipment. Rigging is now a vital part of every event and can be permanent or temporary in nature: it can help to set the atmosphere, move equipment across a stage, secure a large vendor display, suspend video screens, and is now an essential piece of the corporate experience. As the ceiling is composed of removable tiles, production crews cannot access traditional hang points in the steel without removing tiles. Currently, Team San Jose clients incur additional labor costs that are 20 percent to 50 percent higher than competitors with exposed ceilings due to the time it takes to remove ceiling tiles, locate the structural steel beams and install dynamic load bearing rigged points. As a result, temporary bridle hang points must be created and are a poor substitute as they do not have the weight capacity of genuine hang points and limit the size of the rig, taking additional time to install and dismantle. Correspondingly, this additional labor requires additional time, thereby limiting exhibit hall availability and revenue generation. The Convention Center Exhibit Hall Lighting and Ceiling Upgrades Project ("Exhibit Hall Project") completes the vision intended in the previous expansion project and ensures that the Convention Center stays competitive within the Bay Area as a destination location for largescale events. The Public Works Department has worked closely with Team San Jose over the previous two years to scope a project that meets industry standards aligned to the layout and constraints of the building.

3 Page 3 This low-bid design-build project removes the existing ceiling and installs all new lighting and controls, an open truss space so that exhibitors can easily attach their rigging systems, acoustic improvements, video and sound systems, fire suppression and alarm systems, and strengthening of structural components to meet current codes and performance standards. The previously budgeted total cost of $6.3 million was a preliminary legacy estimate of the project as envisioned during the beginning of the Convention Center Expansion project planning and involved significantly less scope. As the design neared its completion, it became clear that project costs would need to grow substantially to allow for the replacement of the fire suppression system, code updates, the complexity of the lighting control system, the recently expensive bidding environment, and to fit the construction work within relatively tight windows to accommodate the City's need to attract and retain key clients that would have otherwise been moved or canceled. When the final Engineer's Estimate for construction came in at $19.5 million, City staff considered financing options to allow for this important project to continue. The accompanying memorandum on this agenda recommends the issuance of commercial paper notes in the amount of $15.0 million to provide a sufficient funding source to award the construction contract and complete the project. Though the project is considerably more expensive than the initial project budget, upgrading the exhibit hall lighting and ceiling addresses a core functionality of the building and positions the City to maintain its recent and growing competitive advantage in large-scale tech-related conferences and events. Implementation of this project will also result in an operating cost reduction related to vendor rigging time, with an additional increase in available event days. The project is using a low-bid design-build delivery approach. The bid package consists of project criteria documents prepared by Salas O'Brien, a City consultant. Construction is scheduled to begin in March 2017, with a projected completion date of December ANALYSIS Bids were opened on December 22, 2016, with the following results: Contractor Engineer's Estimate Stronghold Engineering, Inc. Variance Over/(Under) Base Bid Amount Percent $19,500,000 $17,787,177 ($1,712,823) (8.78)

4 Page 4 Only one bid was received on the December 22, 2016 bid opening in the amount of $17,787,177 and it is 8.78 percent below the Engineer's Estimate. The reasons for the sole bidder are attributed to an overactive construction market, a high standard of bidders' experience required, work complexity, narrow construction schedule, and calendar-pinned dates of job site availability for construction. Only general contractors with adequate workforce resources were encouraged to bid for this contract. Stronghold Engineering Inc. (Stronghold), presented examples of successfully completed designbuild projects over the last six years. Stronghold cited an $80 million Seismic and Life Safety Renovation project for GSA-Edward R. Roybal Federal Building and Courthouse between the years of 2006 and 2011, and a $29 million Naval Medical Center Building 26 project between the years of 2008 and Staff had an onsite interview with Stronghold on January 4, 2017 to confirm their qualifications and ability to delivery this project. Staff considers the bid submitted for this project by Stronghold to be responsive and competitively priced. Staff recommends awarding the base bid to Stronghold Engineering, Inc. Council policy provides for a standard contingency of 15 percent on remodeling/renovation of existing buildings. The 15 percent contingency is appropriate for this project. EVALUATION AND FOLLOW-UP No follow up action with the Council is anticipated at this time. POLICY ALTERNATIVES Alternative #1: Adjust project scope to allow for a longer construction window and rebid the project. Pros: A portion of the increased cost is attributable to the relatively short construction windows available for the contractor to perform the work to minimize the impact on convention activity. Rebidding the project to allow for longer or a single construction window would potentially reduce labor and mobilization costs. Cons: A rebid, and corresponding redesign, would require the construction to instead occur in the summer of This would negatively impact Convention Center business in 2018 as many clients are already booked and places at risk the booking of future clients who expect the improvements to be in place in the coming years. Further, the amount of the savings would vary depending on the bidding climate and be partially offset by additional redesign costs that take into account new code requirements that would be in effect for Reason for not recommending: Completing the Exhibit Hall project is a key priority to maintain the Convention Center's competitiveness as a destination for premier conferences and conventions. As potential savings from a redesign and rebid are unknown, and as a funding

5 Page 5 source to address the remaining project cost has been identified, staff recommends moving forward with the construction contract award. 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 memorandum will be posted on the City's Council Agenda website for the January 31, 2017 Council Meeting. COORDINATION This project and memorandum have been coordinated with Team San Jose, Department of Finance, San Jose Fire Department, Planning, Building and Code Enforcement Department, and the City Attorney's Office. COMMISSION RECOMMENDATION This project was not coordinated with any board or commission. COST SUMMARY/IMPLICATIONS 1. AMOUNT OF RECOMMENDATION/COST OF PROJECT: Project Delivery $ 891,176 Construction 17,787,177 Contingency 2,668,077 TOTAL PROJECT COSTS $21,346,430 Prior Year Expenditure ("$ REMAINING PROJECT COSTS $21,133, SOURCE OF FUNDING: Convention Center Facilities District Revenue Fund 3. OPERATING COSTS: It is anticipated that the 8062-Convention Center Exhibit Hall Lighting and Ceiling Upgrades Project will generate a moderate amount of ongoing savings in the Convention and Cultural Affairs Fund; once the project is complete, the time to set up and take down an event's rigging should decrease, which will increase the number of events held in the exhibit halls. One year system warranty is included in the contract amount.

6 Page 6 4. COST ELEMENTS OF CONSTRUCTION CONTRACT: Construction documents including drawings and specifications for this design-build project which will be wet stamped and signed by California Licensed professional engineer, and permits from City of San Jose Fire Department (with fee) and City of San Jose Public Works Department (no fee) $1,500,000 Reflected ceiling (T-Bar) system demolition $900,000 Rigging system installation, rigging loading diagrams development, existing roof structure evaluation and repair with rigging loading under current CBC code, support system for equipment and devices $800,000 Acoustic Wall and Ceiling installation $3,300,000 Painting everything above ceiling line as defined on drawings $650,000 Mechanical work demolition and installation $950,000 Fire protection demolition and installation $1,300,000 Lighting and controls demolition and installation $5,480,177 Wireless access coverage and cable tray installation $1,200,000 Security video and camera installation $600,000 Fire alarm device relocation $800,000 Sound system demolition and installation $287,000 Utility conflict cost allowance (Revocable) $20,000 TOTAL CONSTRUCTION CONTRACT AMOUNT $17,787,177

7 Page 7 BUDGET REFERENCE The table below identifies the fund and appropriation proposed to substantially fund the contract recommended as part of this memorandum and remaining project costs, including project delivery, construction, and contingency costs Adopted Capital Last Budget Action (Date, Ord. Fund # Appn # Appn. Name Total Appn Rec. Budget Action Budget Page No.) Convention Center Exhibit $15,000,000 V /18/2016, $6,133,000 Hall Lighting R190 Financing Proceeds $0 $15,000,000 N/A N/A CEOA Exempt: File No. PP /s/ BARRY NG Director of Public Works JENNIFER A. MAGUIRE Senior Deputy City Manager/ Budget Director I hereby certify that there will be available for appropriation in the Convention Center Facilities District Revenue Fund in , monies in excess of those heretofore appropriated therefrom, said excess being at least $15,000,000. Attachment: Location Map JENNIFER A. MAGUIRE Budget Director/ Senior Deputy City Manager For questions, please contact Michael O'Connell, Public Works Deputy Director, at (408)

8 CONVENTION CENTER EXHIBIT HALL LIGHTING AND CEILING UPGRADES