SEE BELOW APRIL 3, 2001 FOX CALIFORNIA THEATRE CONSTRUCTION CONTRACT

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1 REDEVELOPMENT AGENCY BOARD SUSAN F. SHICK EXECUTIVE DIRECTOR SEE BELOW APRIL 3, 2001 SUBJECT: FOX CALIFORNIA THEATRE CONSTRUCTION CONTRACT RECOMMENDATION It is recommended that the Agency Board approve an agreement with Swinerton & Walberg Company, Inc., for construction of the Fox California Theatre Phase 2, in an amount not to exceed $11,000,000, and establishing a construction contingency of $1,000,000. BACKGROUND The Agency publicly bid Phase 1 of the Fox California Theatre Project, which included the demolition of a parking structure and the theatre stagehouse. As authorized by the Agency Board, the Executive Director awarded the demolition contract to Iconco, Inc., in the amount of $964,800, and established a 10% contingency. The demolition work was completed mid-january 2001, within the approved budget, for a final demolition cost of $1,027,664. On December 12, 2000, the Agency Board authorized the Executive Director to issue a Request for Qualifications to secure a general contractor and negotiate a contract with the most qualified contractor for Phases 2 and 3 of the Fox California Theatre Project. Phase 2 includes construction of the soil cement columns and drilled foundation piers, construction of the new stage tower and the new service drive from First Street that will serve the adjacent buildings: the Hyatt Sainte Claire Hotel, Original Joe s and the Dohrmann Building. Phase 3 is the balance of the construction for renovation and expansion of the historic theatre, including construction of a new three-story building on Market Street, with an expanded lobby and back-of-the-house facilities, and construction of a new support building and courtyard on the First Street frontage.

2 Redevelopment Agency Board Page 2 The Engineer s Estimate, prepared by Rudolph & Sletten for Phase 2 direct construction costs, is $6,377,850. In addition, Rudolph & Sletten estimated costs for general conditions and construction services for Phases 2 & 3 to be $3,450,000, with a fee for overhead, profit, bonds and insurance, to be applied to all direct costs including the general conditions cost and subcontract costs, estimated to be within the 5.25% to 5.50% range. The approved contractor selection process involved the following steps: 1. Issue a Request for Qualifications (RFQ). 2. Receive and review Statement of Qualifications responses and develop a shortlist of prequalified contractors. 3. Obtain cost proposals from short-listed general contractors for Phase 2 and Phase 3 construction services. 4. Review proposals and negotiate an Owner-Contractor Agreement with the recommended general contractor and return to the Agency Board for approval. The Request for Qualifications was advertised in the San Jose Mercury News on December 13, In addition, Rudolph & Sletten, the Agency s construction manager, made outreach telephone calls to a number of Bay Area contractors to generate interest in the project. Eight general contractors initially requested and received RFQ packages. A pre-rfq meeting was held on December 19 th, with three general contractors attending: Hathaway-Dinwiddie, Hensel Phelps, and Swinerton & Walberg. RFQ packages were also distributed to Webcor, Devcon, Gilbane, Toenisketter & Breeding; and Huber, Hunt & Nichols. ANALYSIS Swinerton & Walberg Company submitted a Statement of Qualifications on January 11, 2001, the established deadline for receipt. This was the only qualification submittal received. Prior to the submittal deadline, Rudolph & Sletten contacted all contractors who had received the RFQ package. Many contractors decided not to pursue the project and did not submit their qualifications, stating as their reasons a lack of management staff, field labor and manpower resulting from the extraordinarily hot construction market. Agency staff, along with the construction manager, reviewed the Statement of Qualifications from Swinerton & Walberg. The general contractor meets all of the qualification standards established in the RFQ. Based on this analysis and the recommendation of the project team (Rudolph & Sletten, Agency staff, General

3 Redevelopment Agency Board Page 3 Counsel and Agency outside Counsel, Tom Maser, a specialist in constructionrelated issues and an attorney with Tomlinson Zisko Morosoli & Maser, LLP), the Executive Director authorized staff to request a cost proposal from Swinerton & Walberg, the next step in the approved contractor selection process. Agency staff met with Swinerton & Walberg on January 25, 2001, to tour the theatre and initiate the cost proposal process. Fox California Theatre construction documents were distributed to Swinerton & Walberg at that time. The documents consist of the general conditions prepared by the Redevelopment Agency, supplemental conditions developed together with Rudolph & Sletten, and plans and specifications for Phase 2 developed by ELS/Elbasani & Logan Architects and approved by the Department of Public Works. On February 8, 2001, Swinerton & Walberg submitted a cost proposal for the direct cost of general conditions, including project staff and temporary facilities for Phases 2 and 3; and a percentage fee, to include required insurance and bond costs applied as percentage of the direct cost of the work for Phases 2 and 3. On February 12, 2001, Agency staff interviewed three members of the project team proposed by Swinerton & Walberg. The contractor proposed three project staff members, all of whom have experience with projects of similar size and complexity to the Fox California Theatre Project. The overall project staff will consist of a project manager, two construction superintendents, two project engineers and supporting administrative and accounting personnel. The Agency s project team reviewed the contractor s cost proposal, with Rudolph & Sletten providing cost analysis. Swinerton & Walberg submitted a cost for general conditions and construction services in the amount of $3,524,846 and a fee of 5%, for overhead, profit, bonds and insurance, which will apply to all direct costs. The contractor s proposal for the direct cost of general conditions was 1% higher than the Engineer s Estimate, while the proposed percentage fee was a quarter percent lower than estimated by Rudolph & Sletten. Tom Maser participated in the negotiations with Swinerton and Walberg. The cost proposal has been refined and a contract has been developed based on Swinerton & Walberg s proposal and subsequent negotiations. The not-to-exceed value of $11,000,000 includes the contractor s lump sum proposal for general conditions and construction services for Phases 2 and 3 ($3.6 million) with allowances for temporary power installation and power consumption, funds set aside for remaining direct costs of the Phase 2 construction work (up to $6.9 million) and the 5% contractor s fee applied to all direct costs (estimated $500,000).

4 Redevelopment Agency Board Page 4 The remaining direct costs of the construction work will include the cost of subcontracts and self-performed work. The Agreement will require Swinerton & Walberg to solicit bids from subcontractors for Phase 2 construction. Once the subcontract direct costs are known, the Agency s Executive Director will have authority to issue work authorizations to Swinerton & Walberg to begin construction. A work authorization is a signed, written order to the contractor to proceed with a specific scope of work, for a specified sum, and within a specified time. The sum of the subcontract direct costs, self-performed work and general conditions costs becomes the cost of the work upon which the contractor s fee is based. Each work authorization will include a fee (5%) for bonds, insurance, overhead and profit. Additionally, the agreement will require Swinerton & Walberg to solicit bids for Phase 3 subcontractor packages in June 2001, after construction documentation for Phase 3 has been completed, plan checked and approved. The Redevelopment Agency and Packard Humanities Institute will designate artisans and specialized contractors to perform some of the historically sensitive work. Agency staff intends to seek Board approval of an amendment to the agreement with Swinerton & Walberg, for Phase 3 construction, after the subcontract direct costs are known. Total costs for the project, including all soft costs, hard costs and contingencies, are estimated to be $64.99 million, per the attached project budget estimate. Construction of Phase 2 is expected to start in mid-may with mobilization of temporary utilities and site offices. An Order of Possession for the adjacent parcels known as the Lin property was granted by Santa Clara Superior Court and will be effective June 14, Approval of the contract with Swinerton & Walberg allows the contractor to proceed with preconstruction services and bidding of subcontracts. Because the June 14 th possession date would delay the start of construction, staff will seek permission from Caltrans to access the theatre construction site from the parking lane of Market Street. This will cause some congestion on Market Street and will require the removal of three existing trees along the site. The Agency will attempt to move and relocate the trees. Arrangements for temporary access now will allow the Agency to proceed with the Swinerton & Walberg proposal rather than lose an additional four to six months of time on the project. The contractor may not be available for the project if it is delayed, and such a delay would mean reissuing the Request for Qualifications in order to solicit new cost proposals.

5 Redevelopment Agency Board Page 5 PUBLIC OUTREACH A Construction Impact Mitigation Plan was developed for this project to identify hours of operation, dust and noise control, truck haul routing and deliveries, and maintenance of access/egress to the adjacent properties. It was reviewed with the Downtown Association and the SOFA Committee and in meetings with adjacent property owners. The Agency will continue to perform public outreach in the neighborhood and will address any issues and conditions that arise as construction continues over the next several years. COORDINATION The Fox California Theatre Project is being coordinated with the Departments of Public Works; Convention, Arts and Entertainment; Streets and Traffic; and Planning, Building and Code Enforcement. This report was coordinated with the Agency s General Counsel. FISCAL IMPACT Funding for the project is available in the Redevelopment Agency s Adopted FY Capital Budget and Five Year CIP, Market Gateway: Fox California Theatre Opera San Jose line item. Approximately one-third of the cost of the Project will be financed with grant funds from Packard Humanities Institute. CEQA Resolution No Attachment SUSAN F. SHICK Executive Director