Home Oakley Delay in Raye Avenue Project Causes Funding Shortfall, Oakley to Decide Projects Fate Tuesday

Delay in Raye Avenue Project Causes Funding Shortfall, Oakley to Decide Projects Fate Tuesday

by ECT

Oakley

Residents of Raye Avenue in Oakley have a reason to be worried prior to this Tuesdays Oakley City Council Meeting as bids for fixing the flooding issue on their street have come in $334,826.68 over secured funding.

Last November, the East Contra Costa transportation leaders agreed to give the City of Oakley an advanced payment of $750,000 in CALTRANS funds to improve Raye Avenue and prevent flooding, however, the low bid for the project came in at $842,606.40 from AM Stephens of Lodi. The engineers estimate was $750,000.

To reduce flooding, this project includes rebuilding the road and adding storm drainage and sewer lines

The issue of flooding on Raye Avenue is not new; it’s been going on for nearly 40-years—prior to Oakley becoming a city. In fact, the project has been on the CIP list for over a decade since Oakley became a city while the property owners have been paying for the Street Maintenance since incorporation and have received no services.

Due to the lack of attention from city staff, the road is no longer fixable while remaining as one of the most flooded streets in Oakley.  Residents of the street have been calling for a fix since 2001.

According to the staff report, former Councilman Jim Frazier was told the project would be $750k so he went to the Bypass Authority to secure funding and fought hard to receive them as there was some opposition. Of course, Frazier won the battle and secured the funds.

Of course, the staff report now claims project costs have increased 20-30% due to the economy improving and that contractors are no longer coming in under the engineers estimate to win work.

The council will consider 5-options

  • Option 1, Make up the Shortfall Using Local Funds-
  • Option 2, Reject the Bids without Prejudice and Without Modifying the Plans and Re-Bid the Project at a Later Date-
  • Option 3, Work with the Contractor and Designer to Identify Potential Cost Saving Measures and Re-Bid the Project at a Later Date-
  • Option 4, Identify Additional Funding Sources to Make Up the Projected Shortfall-
  • Option 5, Reject all Bids, Reallocate Funds for Their Original Purpose, and Place CIP #48 On-Hold Until an Adequate Alternate Funding Source is Identified-

 

Staff is suggesting  Option 1 on paper, but appear to be advocating for Option 3 as a way to kill the project which is what City Manager Bryan Montgomery wants according to a source close to the project.

Editor’s Note: 

When a city is being provided nearly 70% of a projects funding from elsewhere, a council would be foolish to turn away the funds. Had the city staff provided an accurate estimate prior to working on securing funds, this project would be fully funded.

The fact staff waited a year to move forward and now there is a 20-30% cost increase is obnoxious. Furthermore, using city staff logic, delaying the project further could result in even higher construction cost for a simple fix as the economy is apparently growing faster than the bubble bursts.

Truth be told, had the city moved forward when they received the funds instead of focusing all their energy in downtown Oakley, the cost increase would be a non-issue and residents would not have to worry about flooding this year.

The council needs to remember that they don’t always have to hit a home run with saving funds for larger projects, sometimes it’s the multiple singles that make the most impact in a community.

Raye Avenue has waited a decade, it’s time to get that project off our punch list and move forward with the fix.

 

Here is the staff report.

Background and Analysis
The City’s Five-Year Capital Improvement Program (CIP) includes Project Number 48, Raye Avenue Improvement Project. The intent is to improve Raye Avenue to public road standards similar to the projects that occurred on Hill Avenue, Malicoat Avenue, and Douglas Road in conjunction with Subdivision 7689 that was developed by KB Home.

As part of the project development, Staff identified that the right of way for Raye Avenue was only dedicated as forty feet wide, which is significantly less than the standard 52 feet for cui-de-sacs, or 56 feet for residential streets. Since acquiring the additional right of way would have been cost prohibitive, Staff met with the residents beginning in 2006 to identify design alternatives for the limited right of way. After several meetings, the consensus was to construct a 36 foot wide curb to curb street (which is a standard residential width), omit sidewalks, and due to the limited right of way, locate the utility poles on the street side of the curb and construct concrete bulb outs around the poles.

Since Raye Avenue is not a through street like Hill, Malicoat and Douglas, a fire district approved termination is necessary. Several alternatives were considered, including a “hammer head” type turnaround at the very end of the right of way and a cul-de-sac in an already dedicated right of way, several houses prior to the end of the street. Since the property owners near the end of the street could not agree on a preferred alternative, the cul-de-sac feature was selected since the City already had control of the right of way and no additional property rights were required. The cul-desac will require relocation or removal of private improvements that were built within the dedicated right of way, but the property owners have been notified and Staff will continue to coordinate with them on the work.

From a utility standpoint, just like the Hill, Malicoat and Douglas projects a Diablo Water District (DWD) line already exists in Raye Avenue but sewer and storm drain do not. The project will relocate the existing water meters to behind the face of curb and the City will be reimbursed by DWD for the work. Sewer and storm drain will be constructed by the project, and sewer stubs will be installed to the right of way line. Property owners will then be responsible for paying sewer impact fees and extending the sewer line to their residence. As long as the septic system for the property is functional (as determined by County Environmental Health), connecting to the sewer system will be voluntary. lronhouse Sanitary District is not a financial partner in the project (nor were they for the Hill, Malicoat, or Douglas projects), although Staff understands that they have provided property owners with flexibility in paying the impact fees.

When the project was included in the original CIP back in FY 2001/02 it had a construction budget of approximately $430,000, based on the information Staff received from KB Home related to the Hill, Malicoat and Douglas projects. A design contract funded with Redevelopment Agency (RDA) funds was awarded in FY2006/07, and the construction budget was increased to $800,000 during FY 2007/08 once the project was designed. Construction was also intended to be funded using RDA funds, but due to competing priorities and limited resources, adequate RDA funds never became available.

During FY 2012/13, then Councilmember Frazier requested that the Bypass Authority advance the City a portion of its share of the “cost of relinquishment” funds from the Bypass and Main Street transfer, and the request was granted. Since the construction industry at the time was very competitive and agencies in the Bay Area were experiencing bids 20% to 30% below engineer’s estimates, the request to the Bypass Authority was for $750,000 (those funds have since been received by the City). The “cost of relinquishment” funds were not originally intended for Raye Avenue, but are to upgrade traffic signal controllers along the Main Street corridor to City standards, remove aerially deposited lead from the shoulders, retrofit and replace sidewalk ramps to meet accessibility standards, install a storm drain system in the vicinity of 4th Street where routine flooding occurs, and rehabilitate the pavement from Highway 160 to Big Break Road. Since those obligations remain with the City regardless and the advance did not include any provision or plan for backfill, the intent was to keep the advance to a minimum.

Following the advance, in order to update the plans to current standards and finalize the design, the City entered into an agreement amendment with Bellecci and Associates, Inc., the original designer, for an amount not to exceed $41,454. The construction package was released to bidders in early August and on August 30th at 2:00 p.m., the bidding period for the project closed. Six bids were received prior to the submittal deadline, and a summary of the bid results are as follows:

  1. AM Stephens – Lodi – $842,606.40
  2. Bay Cities – Concord – $927,820.73
  3. MCI Engineering – Stockton – $1,009,999.00
  4. Argonaut Constructors – Santa Rosa – $1,127,986.50
  5. Ghilotti Bros – San Rafael – $1,300,740.00
  6. Redgwick Const. Co – Oakland – $1,430,310.00

Staff reviewed the lowest bid for conformance with the proposal requirements and determined it to be responsive. A copy of the bid proposal is attached for reference.

The project did not include any alternates, so the base bid amount is the only applicable quantifying measure.

Since the design effort and associated Staff charges have reduced the available funds to approximately $698,000, there are not currently adequate funds in the CIP #48 account to fund even the base construction bid. Based on Staff’s experience from the Hill, Malicoat, and Douglas projects, Staff is recommending an additional construction contingency amount of 10% ($84,260.64), a construction administration amount of 10% to cover construction surveying, inspection, and project management ($84,260.64), a materials testing amount of $15,000 to test trench and sub-grade compaction, and lronhouse Sanitary District has requested an inspection fee of $6,700. As shown below, that leaves a current shortfall of approximately $335,000.

Although sometimes the construction contingency and management amounts can be reduced for relatively less complex projects, Staff is not recommending that in this instance. During the Hill, Malicoat and Douglas projects, numerous unknowns were encountered including septic systems encroaching into the right of way. Coordinating with the affected property owners will also be very time consuming.

  • Construction Constract – $842,606.40
  • Contingency (10%) – $84,260.64
  • Construction Administration (10%) – $84,260.6
  • Materials Testing – $15,000
  • ISD Inspection Fee – $6,700
  • Total Construction Amount – $1,032,827.68
  • Available Funds – $698,000
  • Projected Shortfall – $334,826.68

Based on the bid amounts and available funds Staff has identified several options for the City Council to consider:

Option 1, Make up the Shortfall Using Local Funds-
In addition to the “cost of relinquishment” advanced funds, CIP #48 is eligible to use Gas Tax or Measure J funds. Traffic Impact Fees (TIF) are not eligible since the project is not on the adopted project list. Finance Staff is currently completing the year end close-out process, and as part of that effort $184,000 of unused Measure J funds will be released to unassigned fund balance. Supplementing those funds with an additional $60,000 of Gas Tax ($15,000 from a total of approximately $40,000 of current year unassigned fund balance and $45,000 from a total of approximately $81,000 of current year interfund charges) and $91,000 of Measure J ($50,000 from a total of approximately $133,000 of current year unassigned fund balance and $41,000 from a total of approximately $70,000 of current year interfund charges) will fully fund the project. Obligation of these funds will not delay the delivery of any other planned projects, but will reduce the amount of unassigned fund balances to relatively low levels. These funds are utilized throughout the year for one-time unanticipated projects and to make up projected shortfalls as projects are bid.

Option 2, Reject the Bids without Prejudice and Without Modifying the Plans and Re-Bid the Project at a Later Date-
It is always possible that unanticipated factors lead to inaccurate or escalated bids. This often happens when many different projects are being bid at one time, when there is low contractor turnout or interest, or when there is perceived confusion on the scope of the project. When it is suspected that this may have occurred, one option is to simply re-bid the project at a later date and attempt to educate potential contractors about the project. Oakley has done this on several occasions with varying success. Sometimes this approach leads to even higher bids due to price inflation. Since there were six total bids received and the dispersion between bids is relatively low (the second lowest bid was approximately 10% higher than the lowest bid and the third lowest bid was approximately 20% higher than the lowest bid), Staff does not believe this is the case and is not recommending this approach. However, it is entirely possible that the impending winter season and the deep utilities that must be done first could have resulted in relatively high costs for that phase of the project. A full, dry construction season may potentially lower those costs, but it is also possible that other material costs could increase at the same time.

Option 3, Work with the Contractor and Designer to Identify Potential CostSaving Measures and Re-Bid the Project at a Later Date-

Since the City has 6 comprehensive bids the City could potentially use that information to “value engineer” the project. This could be done by either rejecting the bids, amending the agreement with the designer to identify cost savings measures and incorporate them into the design, and re-bid the project in the Spring or to accept the low bid, award the contract, and “partner” with the contractor to identify cost savings measures and issue deductive change orders along with the notice to proceed. The benefit to the latter approach is that the maximum amount of the project is known

Option 4, Identify Additional Funding Sources to Make Up the Projected Shortfall-

This option could be utilized with either awarding the project at this time or rebidding the project at a later date. However, per the contract specifications the City has 30 days to review all of the bids and award a contract. If that requirement is not met the bids are not required to be honored by the contractor. In terms of additional funds, the project is a local street that only serves 32 properties. It probably would not compete very well for regional grant funds. An earmark or other special appropriation may be more feasible, but those types of funds are typically hard to come by and are not usually available immediately. One potential alternative source would be to make a request to Iron house to see if they would be willing to fund the sewer portion of the project. Staff is not aware of any similar financial arrangements since the time of incorporation. The cost of the sewer work in the low bid is approximately $233,000 which includes the main line, laterals, and manholes.

Option 5, Reject all Bids, Reallocate Funds for Their Original Purpose, and Place CIP #48 On-Hold Until an Adequate Alternate Funding Source is Identified-

Another option would be to reject the bids and reprogram the “cost to relinquish” funds for their original purpose which was to repair and rehabilitate portions of Main Street. If this option is selected, the Bypass Authority should be notified since the advanced funding request was specific to Raye Avenue and no other agency has received a “cost to relinquish” allocation at this time. Along with rejecting the bids, the Raye Avenue project would be designated “shovel ready” and Staff would be directed to actively pursue outside or alternate funds to construct the project. Depending on when and if the funds are received, additional design funds may be necessary if standards and requirements have changed significantly at that time.

Based on all of the options presented, it is possible that a hybrid option may be selected. Several key issues should be remembered as part of the consideration.Based on the project specifications, the City has 30 days to consider the bids and enter into an agreement. In the past the City has been able to award a contract and delay the start with the cooperation of the contractor. This project includes deep utilities which must be constructed first. Historically Oakley experiences its wettest months in January and February. Constructing a roadway in an existing neighborhood presents a whole host of issues, mainly access related. The winter months will on I~ exacerbate this issue. If the contract is not awarded at the September 10 meeting but it will potentially still move forward, delaying the project until the spring either through a delayed start or re-bid should be strongly considered.

Fiscal Impact
If Option 1 is selected the construction phase of the project would be funded by the following sources:

  • Fund 201, General Capital, CIP #48 Account: $698,000
  • Fund140, Gas Tax- $60,000
  • Fund 148, Measure J- $274,901

This would result in a total obligation of $1 ,032,901. While the proposed Gas Tax and Measure J funds are not currently obligated for any other projects, they are for interfund transfers (Staff) and fund balances that could be designated for roadway and pedestrian maintenance and improvement purposes including gap closure and pavement management.

Recommendation

Since the bids came in higher than the current budget for this project Staff has presented five possible options for the City Council to consider. This project has a long history a strong neighborhood advocacy, and significant Staff and design resources have been invested to date. However, the project benefits only 32 properties which equates to over a $30,000 per property investment. While the advanced “cost to relinquish” funds can only be used for Main Street, the Gas Tax and Measure J funds can be used throughout Oakley and there are many additional needs for the funds.

Based on these considerations Staff recommends Option #1 as the most immediate way to deliver the project; however, Option #3 is also recommended as a viable alternative, albeit with a delay. A draft Resolution and Agreement consistent with Option 1 is being presented for consideration if that option is ultimately chosen.

Source: Item 3.10
http://www.ci.oakley.ca.us/subpage.cfm?id=1215262&CFID=23617250&CFTOKEN=72276031

 

Burk Byline

By Michael Burkholder
[email protected]

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5 comments

Barbara DuMont Sep 8, 2013 - 8:03 am

Yet again people that have a need that is the city’s responsibility get the shaft while more money is poured into the money pit. HELLO there is more to the City of Oakley than the so-called downtown. (Sorry I have a very hard time calling the area around city hall the downtown heart of Oakley. Growing up in Oakley, Downtown was always O’Hara Ave to O’Neil–Snack Shack last business in town)

JimSimmons42 Sep 8, 2013 - 9:07 am

Oakleys council should be replaced if they fail to approve the fasted action to fix a flooding problem. A project does not increase in cost 20-30% in one year, they are fudging numbers.

thawad Sep 8, 2013 - 9:17 am

Took them ten years to fix Norcross flooding…..I had the mosquito bites to prove it.

Oakley Old Timer Sep 8, 2013 - 9:28 am

I can’t wait to see City Staff pretend to be objective on this project which residents of the street have waited a long time for and because staff either under estimated the project or messed up which is a common theme in Oakley. Again, the residents will pay for a lack of oversight the city has done in doing their job. I for one am embarrassed we asked for funds from our transportation neighbors and it turns out it was for the wrong amount.

Anyone else embarrassed?

Julio-Antioch Sep 8, 2013 - 10:51 am

“Staff” here in lies the true problem. Never believe a “staff report” unless you have checked every bit of it yourself. All “staff reports” should be investigated.

Comments are closed.