HomeMy WebLinkAbout05/17/2005, BUS 2 - 919 PALM STREET PROJECT council McdaDv
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CITY O F SAN LUIS O B I S P O
FROM: Jay Walter, Director of Public Works
Prepared By: Michael McGuire, Assistant Engineer
SUBJECT: 919 PALM STREET PROJECT
CAO RECOMMENDATIONS
1. Approve a revised project budget for the 919 Palm Parking/Offices project of $17;354,000
funded as follows:
919 Palm Parking/Offices Project Funding Summary
Packing Fund General Fund Total
Proceeds from Sale of Court Street 1,510,000 452,000 1,962,000
Parking In-Lieu Fees, Court Street Project 512,000 512,000
Parking Reimbursement from General Fund 145,000 145,000
Pay-As-You-Go Appropriations 1 75,300 157,100 23 2,40 0
Proceeds from Sale of Bonds 1 7,907,500 6,505,100 14,502,600
Total 1 1091499800 79204,200 17,354,000
2. Approve the plans and specifications for Tenant Improvements at 919 Palm, Specification
No. 90323 and authorize the CAO to award the contract if within the project budget of$1.4
million.
3. Approve the sole source purchase for office systems furnishings at 919 Palm from California
Business Furnishings and authorize the CAO to award the contract if the purchase is within
the project budget of$525,000.
4. Authorize the CAO to issue an RFP and award a contract for Construction Management
Services for 919 Palm if the contract is within the project budget of$30,000.
REPORT-IN-BRIEF
As the 919 Palm Office project nears completion, several outstanding issues need to be decided
by Council in order for the final stages to proceed. Council is already very familiar with the need
for this project and the agreements that have been reached for property exchange as well as the
final fixed price that is due and payable upon completion. Those details are overviewed in the
discussion section below. Items requiring further attention include an adjustment to the overall
budget in order to correct cost figures used as part of the original budget,including an adjustment
in the property acquisition cost as well as site remediation cost, an adjustment in the cost of
constructing the tenant improvements that will be used as the office for the Public Works and
Community Development Departments, and an adjustment in the budget to account for the cost
related to moving in and hooking everything up. There will be an increase in the debt service
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costs for the project because of the increased bond amount needed. However, the increase is
consistent with the amount reflected in the five year fiscal forecast presented to the Council in
December 2004 and the balancing budget strategy approved by the Council in April 2005.
Council action is needed to make these adjustments and authorize staff to proceed to construction
with the two main parts of the tenant improvement plan.
DISCUSSION
Need for Additional Civic Office Space
As early as the late 1980's, the Council acknowledged that City Hall could not meet the growth
requirements of the City and was overcrowded, even with the "interim" relocation of Public
Works Administration and Engineering to the building at 955 Morro Street in 1989. The Council
also acknowledged that customer service and communication suffered with the fragmented
locations of our major development review team "players", Public Works and Community
Development staff. Even within these departments, employees were further fragmented, with
Public Works construction inspectors located in a trailer at the Corporation Yard.
Accordingly, the City contracted with an architectural and planning firm to develop a Civic
Center Master Plan and a City Hall Addition Building Program, both of which were approved in
late 1991. Unfortunately, difficult financial times occurred shortly thereafter, and the two plans
were set aside. The need for additional office space did not go away, and in November 1999, the
City contracted to update the original Civic Center Master Plan. A staff-task force was formed to
evaluate City space needs and make a recommendation to the Council on the purchase of
property for an expansion of City Hall facilities. The task force concluded that an office building
in the range of 20,000 to 30,000 square feet should be constructed on the corner of Palm and
Morro Streets, with underground parking included. The construction of additional civic office
space eventually became a Major City Goal for 2001-03.
At the same time that the City was moving forward with plans to construct new office space,
staff was also in discussions with Court Street Partners LLC (the Copelands) over the original
version of their proposed projects, a retail/commercial development and parking structure. They
offered the idea of providing office space for City employees on the ground floor of the parking
structure as a solution to the City's space needs. While the space available (16,000 square feet)
would be smaller than the earlier 20,000 to 30,000 square foot recommendation, for a variety of
other good reasons, this idea was embraced by the City.
Approval of Property Exchange Agreements
In February 2003, the City and the Copelands entered into a Real Property Exchange Agreement,
in which the City sold to the Copelands the Court Street Parking Lot, where their major new
retail/commercial development is nearing completion. In turn, the City agreed to make two
purchases from the Copelands:
1. An initial purchase of property at the corner of Palm and Morro Streets(919 Palm Street) for
$1,263,263
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2. And upon completion, a parking structure with 16,000 square feet of ground floor office
space, located on the site, for an agreed upon fixed price of$12,169,947.
The office space was to be a shell only with the cost of tenant improvements budgeted separately
at an estimated $760,000. Additionally, the Council approved an Option Agreement with the
Copelands for the purchase of City-owned surface parking lots between Palm and Monterey
Streets and the Public Works building at 955 Morro Streets, to be used as the location for their
proposed Chinatown Historic District Project.
Designation of a Tenant for the Office Space
When the property exchange agreements were approved, staff did not make a recommendation
on who should actually occupy the office space to be built. However, none of the original drivers
of the Civic Center expansion Major City Goal had changed. City Hall workspace was more
cramped than ever. The development review process was still physically split between
Community Development, located in City Hall; and Public Works, located at 995 Morro Street.
Public Works inspectors were still housed in temporary trailers at the Corporation Yard,
separated from their engineering teammates at 955 Morro Street. And significantly, the City was
agreeing to sell the 955 Morro Street office building to the Copelands should they exercise their
option. Accordingly, in June 2003, staff recommended, and Council approved, the City as the
tenant for the new office space in the parking structure located at 919 Palm Street. The Council
also approved $350,000 in funding for a modest reconfiguration of City Hall, once the
Community Development Department departed, in order to alleviate very cramped quarters on
the second floor.
The Tenant Improvement Concept and Advantages of the Added Space
In designing the tenant improvements at 919 Palm Street, staff has work with our consultants to
create exciting opportunities for service improvements, most specifically in the area of
development review. By moving the Community Development Department and Public Works
engineering, development review and public works inspection staff into the same facility, we will
create "one stop shopping" for customers using development services. A single public counter
will allow opportunities for builders to address problems in a collaborative way with staff
representing all aspects of the development review process. This enhancement has been a
cornerstone of all the City Hall expansion plans dating back to the 1980's, and will become a
reality through this project.
Finally, when the Community Development Department leaves City Hall, a significant portion of
the downstairs space will open up. While final plans have yet to be developed, it is likely that the
Finance & Information Technology Department, which is currently split between upstairs and
downstairs, will be able to consolidate downstairs and all be in the same location for the first
time in about fifteen years, with the exception of the computer room. This change will allow for
better operational functioning and supervision of the Finance Division staff. It will also allow for
the co-location of telecommunications technical staff, who are currently located at Fire Station
No. 1 and the Corporation Yard. Similarly, the Natural Resources Manager and Economic
Development Manager will be able to move upstairs to the same floor as their support staff and
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department head. The City Clerk will likely occupy the old Finance & Information Technology
Department offices upstairs, allowing for long needed improved workspace and storage for their
department, the Administration Department and Council members.
Need for Additional Funding for Tenant Improvements
Unfortunately, as will be addressed in greater detail later in this report, for a number of reasons
the cost of the tenant improvements for 919 Palm Street will be significantly greater than the
original budget of $760,000, which omitted some essential costs. However, staff still believes
that the City is the best tenant for the office space. Some of the arguments in favor of this
decision that were made in June 2003 still hold true and are listed below:
1. Consolidating City departments into one building will facilitate and improve
communications and interaction between those departments.
2. Consolidating City departments into one building will also improve the public's access to
City services and provide a one-stop-shop for advice and direction.
3. Significant staff effort and design has already gone into preparing for City occupancy, and
with the recent planning application for the Chinatown project, it would appear that the
955 Morro site will soon be purchased.
More importantly, the Copelands have recently submitted plans for the Chinatown project, and,
upon their approval, will be exercising their option to purchase the Public Works building on
Morro Street. So, in order to further this visionary retail and residential project, the City will
need space somewhere to relocate the approximately 40 employees working in that building.
Currently, there is no such space at any existing City facility. Finally, as is more fully addressed
in the Alternatives section, because the office space is only a shell building, the City would still
need to pay for many of the proposed improvements even if the building were leased to another
tenant.
Revised Project Budget
1. Real Property Acquisition Costs
On February 18, 2003 Council approved the following amount for the 919 Palm property
acquisition: $1,263,263. This amount was the fair market value plus a share in easements
necessary to facilitate the construction of the structure as designed (those easements are over
property held by Vintage Properties and the Tartaglia Family).
On October 7, 2003 a staff report regarding adjustments to the Fixed Price for 919 Palm was
taken to Council. In that report, an incorrect number was used for the property acquisition. That
number was $1,172,500, which omitted the easement acquisitions. This item revises the cost
figures to accurately reflect what was originally approved by Council.
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Tenant Improvement Project
1. Discussion
a. Sustainable or"Green"Design
One of the earliest objectives in the design of the tenant improvement for the
combined offices of the Public Works and Community Development
Departments was to incorporate sustainable or "green" design components and
materials. The benefits of sustainable design are plentiful and include
methods and materials that have less impact on the environment, materials
that are of recycled content, less energy usage and increased longevity along
with requiring less maintenance. While initial costs of sustainable design can
be more than for conventional design or materials, the life-cycle costs are less
due to longevity and less material maintenance.
The main sustainable element of the tenant improvement is the geothermal
mechanical system. Pumps will circulate tap water through a system of
looped piping placed in 50 vertically drilled boreholes 300 feet deep. The
circulating water, moderated by a consistent 62'F temperature underground,
will moderate the temperatures in the office space all year long. Sixteen heat
pumps will move energy to or from the earth by way of the ground looped
piping. This closed loop circulation system will save approximately 10,000
gallons of water a year that would normally evaporate using a conventional
heating and cooling system. Also, it will prevent an estimated 20,000 pounds
of carbon dioxide and 18,000 pounds of sulfur dioxide from being generated
and released into the air annually.
Other forms of ``green" design are found in the selection of interior materials
such as tile flooring, carpeting, linoleum flooring and ceiling insulation. All
of these materials contain a portion of recycled material content and can be
recycled for reuse. All of the lighting used in the tenant improvement is low
wattage, energy efficient type fixtures. On the west and south walls of the
main workspace, metal-framed "eyebrows" have been designed to deflect
direct sunlight into the office space but allow indirect light to reflect back into
the offices, reducing both cooling and lighting costs.
The main cost item in this area is the geothermal temperature control system.
The initial components for this were installed as the very first item of work
and so there is little we could do to change this. While this will save costs in
the long run, the added initial cost for this is $65,000 over a standard HVAC
system or$4 per square foot.
b. Government contract issues
One of the aspects of increased cost for the tenant improvement is that the
project must be publicly bid and adhere to provisions required under
government contracts. Prevailing wage rates for labor by various building
trades are required for government jobs and will significantly increase the cost
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of construction. Add to that the costs for workers compensation, liability
insurance, performance bonding and other aspects associated with government
contract work, and the square foot cost of construction will exceed the cost of
private-sector construction.
c. Construction materials costs
Another factor in the escalating cost of construction is the cost of construction
materials. The past few years have seen the cost of all construction materials
particularly steel, concrete and wood, skyrocket. This is due to a number of
factors: demand for materials world-wide has increased sharply while
production has not kept pace, creating a limited supply of materials and
driving up the cost of those materials that are available; production costs have
increased due to more stringent regulations regarding worker safety and
environmental concerns; fuel prices have risen that increase the cost of
production and the cost of shipping these materials. While construction has
not slowed down, construction material costs have significantly contributed to
the overall increase in the cost of construction.
d. Oversight of Tenant Improvement costs
While tenant improvement construction costs have increased, as previously
mentioned, much of the difference between the estimated budget and the
current construction costs can be attributed to the budget estimate not taking
into account a nurimber of costs associated with the overall scope of
construction.
The initial budget for construction was included in the early estimates for the
structure. The estimate included an allowance for tenant improvements in the
range of$30-40 per square foot to provide a"base" level of improvements that
would make the space leaseable. The prospective tenant would have then
negotiated a contract with the City that would have included final
improvements which would have been recoverable through the cost of the
lease. For an unknown reason, when staff brought the fixed price adjustment
back to the Council for approval in October 2003, this base amount was left
out of the estimate for tenant improvements and design. The amount the
Council approved at that time was only a cost estimate for the office furniture
and cabling and electrical costs, which was presented as $760,000. Also,
since the decision has been made for the City to occupy the office space, a
total cost per square foot has been developed. This cost is significantly higher
than the initial base estimate, and it must be paid up front because we will not
be recovering it through the lease with some other tenant. Council is being
asked to approve a complete cost for the tenant improvements at this time.
The table in the Fiscal Impact section has the breakdown of all of the cost
items for the tenant improvement space.
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2. Cost Estimates
a. Typical commercial cost:
Recent industry costs for tenant improvement projects of this occupancy type
and size have ranged from $70.00 to$85.00 per square foot.
b. Typical commercial cost with prevailing wages:
Projects that are constructed under prevailing wage provisions can be expected
to be 30% higher in cost than typical construction projects. This would result
in costs ranging from $91.00 to $110.50 per square foot for a tenant
improvement project.
c. 919.Palm Street cost:
The most recent cost determined for 919 Palm Street with all the specified
material and constructed under prevailing wage rates is approximately $90 per
square foot, excluding the extra cost for the geothermal mechanical system.
3. Value Engineering
a. Design items found
In response to the construction cost estimate provided by the Architect, Staff
directed two local general contractors to perform their own cost estimates as a
means to determine the construction cost within a competitive bidding
environment. Although both of the contractor's construction costs were lower
than the Architect's estimate, Staff concluded that costs could be decreased
even further by undertaking a value engineering analysis of the tenant
improvement.
Value engineering involves reviewing the construction project, replacing a
building material with a less costly material and/or modifying a design feature
with a less expensive element, yet maintaining the purpose and function of
that material or design element.
The most significant design element found that resulted in substantial cost
savings was the substitution of ceiling types over the walkway fronting the
managers' offices. The original design specified an organic, three
dimensional, "wavy" ceiling along the front of the offices that provided a
dynamic contrast to the flatness of the remaining ceiling over the main
workspace. When it was determined that the cost of this ceiling system was
nearly half of the cost of the remaining flat ceiling, it was substituted with a
flat soffited ceiling that still broke up the flatness of the ceiling and yet
provided a significant cost savings.
Other design items found were eliminating the labor-intensive tile patterns in
the main lobby and restrooms for a simpler, less costly pattern. Some hand-
crafted tile was eliminated due to its cost. Flooring costs were further reduced
by specifying a carpet that was less costly and more durable, and by expanding
the carpeting into the hallways in place of the costlier tile. The pendant-type
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lighting fixtures for the main workspace were replaced with a more
structurally stable and less expensive fluorescent fixture due to the high cost
of the pendant fixtures and concern for vibration from traffic on the parking
deck above.
b. Design items rejected
While more design elements or materials were found that could have resulted
in greater cost savings to the overall construction cost, they were not
implemented. Utilizing all of the value engineering items would have saved
money but would have resulted in a bland, unappealing office space to work in
that would have resulted in employee dissatisfaction with the work
environment.
For instance, the carpeting and tile throughout the office space, as a cost-
saving measure, could have been eliminated and a sealed concrete floor
specified in its place. This measure was not considered, though, due to
concerns regarding noise, acoustics within the space, handicapped
accessibility issues, interior temperature and the resulting undesirable look of
the workspace.
This also applied to the work space ceiling. Staff considered elimination of
the grid ceiling system for substantial cost savings but eventually abandoned
that idea due to noise concerns within the office and from the vehicles on the
deck above. In order to minimize the noise from traffic, insulation has been
specified at the ceiling area and without a ceiling in place, there would be no
means to support that insulation. A solid, board-type insulation could be
substituted but would be a more expensive product and require more labor to
install, negating any cost savings. There were concerns about the starkness, or
industrial, warehouse look that would result from the elimination of a ceiling
that would expose wiring, mechanical ducts, conduit, cables and structural
components.
Another material considered was replacing the Corian countertops, a seamless,
durable, low maintenance material, with a plastic laminate material. This idea
was rejected because of the wear and tear that the countertops will experience.
Although a less costly material, plastic laminate countertops have seams that
in this heavy traffic environment from the public, would become chipped and
delaminated from the casework, resulting in a shoddy, cheap appearance and
require more repair and maintenance than the originally specified Corian.
Lastly, the back-up generator that would allow the 919 Palm Street office to be
used as an emergency operations center could be eliminated. The trend has
been to supply back-up power for public buildings during power outages and
would provide the City with an alternative operations center during an
emergency should the Corporation Yard facilities be rendered unusable. Staff
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decided against removal of the generator considering its importance in
keeping City functions in operation during emergencies.
4. Miscellaneous Costs
a. Printing& Advertising
Costs for the printing of the tenant improvement construction documents, for.
bidding purposes and additional sets required by the awarded contractor, plus
costs for advertising the project for public bidding will total approximately
$5,000. A little of this will be recovered through charges to bidders to
purchase copies.
b. Designer Construction Support
The Architect, RRM Design Group, will be required to assist during
construction of the tenant improvement by responding to requests for
information from the Contractor, reviewing Contractor submittals, and
attending construction meetings and making site visits on an "as-needed"
basis. The estimated fee for this support is $10,000.
c. Construction Management/Inspection
Currently, the construction management and inspection duties are slated to be
performed by Public Works Staff Inspectors. Given that the workloads of the
Inspectors might be filled to capacity at the time of construction, making it
difficult to provide the construction management and inspection services at a
level required for a project of this magnitude, an independent construction
management/inspection consultant may need to be retained. The fees
estimated for a consultant to perform these duties for a project of this scope
are $30,000. Staff will issue a Request for Proposals for Construction
Management Services if, as the time grows closer, it appears the expected
workload will not allow for City inspection.
Office Systems Furnishings
1. Furnishings
a. Furniture—Reuse existing, purchase refurbished, purchase new?
The furniture for the tenant improvement consists of powered modular cubicle
panels, cabinetry, work surfaces and seating. Initially, Staff chose to use a
new furniture panel type (called "Places") in order to be able to: use existing
standard components; continue with ease of installation; provide a solution for
conforming to the electrical and data communications network requirements.
Existing modular furnishings at Public Works and Community Development
Departments were originally installed over 15 years ago. The furniture in
Community Development and City Hall is planned to be reoccupied by
remaining staff who will be moving into that vacated space. The furniture
panels currently in use at 955 Morro are unique to that location. The panels
are an outdated panel system (Tri-Circuit) that is no longer available and is not
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compatible or usable at any other City locations where they would have to
interface with other panels.
California Business Furnishings of Fresno (CBF) has been involved with the
office furnishings of the tenant improvement since the inception of the project.
Not only do they sell new furniture but also act as the dealer for refurbished
furniture since refurbished furniture is never sold directly to the end-user.
From the beginning, CBF has recommended the new Haworth Places line of
furnishings as the best selection for the City's space needs and power
requirements. Since the Places line is so new, it is almost certain there are no
refurbished Places furniture panels currently available on the market. Even if
they were available, it would be so limited that meeting the design
requirements (colors, patterns, power, size) would be difficult, if not
impossible, without substantial refurbishing that would eliminate any kind of
cost savings over buying new Places panels. Also, any purchase of
refurbished furniture would not cant'the manufacturer's waranty whereas the
purchase of the new Places panels would carry a lifetime warranty.
Recently, the new San Luis Obispo County Government Center opened and
revealed that they had saved over $500,000 in selecting refurbished furniture
to complement their existing furniture. Regardless of the fact that the
Government Center is a vastly different project from this office tenant
improvement in size and scope, the County was able to achieve their savings
due to use of non-powered wall partition panels and much simpler design
requirements. That allowed the County to consider a broader choice of
furniture lines. The costs of their cubicle partitions were predominantly lower
since there was no power or data communications capabilities within the
partitions. All power and data communication was provided to the cubicles
from under a raised floor system. Due to the structure of the 919 Palm Street
parking garage construction design, a raised floor system could not be
installed into the office space.
CBF did a cost comparison to use some refurbished materials. Some new
materials would have to be used because of the lack of available refurbished
materials. The cost to use this refurbished material would increase the cost by
$29,600 and there would be no warranty. Based on this, Staff determined that
the purchase of new furnishings for the tenant improvement was the most
cost-effective choice.
Staff has worked exclusively with CBF for many years as the supplier of the
Haworth line of furnishings that we use for our office space. Clearly it is
important from the standpoint of interchangeability to be consistent with our
furnishings. This allows modifications and replacements to be completed with
surplus. While the panels will be of a new design, there will still be some
interchangeability of the components that attach to the panels.
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If the Council approves the purchase of the materials through CBF, we will be
paying prices bid on a contract that originated on the east coast, called the US
Communities contract. The bid prices are 65% off of list price. Our price will
be 75% off list price with cubicle chairs, a$27,000 value, added for free. This
is an effort by the supplier to obtain this contract. This offer was originally
granted through the end of last year; however; staff was clear with the supplier
at that time, that a commitment could not yet be made to purchase the
furnishings. The supplier extended the offer until June 1 of this year, but has
indicated they will have to raise the cost if we are unable to commit by that
time.
CBF has put in a considerable number of hours to date, interviewing staff to
design the individual workstations and select the finishing materials at no
additional cost. If the City opts to advertise for the materials, the results of
that design effort will either have to be purchased from CBF or be completed
again with the new supplier at an unknown cost and certain delay to the
project.
Staff believes using CBF will provide the City with furnishings that will work
with the large open space layout of the building at the least cost and are
recommending sole sourcing of this purchase.
b. Filing System—Special system due to space constraints
Due to limited space for the combining of records and files of both the Public
Works and Community Development Departments, a special filing system
was required for the new office space. This system, manufactured by
McMurray Stern, consists of five shelving units grouped together and mounted
on a track system. To access a file stored within one of the shelving units, a
mechanical assist wheel on that shelf is turned to create an aisle to allow
access to that file location. Use of this filing system greatly concentrates the
area of file storage such that filing capacity is almost double what a
conventional filing cabinet system can provide.
Support Services
1. Moving Expenses
In order to facilitate the move of files, computers, printers, copiers, miscellaneous furniture
and employee work materials from the current offices of Public Works and Community
Development, and make the move in a timely manner, a moving company shall be retained to
perform this task. The move by each department would occur around consecutive weekends
to minimize the time that the departments would be unable to provide services to the public.
Boxes will be supplied to all staff members for the packing of their cubicle belongings which
will then be moved to their new office location by means of coding on the boxes associated to
that staff member. Once the boxes have been used by both departments, they will be returned
to the moving company for reuse or recycling. Since the move from both departments is
literally "across the street", significant savings will result in no transportation or fuel costs
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and packing of fragile equipment will be minimized. Additional savings will be realized by
"staggering" the move-in of both departments. By moving in one department at a time,boxes
can be used and emptied by one department for the other department to reuse for moving
office contents. This will result in fewer boxes needing to be purchased. These costs have
been estimated at $9,000.
2. Utilities &Data/Communication—Detail of items
Although site cabling and data/communication lines have been installed as part of the parking
garage construction, cabling and various communication components must be installed with
the tenant improvement to complete the communications system for the office. Some of the
items to be installed are switches, voice patch cables, data patch cables, fiber patch cables, a
bi-directional antenna system and telephone hook-ups throughout the office space. The main
conference room will need to be fitted with a speaker phone, projector, motorized projector
screen, DVDNCR player and receiver with accompanying speaker system and a computer to
monitor all the communication capabilities within the room. The total cost estimate for this
equipment is $82,900.
3. Office Support Equipment—Detail of items
In order for Public Works and Community Development Departments to fully function, it
will be necessary to provide support equipment items for the office space. These items
include a security alarm system, appliances for employees use, paper product dispensers,
trash receptacles, weather station connections, interior building utility expenses for PG&E
and SBC, and any cable television hook-tip costs. All of this equipment is estimated to cost
$27,500.
4. 990 Palm Street Reconfiguration—What's involved and why the need
Once Community Development staff move from their existing offices at 990 Palm to the new
offices at 919 Palm, the lower level will be empty during the transition period. Eventually, it
will be occupied by Finance & Information Technology staff, who occupy space on both the
upper and lower levels of City Hall.. The vacated upper level areas will be used by
Administration, Clerk, and the Council to relieve overcrowding. This reconfiguring of the
work space will require a combination of replacement and remodeling work in order to
address space and restoration needs that will be very efficient to do during the transition
period. A budget of$350,000 was established for this purpose for all reconfiguration work at
City Hall. It is planned to not exceed that total budget amount. Though this work scope is
not complete yet, there are a few minimum goals planned to be achieved such as: replacement
of all downstairs carpeting; reusing existing modular parts while adding the least amount of
new parts necessary; providing expanded Council office space; laying out staff workspaces to
maximize convenience to the public at the counters; and to cluster staff together with realistic
workflow and interaction potential.
CONCURRENCES
An extensive amount of collaboration between the Public Works and Community Development
Departments has been completed in order to develop the plan for the layout and location of
employees in the new office space. Efforts have also been underway to preliminarily outline
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options for City Hall, which would be reviewed with Council later after this project has been
completed.
FISCAL IMPACT
919 Palm Offices/Parking Structure Project Cost Summary
Project Costs Current Proposed Proposed
Budget Changes Budget
Parking Fund 1090809900 68;900 109149,800
Real Property Acquisition 843,000 68,900 911,900
Environmental Mitigation 65,600 65,600
Site Preparation 66,300 66,300
Structure Purchase 8,446,000 8,446,000
Construction Inspection 222,500 222,500
Contingencies 437,500 437,500
General Fund 5,589,000 1,615;200 7,204,200
Real Property Acquisition 329,500 26,600 356,100
Environmental Mitigation 3,900 3,900
Site Preparation 22,100 22,100
Structure Purchase 3,724,000 3,724,000
Construction Inspection 83,500 83,500
Parking Space Purchase 145,000 145,000
Tenant Improvements at 919 Palm
Design 199,500 199,500
Design Construction Support 10,000 10,000
Construction 760,000 640,000 1,400,000
Interior Utilities and Data Communications 82,900 82,900
Other Equipment and Utility Connections 27,500 27,500
Construction Management 30,000 30,000
Printing and Advertising 5,000 5,000
Office Filing System 59,700 59,700
Office System Furnishings 525,000 525,000
Moving Costs 9,000 9,000
Total Tenant Improvements 760,000 1,588,600 2,348,600
Interior Reconfiguration at 990 Palm 350,000 350,000
Contingencies 171,000 171,000
Total Project $1596699900 $19684,100 $17,3549000
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919 Palm Street Project Page 14
Project Funding Sources
Current Proposed Proposed
Budget Changes Budget
Parking Fund 10,080,900 681900 10,1495800
Parking In-Lieu Fees,Court Street Project 512,000 512,000
Parking Space Acquisition,General Fund. 145,000 145,000
Proceeds from Sale of Court Street Property 1,510,000 1,510,000
Pay-As-You Go Appropriations 75,300 75,300
Proceeds from Sales of Bonds 7,983,600 (76,100) 7,907,500
General Fund 5,5899000 19615400 7404400
Proceeds from Sale of Court Street Property 452,000 452,000
Pay-As-You Go Appropriations 157,100 157,100
Proceeds from Sales of Bonds 4,979,900 1,615,200 6,595,100
Total Project $159669,900 $196849100 $179354,000
Annual Debt Service Costs
Current Proposed Proposed
Estimate Change Budget
Parking Fund 549,300 (5,100) 544,200
General Fund 342,600 108,100 450,700
Total $8919900 $1037000 $994,900
While the projected General Fund debt service is higher than initially estimated in October 2003,
it is consistent with the amount used in the December 2004 forecast and in the "Budget
Balancing Strategy" report presented to the Council in April 2005.
ALTERNATIVES
1. Take advantage of every cost reduction identified through the value engineering process. As
indicated above, when the initial estimates for the tenant improvements were received by the
City and it became apparent that the cost would be significantly greater than the current
budget, staff implemented a value engineering process to look for areas to reduce expenses.
The results of the value engineering were carefully considered by staff and many of them
were included in the revised plans. However, Council could direct staff to include all
reductions that were identified. This action would reduce the cost of the project by potentially
$175,000. Staff does not recommend making any additional changes for several reasons.
a. Including all the suggested items would lead to a very stark building. Since this office
space will be used by City employees for many years, and be visited by many citizens,
we believe that recommending additional cuts would not be appropriate.
b. Making additional cost-cutting changes would require the expense of making revisions
to the plans and would add delays to the project construction.
919 Palm Street Project Page 15
2. The City could make the least amount of tenant improvements required to make the office
space rentable, and then lease to another tenant. Based on going rental rates and taking into
consideration that the need for a public-entity tenant may bring in the lower end of rent, this
option could bring in a potential $270,000 annually of new revenue. It also assumes a public-
entity tenant could be found. This option would not address any of the concerns that led the
Council to approve the City as tenant back in June 2003, including the need to relocate Public
Works administration, engineering, transportation and GIS staff. Given the fact that when
the City purchases the building the office space will only be a shell, the City would still need
to invest an estimated$560,000 on tenant improvements to make the building leaseable, and
would not gain the needed office space.
3. The City could eliminate the $350,000 authorized by Council for changes at City Hall after
the Community Development Department moves out. Staff does not recommend.this option
because some limited internal rearrangements will be necessary to make the workspaces
function in an efficient and productive way for the remaining departments that move into
them. If the changes are done now, so that the funding can be included as part of the debt
financing for 919 Palm Street, the annual cost will be small. If they are put off until later,
money would need to come from the General Fund on a"pay as you go"basis and would be
likely deferred for a long time, leaving staff and Council members to continue working in
awkward and cramped spaces that do not meet their needs.
ATTACHMENTS
Attachment 1 - Floor Plan
Attachment 2 - Lobby Rendering
The 919 Palm Street tenant improvement plans and specifications and samples of colors and
materials are available in the Council Reading File.
i:looundl agenda repores2005 agenda repodstengineedng and maintename services(wralter)tapital Projects design OYnch)\90323car ti_section.doc
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