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HomeMy WebLinkAboutItem 07 - Amendment No. 2 to Joint Construction and Financing Costs for an Animal Services Facility Department Name: Administration Cost Center: 1001 For Agenda of: November 19, 2019 Placement: Consent Estimated Time: N/A FROM: Greg Hermann, Deputy City Manager Prepared By: Ryan Betz, Assistant to the City Manager SUBJECT: AMENDMENT #2 TO THE CURRENT AGREEMENT FOR JOINT CONSTRUCTION AND FINANCING COSTS FOR AN ANIMAL SERVICES FACILITY RECOMMENDATION Authorize the City Manager to approve Amendment #2 to the Agreement for Allocation of Construction and Financing Costs for an Animal Services Shelter. DISCUSSION Background On February 7, 2017 the City Council approved a contract with the County of San Luis Obispo, and the Cities of Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Pismo Beach and Paso Robles to pay a proportional share of the County’s costs to finance and construct a replacement of the County Animal Services Shelter (Shelter) in exchange for the continued right to use of and services from the Shelter. The Shelter, operated by the County of San Luis Obispo’s Animal Services Division, houses and cares for stray and owner relinquished animals. Located at 885 Oklahoma Avenue in San Luis Obispo, it is the County 's only open intake animal shelter and receives approximately 5,000 animals annually, with dogs and cats accounting for roughly 95% of the animals handled. The existing Shelter was constructed in 1975 and since that time industry standards and public expectations of animal shelter have shifted substantially and many of the shelter's original design features and characteristics are now outdated or inconsistent with the current understanding of humane animal sheltering. Under this service contract, all seven cities and the County are allocated shares of the County’s costs to build a new Shelter to provide animal services based on a formula that factors the agencies' proportionate use of field services and shelter services. The agreement provides a mechanism to: 1. Allocate costs based on proportionate use. 2. Clarifies service and shelter governance. 3. Contains mechanisms to control construction costs and affords the County a more efficient way to construct a shelter consistent with state law in order to satisfy local service preferences and standards. Item 7 Packet Page 31 On August 21, 2018 the City Council approved Amendment #1. The amendment clarified that the first $1,000,000 of costs would be allocated solely to the County and added clarity for shared governance of shelter services among participating agencies, and a new service approach to the shelter operations. Agreement Amendment #2 In April 2019, the County invited the top 3 prequalified Design-Build Entities (DBEs) to submit proposals for the new Shelter. In July 2019, the County received proposals from 2 DBEs for design and construction of the new Shelter: F&H Construction and Diani Bui lding Corporation. The proposals were reviewed for firm expertise and project management, pricing for key project components and project additives, concept design and design approach, lifecycle costs, delivery schedule, and presentation. These categories were ranked by a selection committee consisting of representatives from the County, City of San Luis Obispo, and the City Managers from Atascadero and City of Grover Beach. In August 2019, the selection and project steering committee affirmed the selection of F&H Construction as the best qualified firm providing the best value to the project and are recommending the Board of Supervisors award them the project at a Board of Supervisors meeting in December 2019. Final negotiations with F&H are nearing completion, and a Design-Build contract will be awarded and signed by the County Board of Supervisors following ratification of the amended agreement regarding project cost allocations between the County and all partner Cities contracting for shelter services (Amendment #2). Amendment #2 (Attachment A) identifies the increased estimated construction costs for the Shelter. Initial project construction costs were estimated to be $13,176,500 and as part of Amendment #1, the County agreed to reduce the costs allocated to the Cities by $1,000,000, lowering the estimated shared construction costs to $12,176,500. Based upon the pending Design-Build contract for the project, the total project costs to be shared by the cities and County are $18,999,773. The increase is likely due to the current high activity in the building industry, shortage of labor, tariffs on materials and DBEs needing to adhere to State requirements for providing skilled labor on projects, and a high demand for design and construction of capital projects throughout the State of California. Over the last two years, the City has also experienced elevated bid proposals for capital projects that align with the increases demonstrated with this project. Previous Council or Advisory Body Action On August 21, 2018 the City Council approved Amendment #1 to the agreement. On February 7, 2017 the City Council approved the original agreement for allocation of construction and financing costs in exchange for the continued animal shelter use and services. Policy Context Under state law, each incorporated City has the option of contracting with the County or providing their own animal services consistent with the standards outlined under state law. All seven cities in the County of San Luis Obispo have contracted with the County for those services. Absent an agreement to offset the County’s construction costs and to facilitate the County moving forward with construction of a new Shelter, the cities would need to pursue alternate service delivery methods that were deemed cumulatively more costly and less effective Item 7 Packet Page 32 than the current County services agreements. Public Engagement This item is on the agenda for the November 19, 2019 City Council meeting and will follow all required postings and notifications. The public may comment on this item at or before the meeting. CONCURRENCE The County of San Luis Obispo and the cities of Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Pismo Beach, and Paso Robles have either approved Amendment #2 or are in the process of approving it. In addition to the cities listed above, the City’s Police Department concurs with the proposed amendment to the existing agreement. ENVIRONMENTAL REVIEW The County of San Luis Obispo is the lead agency under the California Environmental Quality Act (CEQA) and will complete all required environmental review for the project. The project is not in the City’s jurisdiction, the City will not be directly participating in the contracts for or construction of the new Shelter and is not responsible for carrying out or approving the project or any regulatory oversight of the project for purposes of CEQA. FISCAL IMPACT Budgeted: Yes Budget Year: 2019-20 Funding Identified: Yes Fiscal Analysis: Funding Sources Current FY Cost Annualized On-going Cost Total Project Cost General Fund $145,128* $111,028 State Federal Fees Other: Total $145,128 $111,028 *$111,028 for 19-20 and $34,100 for a one-time construction cost. Both have been budgeted in the Police Department’s budget. As part of the approved 2019-21 Financial Plan, the Police Department budgeted $130,000 for the annual allocated project costs the construction of the new Shelter. The estimated annual allocated cost derived from the Shelter project costs over the next 25 years is $111,028 (Attachment B), a savings of $18,972 in FY 19-20. There is no immediate identified use for the savings, and it will remain in the Police Department’s budget for FY 19-20. As the lead agency for project, the County will be funding the project through debt financing, with the participating Item 7 Packet Page 33 cities paying their portion of the construction cost directly to the County on an annual basis. The original agreement also included a one-time construction cost allocation of $34,100, which the Police Department budgeted as part of the approved 2017-19 Financial Plan and is still applicable. It brings the total due for the first year (2019-20) to $145,128. In addition to the construction cost for the new Shelter, the City pays $151,582 annually to the County for animal care and control services. The City, along with the six other cities within the County, have contracted with the County for these services for many years. Services provided include: 1. Emergency and non-emergency response of Animal Services Officers for injured and stray animals; 2. Investigative services for animal bites, abuse, and neglect; 3. Sheltering and quarantine services; 4. Dog licensing; 5. Animal adoption and other services as required either by State law or City Municipal Code. The Police Department administers the contract on behalf of the City and the funding for this cost was approved in the 2019-21 Financial Plan. This funding, for animal care and control services, is separate than the construction cost for the new Shelter. ALTERNATIVES The City Council may choose not to approve this amendment. This alternative is not recommended because the estimated cost identified in this amendment is under budget and ensures the City participates, in a joint effort with the cities and County, to ensure the County’s construction of a new Shelter that meets the service needs of the community and is consistent with the humane sheltering of animals. Attachments: a - Amendment No. 2 b - Exhibit A to Amendment No. 2 Item 7 Packet Page 34   Page 1 of 3 AMENDMENT NUMBER 2 TO THE AGREEMENT FOR ALLOCATION OF CONSTRUCTION AND FINANCING COSTS FOR AN ANIMAL SERVICES SHELTER AT 865 OKLAHOMA AVENUE IN SAN LUIS OBISPO, CALIFORNIA, BETWEEN THE CITIES OF ATASCADERO, ARROYO GRANDE, GROVER BEACH, MORRO BAY, PASO ROBLES, PISMO BEACH, AND SAN LUIS OBISPO AND THE COUNTY OF SAN LUIS OBISPO THIS AMENDMENT No. 2 (“Amendment No. 2”), dated for reference as of December 10, 2019, to the Agreement (defined below), is entered into by and between the COUNTY OF SAN LUIS OBISPO (the “County”), and the cities of ATASCADERO, ARROYO GRANDE, GROVER BEACH, MORRO BAY, PASO ROBLES, PISMO BEACH, AND SAN LUIS OBISPO (each, a “City,” and collectively, the “Cities,” and, together with the County, the “Parties”, or individually “Party”). RECITALS The County and each of the Cities previously entered into an Agreement (“Agreement”) for allocation of construction and financing costs for a new Animal Service Shelter at 865 Oklahoma Avenue in San Luis Obispo, California (“Shelter” or “Project”). The Agreement is dated as of February 1, 2017. The Parties entered into Amendment No. 1 to the Agreement, dated June 5, 2018. The County provided written notice of increased estimated construction costs to the Cities on July 18, 2019, pursuant to Section 3(a)(ii) of the Agreement. The Cities approved the additional construction costs in writing, pursuant to Section 3(a)(ii) of the Agreement. The Parties acknowledge the benefit of collaborative and joint efforts in constructing, financing, and managing the Shelter. The Parties now enter into this Amendment No. 2 to memorialize the increased estimated construction costs for the Shelter. The Agreement, Amendment No. 1and this Amendment No. 2 represent the entire agreement between the Parties. NOW, THEREFORE, the Parties agree as follows: 1. Recitals. The above Recitals are true and correct.  2. Capital and Financing Costs a) The Project construction costs to be shared by the Parties were estimated at the time the Agreement was signed to be Thirteen Million One Hundred Seventy-Six Thousand Five Hundred Dollars ($13,176,500). Pursuant to Amendment No. 1, the County agreed to reduce the costs allocated to the Cities by $1 Million, thereby lowering the estimated shared constructions costs to Twelve Million One Hundred Seventy-Six Thousand Five Hundred Dollars ($12,176,500). Pursuant to this Amendment No. 2, and in consideration of the Design- Build contract amount for the Project, the Project construction costs to be shared by the Parties shall not exceed Eighteen Million Nine Hundred Ninety-Nine Thousand Seven Hundred Seventy-Three Dollars ($18,999,773). b) Estimated financing costs are shown in Attachment A to this Amendment No. 2 and may vary depending on the applicable interest rate and whether there are out of pocket costs to obtain Item 7 Packet Page 35   Page 2 of 3 financing (collectively “Estimated Project Financing Costs”). If the actual interest rate is higher or lower than that estimated on Attachment A, the actual financing costs will vary. 3. In the event of a conflict between the terms of the Agreement, Amendment No. 1 and this Amendment No. 2, the terms of this Amendment No. 2 shall prevail. IN WITNESS WHEREOF, by their execution below, the Parties agree to be bound by the provisions of this Amendment, and the Board of Supervisors of the COUNTY OF SAN LUIS OBISPO has authorized and directed the Chairperson of the Board of Supervisors to execute this Agreement for and on behalf of the County, and the Cities of ATASCADERO, ARROYO GRANDE, GROVER BEACH, MORRO BAY, PASO ROBLES, PISMO BEACH, AND SAN LUIS OBISPO have caused this Agreement to be subscribed by each of their duly authorized officers and attested by their Clerks. Dated: _______________ COUNTY OF SAN LUIS OBISPO _____________________ ____________________________ Clerk of the Board Dated: _______________ CITY OF ATASCADERO _____________________ ____________________________ City Clerk By: Dated: _______________ CITY OF ARROYO GRANDE _____________________ ____________________________ City Clerk By: Dated: _______________ CITY OF GROVER BEACH _____________________ ____________________________ City Clerk By: Dated: _______________ CITY OF MORRO BAY _____________________ ____________________________ City Clerk By: Dated: _______________ CITY OF PASO ROBLES _____________________ ____________________________ City Clerk By: Item 7 Packet Page 36   Page 3 of 3 Dated: _______________ CITY OF PISMO BEACH _____________________ ____________________________ City Clerk By: Dated: _______________ CITY OF SAN LUIS OBISPO _____________________ ____________________________ City Clerk By: Item 7 Packet Page 37 SLO County Animal Services Facility Financing cost estimates at proposal costs July 25, 2019 market update Project cost 13,176,500$                   Scope Cost 20,348,740$             less: County‐only Road Costs (348,967)$                 County Contribution (1,000,000)$                   less: County Contribution (1,000,000)$              Shared debt 12,176,500$                  Amount Financed 18,999,773$             Agency Share 25yr ‐ 3.5%Additional Annual Debt Service vs. MOU  low‐end 25yr ‐ 3.24% Arroyo Grande 5.94% 45,523$                          20,231$                                                          65,753$                     Atascadero 15.03% 115,186                          51,190                                                            166,376                     Grover Beach 3.12% 23,911                            10,626                                                            34,537                       Morro Bay 2.90% 22,225                            9,877                                                              32,102                       Paso Robles 18.15% 139,097                          61,816                                                            200,913                     Pismo Beach 1.19% 9,120                               4,053                                                              13,173                       San Luis Obispo 10.03% 76,868                            34,160                                                            111,028                     Unincorporated 43.64% 334,447                          148,630                                                          483,077                     Avg Annual Payment 100.00%766,377$                        340,582$                                                       1,106,959$               MOU (low end) Estimated Annual Debt Service at July 25th market  update Exhibit A to MOA Amendment No. 2 Item 7 Packet Page 38