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of the shelter's original design features and characteristics are now outdated or inconsistent with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.
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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
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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
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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
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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
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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:
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Dated: _______________ CITY OF PISMO BEACH
_____________________ ____________________________
City Clerk By:
Dated: _______________ CITY OF SAN LUIS OBISPO
_____________________ ____________________________
City Clerk By:
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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
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