HomeMy WebLinkAboutE-10 Staff Report - 890 Promenade Project Re-BidCONSENT ITEM
E-10
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: NICO DE ANDA-SCAIA, DEPUTY CITY MANAGER
DATE: MAY 15, 2023
SUBJECT: AUTHORIZATION TO RE-INITIATE BID PROCESS FOR TENANT
IMPROVEMENTS AND PURCHASES RELATED TO CITY-OWNED FACILITY AT
890 THE PROMENADE (PROMENADE AT CITRUS PROJECT)
BACKGROUND:
The City of Azusa currently owns a ±8,206 square foot vacant commercial facility located at 890 The
Promenade. On February 1, 2022, the City of Azusa entered into a Lease Agreement with the Los
Angeles County Metropolitan Transportation Authority (LA Metro) for use of the city-owned facility as
System Security and Law Enforcement Offices to support the operation of the Metro L Line (Gold). In
order to facilitate the intended use, LA Metro requested the City build-to-suit the premises per a
mutually agreed upon space plan.
Following a formal bid process on March 1, 2022, the City Clerk’s office opened and announced the
results of nine (9) bids received for construction services, and one (1) proposal received for the purchase
and installation of furniture, fixtures and equipment (FF&E) associated with the Project. Construction
bids received had cost proposals above the estimated and approved budget for the Project. Per the Lease
Agreement, LA Metro is responsible for funding all project-related costs beyond the City’s contribution
limit, and therefore the Agency must approve the final project budget and bid assignment. LA Metro
staff subsequently requested a project budget increase within their CEO’s administrative signing
authority.
On July 13, 2022, LA Metro provided the City a letter clarifying that they did not have CEO approval to
increase the Project budget by the full amount required to cover cost increases at that time.
Subsequently, on July 18, 2022, the Azusa City Council rejected all bids and proposals for the Project
with the understanding of both parties that the Project would be re-bid at a future date.
Since that time, city staff have been in regular communication with LA Metro, and facilitated an in-
person site visit with new leadership from their Security & Law Enforcement Division on October 18,
2022. Most recently, LA Metro representatives have reaffirmed their desire to move forward with this
project and directed Azusa City staff to proceed with steps to rebid the Project.
Approved
City Council
May 15, 2023
890 The Promenade – Authorization to Re-Bid
May 15, 2023
Page 2
The proposed action authorizes staff to re-bid for tenant improvement construction services of the
facility, and initiate a Request for Proposals for the purchase and installation of furniture, fixtures and
equipment related to this project, subject to minor modifications. City Council has previously approved
the Project’s plans and specifications, as well as the initial project budget at their January 18th, 2022
meeting.
RECOMMENDATION:
Staff recommends that the City Council take the following actions:
1) Authorize Staff to solicit a Notice of Inviting Bids for construction services related to tenant
improvements of the Promenade at Citrus Project (CIP Project #62519A), subject to minor
modifications.
2) Authorize Staff to solicit a Request for Proposals for the purchase and installation of furniture,
fixtures and equipment (FF&E) related to the Promenade at Citrus Project (CIP Project
#62519A), subject to minor modifications;
ANALYSIS:
The proposed tenant improvements for this Project include an internal reconfiguration of the building for
individual offices, briefing and conference rooms, computer center, kitchen, personnel bunk area, gym
room, and lockers. No significant modifications to the outside of the building will be planned with the
exception of adding security perimeter fencing and an electric entrance gate. Promenade at Citrus
Project plans and specifications, as well as a Lease Agreement for the facility have been previously
approved by the LA Metro Board and the Azusa City Council.
Per the negotiated terms, both LA Metro and the City of Azusa will contribute to project costs. The City
will pay for project costs up to the Landlord Contribution Limit of $30 per square foot, for a total of
$246,180. LA Metro will be responsible for reimbursement of all project-related costs that exceed the
City’s contribution limit. Upon commencement of the Lease, LA Metro will pay rent to the City on a
monthly basis beginning at an initial rate of $1.40 sf with annual increases. The tenant will also pay for
all other costs associated with operating the facility, known as triple net (NNN) operating expenses. The
initial term of the Lease Agreement with LA Metro is for a period of ten (10) years, with four (4) five-
year options to renew (extension periods).
At the time of initial project and budget approval by both agencies, the total estimated costs for this
project were $3,111,498 for tenant improvements, including labor, materials, furniture, fixtures and
equipment (FF&E), associated professional service costs, fees, and built-in contingencies. Following the
pandemic and other major events impacting the U.S. and world economies, this period saw particular
impacts associated with heightened inflation, demand, and economic shifts in the prices of goods and
services. Despite accounting for higher-than-usual price fluctuations, bids received in March 2022
exceeded both agencies’ overall cost estimates for the Project. The lowest construction bid received was
$370,740 above tenant improvement hard cost estimates, and together with recalculated increases to
project contingencies, raised the Project’s total estimated budget by $491,303.
890 The Promenade – Authorization to Re-Bid
May 15, 2023
Page 3
Lacking LA Metro approval at the time for a new budget amount and the assignment of contracts, the
City had no choice but to reject all bids and proposals for the Project. The understanding of both parties
was that the Project would be re-bid at a future date. Most recently, LA Metro representatives have
reaffirmed their desire to move this project forward and directed Azusa City staff to proceed with steps
to rebid the Project. The proposed action authorizes staff to re-bid the Project for tenant improvements
and purchase of FF&E with a project scope and budget that have previously been approved by the City
Council, subject to minor modifications.
FISCAL IMPACT:
There is no fiscal impact to the City for re-bidding the Project at this time. Because staff anticipated
recovering costs from LA Metro over a phased process, the original estimated project budget of
$3,111,498 has been previously allocated by the City under CIP account number 46-80-000-625-7140-
62519A-7140. Per the existing lease terms with LA Metro, the City’s Landlord Contribution Limit
remains capped at $246,180. Any necessary future changes to the budget will be pending LA Metro
approval.
Prepared by: Fiscal Impact Review by:
Nico De Anda-Scaia Talika M. Johnson
Deputy City Manager Director of Administrative Services
Reviewed and Approved by:
Sergio Gonzalez
City Manager