PURPOSE

The purpose of this report is to provide information for holding a joint public hearing for consideration of resolutions of the City Council and Redevelopment Agency to proceed with construction of the Community Services Building (CSB) Project. As part of the actions to be considered, the Agency proposes the transfer of land and funds for construction of a publicly owned building, which in accordance to Section 33445 and 33679 of the California Redevelopment Law requires a public hearing.  In addition, pursuant to the State of California Streets and Highways Code Section 8300, a public hearing is required for the proposed alley vacation.  The Council will also be considering the approval of project plans, funding for the Project, and approval of related professional services agreements.

The specific actions to be considered are:

1. City budget amendment for Fiscal Year 2006-2007 to reallocate funds to the Capital Holding Fund

2. City and Agency authorizations to execute a Cooperation Agreement between the Redevelopment Agency and the City of Burbank relating to the Agency transfer of land and funds to the City for the CSB Project and making the necessary findings

3. City and Agency budget amendments for Fiscal Year 2006-2007 for the purpose of funding additional costs of the Community Services Building

4. City Ordering the Conditional Vacation of Two Alleys (V-351)

5. City approval of the Plans and Specifications and the Construction Agreement between the City of Burbank and Swinerton Builders, Inc. for Bid Schedule 1098

6. City approval of Professional Services Agreement Amendment #5 between Leo A. Daly and the City of Burbank

7. City approval of Professional Services Agreement between Smith-Emery and the City of Burbank to provide Deputy Inspection and Materials Testing Services

BACKGROUND

On January 17, 1994, Burbank was rocked by the massive Northridge Earthquake, which seriously damaged the former Municipal Services Building (MSB) behind City Hall.   That event triggered the beginning of a 13-year effort that included several City Councils, nearly every City department, two separate architectural teams, two separate pre-construction service providers, numerous consultants, and various design iterations. 

The following list of key events summarizes the process to date:

• January 1994 �  Northridge Earthquake damages the former MSB

• May 1997 �  Culmination of numerous engineering evaluations reveal that the MSB needs significant structural improvements to comply with existing codes

• September 1998 �  Council directs staff to demolish the former MSB and initiate programming, design, and the construction of a new Development & Community Services Building (DCSB)

• June 1999 � The Nello Group is retained to perform site studies and programming for the new DCSB

• December 2000 � Council accepts the conceptual Civic Center Master Plan and directs staff to proceed with the design and construction of a new three-story 57,200 gross-square-foot (g.s.f.), $13.9 million DCSB

• March 2001 � Staff relocates out of the former MSB into temporary facilities

• July 2001 � Council adopts Resolution No. 26,065 to employ a fixed fee, guaranteed maximum price (GMP) project delivery method in lieu of the traditional design-bid-build (DBB) delivery method for the CSB Project

• September 2001 � The former MSB is demolished

• November 2001 � WWCOT is selected to design the DSCB Project

• January 2002 � Turner Construction is selected to provide pre-construction services

• April 2002 � Council accepts the Civic District Master Plan as developed and directs staff to proceed with the design completion and construction of the DCSB as proposed

• December 2002 � Council approves the three-story, Leadership in Energy and Environmental Design (LEED) Certified, 63,500 g.s.f., $25.5 million DCSB schematic design phase program

• January 2003 � Project is placed on hold as a result of California�s statewide fiscal health and potential fiscal impacts to the City of Burbank

• March 2003 � Council approves Ordinance No. 3620 for the Civic Center Master Plan (of which the DCSB is a part), the Development Agreement, and Development Review No. 2002-42

• March 2003 � Council adopts Resolution 26,443 and accepts the Mitigated Negative Declaration for the Project and directs the City Manager to file the Notice of Determination

• November 2003 � The CSB Project resumes with a new (and current) architectural/engineering design team, Leo A. Daly (Daly), to re-evaluate the current accepted design and develop cost-effective re-design alternatives

• March 2004 � Council approves Daly�s abbreviated design development phase proposal to improve the building�s efficiency and re-design in an effort to reduce potential construction costs

• November 2004 � Council accepts the Design Development Phase Program for the 72,368 g.s.f. CSB and directs staff to proceed with the construction documents phase.  However, Council does not accept the $28.1 million estimated total projected Project cost and directs staff to continue its value management efforts.

• January 2006 � Building Division completes its review and approves the Project plans and specifications.

• February 2006 � A Request for Proposal is issued to secure services to develop the Guaranteed Maximum Price and select a general contractor to perform the construction effort as a measure to reduce the cost of construction.

• April 2006 - Completion of an independent third-party review to assess the effectiveness of the Project�s procedures, management decisions, project controls, programming, design, and bidding efforts

• October 2006 � Swinerton Builders completes the bidding effort and GMP development process

• October 2006 � The Project�s Oversight Committee recommends that the Project as currently designed, including the total projected project cost, and schedule be presented to Council for consideration and approval

ANALYSIS

The CSB Project represents the initial phase of the City�s long-term Civic Center Master Plan, which was adopted in March 2003.  At final build-out, this Master Plan includes the proposed 72,368 g.s.f. CSB, an approximately 80,000 g.s.f. Central Library, a parking structure to accommodate approximately 500 vehicles, an approximately 39,000 g.s.f. Administrative Services Building behind City Hall, and streetscape improvements within the confines of Glenoaks and San Fernando Boulevards to the east and west, and Palm and Angeleno Avenues to the north and south.

The design efforts for the CSB Project have resulted in a program that is consistent with Council�s direction over the past 13 years.  The proposed facility meets the following design criteria:

• It will serve as a permanent replacement to the former MSB.

• It will consolidate several public permitting functions in a one-stop permit center to better serve the thousands of citizens who visit the various Public Works and Community Development Department counters.

• The proposed building size is efficiently designed and will meet current operations and future expansion, if needed.

• The interior space is planned so that it will meet operational requirements to properly serve community needs.

• The quality level of the building�s exterior materials and finishes are selected to last for many decades and are aesthetically pleasing and appropriate for a civic type facility.

• Other on-site and off-site improvements integral to the building program are consistent with the future build-out of the Civic Center Master Plan as previously approved by Council.

CSB Design Summary.  The completed design includes the following primary elements: 

• Building and Parking Program

• Three stories - 72,368 g.s.f. and 60,678 net usable square feet

• Tenants � Park, Recreation & Community Services, Public Works, Community Development, and Public Information Office

• Employee capacity � 189 full and part-time positions (current & future)

• LEED - Certified Level

• Art in Public Places � interior and exterior art elements

• Surface parking for 247 vehicles (after the temporary facilities are removed)

• Other program features:

  • One-stop permit center

  • A water feature at the Third Street and Orange Grove Avenue main building entrance

  • Community room with 120 maximum seating capacity and storage

  • A media control room to operate audio visual and future broadcasting capabilities within the Community Room

  • Traffic Management Center

  • Fourteen (14) conference rooms for public and City use

• On-Site & Off-Site Improvements

• Pedestrian paseo (along south side of building)

• Courtyard area at secondary entrance

• Curb, gutter, sidewalk, landscaping, and irrigation along portions of Third Street and Orange Grove Avenue

• Post-occupancy restoration of a portion of the existing surface parking lot

Guaranteed Maximum Price (GMP) Delivery Method and Approval Process.

In July 2001, Council adopted Resolution No. 26,065, which allowed the City to implement a fixed fee, GMP project delivery for the CSB Project.  The CSB Project represented a unique opportunity to employ an alternate delivery method due to its design complexity and anticipated cost.  This will be the first City capital project to employ this alternate delivery method, which has a proven track record within the private sector for projects of similar type and nature.   

Under the GMP delivery strategy for the CSB Project, the:

• General Contractor (GC) guarantees the Project will be constructed in accordance with the construction documents, will not exceed a pre-established and stipulated cost, and will be completed within a specific time frame;

• GC was selected through a competitive pre-qualification process and subsequently by negotiation of its fixed fee and GMP construction agreement, with its subcontractor trade work competitively bid;

• GC will pay for any costs in excess of the GMP either out of its fee, or where construction costs exceed the GMP and the GC�s fee, out of its own pocket; and

• Project savings will be returned to the City for this Project.

Resolution No. 26,065 also allowed staff to develop a statement of qualification (SOQ) process to secure qualified general contractors.  This pre-qualification process has been adopted and successfully utilized by numerous State agencies and public entities that result in a more consistent group of qualified construction service providers, establishes a �level playing field� of bidders, and stimulates competitive involvement.

Through the SOQ process for the CSB Project, staff developed a short list of qualified general contractors who subsequently received a separate request for proposals to solicit information on project experience, in-house staff qualifications and their costs, insurance and bonding costs, and a proposed fixed fee as a percentage of the anticipated construction bids. In effect, this process represented a competitive bid approach at the GC level.

Selection of the GC for this Project was based on competitive staff costs, collective project and staff experience, and specific LEED experience.  The GC implemented its own pre-qualification program at the subcontractor level and exceeded City requirements that evaluated the subcontractor�s project experience, financial strength, bonding capacity, overall safety record, and other relevant criteria.  The call for subcontractor bids was also publicly advertised although most of the subcontractors that actually submitted bids had record of quality performance with the Project�s GC.

In light of the fact that the local and regional Southern California construction market continues to experience high demand, Swinerton Builders (Swinerton) implemented a substantial and successful subcontractor outreach effort as evidenced by its Trade Summary, Exhibit A, to ensure a solid competitive bidding environment.  With few exceptions, most construction trades resulted in at least three bids. 

Once bids were received, Swinerton evaluated each trade for completeness and comparative scope.  Swinerton submitted this bid information, including trade recommendations, to the City for its review.  Subsequent cost adjustments and clarifications were made by Swinerton to refine the final GMP.  These bids were combined with Swinerton�s negotiated and pre-approved general requirements, general conditions, fixed fee, construction contingency allowance, and volume-based costs for insurance and bonds to establish the GMP Summary provided as Exhibit B.  The $28.9 million GMP value comprises 76 percent of the total projected Project cost. The Construction Agreement between the City of Burbank and Swinerton Builders is provided herein as Exhibit C.

Total Projected Project Cost

Cost Comparison Summary. The total projected Project cost for the new CSB Project is $38.1 million, which is $10.0 million more than the $28.1 million Project estimate presented to Council in November 2004.  A cost comparison summary of the total projected Project cost is provided as Exhibit D, and portrays the increase in the construction cost category.  Exhibit D compares the anticipated cost at the completion of the Schematic Design (SD) Phase in December 2002, the Design Development (DD) Phase in November 2004, and the current Construction Documents (CD) Phase.  Column D of Exhibit D identifies the total percent increase for each Project line item category for the current budget in comparison to the SD Phase budget. 

Project Cost Anatomy.  Exhibit E provides a more detailed look at the individual costs that comprise the total projected Project cost on a dollar-per-square-foot basis and as a percentage of the total $38.1 million cost.   For example, Item F indicates that the cost of the Project on a gross square footage basis (the total size of the building), is $526.48 per g.s.f. ($526.48/g.s.f.).  This is a simplified measure of the Project�s total cost and often used as a basis when comparing the cost to other projects. 

Exhibit E identifies that the total building cost is the summation of several components.  Some key examples of this include the following:

• Item A.10 � Professional services represents 11.0 percent of the total cost and $57.90/g.s.f.;

• Items B.3 and B.4 � Core & shell and tenant improvements represents the direct cost of the building (57.9 percent of the total cost) and a combined cost of $305.79/g.s.f.[1];

• Item B.5 � LEED premium represents 0.6 percent of the total cost and $2.97/g.s.f.  However, this is only a partial measure of LEED since there are other direct LEED-related costs that are part of the professional services (Item A);

• Item B.15 � Indirect Costs (part of the GMP) represents 10.3 percent of the total cost and $54.36/g.s.f.  This is for the general contractor�s construction contingency, general conditions, fee, insurance, and bonds.

• Item D � Furniture, Fixtures, & Equipment represents 6.6 percent of the total cost and $34.52/g.s.f.

Cost Comparison (DD Phase Estimate vs. CD Phase GMP).  Exhibit F provides a detailed listing that compares the estimated cost for each specific construction trade for the DD Phase to the actual bid obtained as part of the GMP development process.  It is important to note that the DD Phase information provided herein was compiled in June 2004, approximately 2.5 years ago.  Since then, there has been a period of dramatic construction cost escalation that continues today.

Twelve items are highlighted on Exhibit F because of their significant cost variance from the DD Phase. Collectively, these highlighted items increased the GMP by almost $8.4 million and 60 percent beyond the same group of DD Phase items.   Underlying causes behind these dramatic cost increases have been generally reported as supply and demand forces - risk premiums to cover volatile market prices for numerous building materials (commodities like copper, aluminum, scrap metal, and concrete), more aggressive profit margins by GCs and subcontractors, and limited regional labor resources.  Some of the increased costs can be explained by the increased scope changes between the DD Phase documents and the final approved plans and specifications.  The following examples highlight some major causes behind the escalation cost:

• Bid Package #6 � Water Fountain � The direct cost increased by more than $370,000.  At the time of the DD estimate, there were no water fountain drawings.  It was not until January 2005 that the Project Architect was directed to include this element as part of the construction program.  The original $316,000 was an estimate of an unknown and yet-to-be-designed water feature.

• Bid Package #13 � Structural Steel � The Project currently contains approximately 485 tons of structural steel (vs. 412 tons initially) and the cost of fabricated steel increased from approximately $2,900 per ton to about $3,800 per ton.  This increased tonnage and unit price increase accounted for approximately $648,200 of the $827,000 increase.  The spread between the two lowest bidders was less than $2,100 on bids in excess of $2.6 million, which is an indicator of the competitive costs realized through the bidding process.

• Bid Package #18 � Interior Architectural Woodwork � A large portion of the $233,000 increased cost experienced for this trade was due to the added scope that was not part of the DD Phase documents.  Cabinetry design information was subsequently completed as part of the design effort to address storage needs in various workrooms and storage areas throughout the CSB.  Plywood, the base material used for cabinetry, has substantially increased over the last two years and further added to the total cost.

• Bid Package #24 � Glass Curtain Wall / Metal Wall Panels � This particular scope of work represented the largest unexpected cost increase ($2.8 million). Notwithstanding the substantial increase of aluminum over the last few years, it appears that the demand, and therefore the cost, for high performance glass has reached an extraordinary level with material pricing behavior being compared to that of commodities like copper and stainless steel.  There were no significant changes to exterior building design quantities for the exterior skin.  However, some key points that can be attributed to this significant change in the anticipated cost for this scope of work include the following:

• Interior window framing and sills are made from aluminum versus drywall and are consistent with the quality level requirements for this type of facility and detailed drawings of this particular interior condition were not available in early 2004 for bidding;

• Only two bids were received even though nine were solicited (two potential bidders did not submit proposals and four other firms declined to bid because of current work loads and back-log);

• The two bids that were received differed by $760,000 (or almost sixteen percent); and

• A change in the manufacturer for the glass curtain wall system, but still in conformance with specification requirements, resulted in a construction savings of approximately $689,000.  However, this savings is already included within the $2.8 million variance.

• Bid Package #44 � Electrical � Four of five bidders submitted bid proposals.  A 3.3 percent bid spread between the two lowest bidders represented less than $93,000 for bids in excess of $2.8 million.  This is an important indication of the competitiveness that exists even in such a volatile construction market.  Nonetheless, bids increased by more than $1.0 million above the DD Estimate (a 56.4 percent increase) in large part due to the increase in material costs such as copper, stainless steel, and aluminum, and increased scope - cabling for data and communications services.

Even though almost $1.6 million was set aside in combination for escalation (4.0 percent), architectural design contingency (4.0 percent), and construction contingency (3.5 percent) at the time the June 2004 DD Estimate was developed, hindsight indicates that these contingencies were insufficient.

Value Management Efforts.  In its October 5, 2004 report to Council, staff indicated that the then current high cost of construction materials was a primary contributor to the Project�s potential fiscal impact to the previously accepted $24.54 million Project budget.  Since that time, the market has continued to escalate, not only in material costs, but also in costs for limited labor resources, fuel oil, and fabrication.

At that time, staff had implemented several control measures in its attempt to mitigate and control construction costs to the extent possible.  Challenging market conditions have plagued owners and developers for more than three years.  Recommendations posed to the Oversight Committee for consideration were valued at almost $2.5 million in construction savings but did not compromise the long-term quality, aesthetics, and functional program requirements.[2]  In reality however, the Project team�s work to generate project savings has unfortunately been eclipsed by escalation costs.   

Costs for Other Public and Private Projects.  The rising cost of the CSB Project is not an exception in today�s construction market.  Numerous articles have been written documenting dramatic project cost increases experienced in both public and private sectors and across all project types.  The following project examples represent just a few projects that further demonstrate the tremendous upsurge in the cost of construction.

• Central Los Angeles Area High School #9 � Estimated at $117 million with the lowest bid at $172 million, representing a 46.8 percent increase.

• An October 19, 2006 Los Angeles Times article regarding the Los Angeles Unified School District (LAUSD) � �� bids routinely come in at more than $500/s.f. and the District received one recently at more than $625/s.f., ��  However, Roy Romer, LAUSD�s Superintendent reiterated the need to push ahead.  When asked, �If the marketplace is costing that much for building, should you just stop building?�  He replied, �No.  I personally made the decision you don�t stop providing [for] the needs of these kids�. We�ve got to have guts to stay with this program and we have.�

• Hollenbeck Area Police Station Replacement (54,000 s.f. police station, 8,000 vehicle maintenance center, and a 300-space multi-level parking structure.  Estimated at $21.0 million with the lowest bid at $31.1 million for a unit construction cost of $576/s.f. Assuming that the construction cost represents 80 percent of the total project cost, the total unit cost is $720/s.f.

• An October 24, 2006 Los Angeles Times article reported that �The cost of a new or renovated stadium in the Los Angeles area could top $1 billion, � That�s more than double the cost estimate of a few years ago, and $200 million more than last spring�s estimate.  The main reason for the increased price tag is the rising cost of construction.�

Market Conditions - August 2004 and June 2006. With the benefit of 20/20 hindsight, a construction market report referenced in the October 5, 2004 Council Report entitled �Current Construction Market Analysis, �The Perfect Storm�[3], identified factors that contributed to the then recent construction cost �spike.�  These factors included:

1. Weak U.S. dollar

2. Sustained high energy costs

3. Increased international demand for raw and processed materials such as cement, steel, coal

4. Scrap steel and coke shortage, with associated price spikes

5. Increase in California construction activity

6. Continued domestic demands by housing and auto industries

7. Increased labor costs

More recently, a Construction Industry Market Report � Mid Year 2006 written by Davis Langdon[4] provided a construction market overview, as well as construction market conditions for �Region IX,� an area that includes the states of Arizona, California, Hawaii, and Nevada.

• Contractors are extremely busy and selective in the work they bid due to continued high demand for construction services [LAUSD for example]

• Many projects are experiencing very poor competition and very high bid prices.

• Competitive imbalances enable contractors to take higher profits.

• Most contractors and subcontractors are at full capacity and in the short term, have no ability to expand.

• Escalation in [Region IX] for the period July 1, 2006 through June 30, 2007 is expected to be from 10 to 15 percent with the likelihood of localized, significant bid overages in certain sub-trades, particularly cladding systems [such as pre-cast and glazing systems for the CSB Project], drywall, mechanical, and electrical trades.

• Material pricing volatility - healthy premiums to cover real and perceived risk.

The news has not been good for owners for the past three years and the long-term outlook indicates that the demand and risk factors are likely to continue to be major cost drivers.  Escalation is anticipated to remain high but at a reduced pace from the past two to three years.  Without a significant re-design effort, a process that will most likely not result in the type of quality facility the City needs, it does not appear that placing the CSB Project on hold for an indeterminate period or shelving the Project, either on a short or long term basis, represent viable solutions.

Cooperation Agreement and Summary Report. If the CSB Project is approved, the Redevelopment Agency will enter into a Cooperation Agreement with the City of Burbank (Exhibit G) for the transfer of funds in the amount of $33,802,716 and the transfer of land, totaling 31,000 s.f. for construction of the CSB Project.  The land would be sold for one dollar (the land was acquired by the Agency at a cost of $2,722,100).

The Health and Safety Code, Section 33679 requires that before an agency commits to use a portion of taxes for the purpose of paying all or part of the value of land and the cost of construction of any publicly owned building, the agency must hold a public hearing and make certain findings consistent with Health and Safety Code Section 33445.

Section 33679 requires a summary report, which includes: (a) an estimate of the amount of the taxes to be used; (b) the facts supporting the findings required by Section 33445; and (c) the redevelopment purpose served by the use of taxes.

Section 33679 findings are as follows:

(a)   The fiscal impact of CSB is estimated at $38,100,000.  The Agency will consider funding $33,802,716 of this total amount toward the construction of the CSB, located within the Merged and Amended Redevelopment Project Area. Interest costs on the Golden State bond proceeds to be paid through the bond�s full repayment in 2024 will total $6,552,465.  This in addition to the $682,719 in funding already provided by the Agency. The Agency will also deed property it acquired at a cost of $2,722,100 (The fair market value of the property today is estimated at $2,790,000, or $90 per square foot). 

(b)    The construction of CSB will serve to replace a City building that was severely damaged by the 1994 Northridge Earthquake, increase public service efficiency by consolidating several City departments, provide public community meeting space, and provide adequate parking for City employees and community members visiting the various City departments.  This will serve to increase City service efficiency and improve the image of the Project Area thereby contributing to reinvestment in the area.  The CSB is part of a master plan of civic uses for the block including proposed library facilities and additional public parking.  This civic center area has been identified in the 5-year Redevelopment Implementation Plan.  The construction of CSB will provide a direct public benefit by eliminating environmental deficiencies including incompatible or non-conforming land uses and obsolete buildings, including deteriorating temporary office trailers.  There are no other reasonable means of financing this portion of CSB project costs available to the community.

(c)   The payment of funds for a portion of the costs of CSB will assist in the elimination of blighting conditions, including factors that prevent or substantially hinder the economically viable use or capacity of buildings or lots. In this case, deteriorating office trailers will be replaced with a high-quality civic building within the downtown area.  This will increase the viability of Downtown Burbank by supporting neighboring businesses and complementing the residential uses, which create a 24-hour urban environment that is characteristic of a successful downtown.

Health and Safety Code Section 33445 requires that the City Council find that:

1)         The use of Agency funds is of benefit to the project area funding the improvement.

The use of Agency funds for the construction of CSB will benefit all the Redevelopment Project Areas by replacing a City building that was severely damaged by the Northridge Earthquake, increasing public service efficiency by consolidating several City departments, providing public meeting space, and providing adequate parking for City employees and community members visiting the various City departments.  Providing a permanent structure will increase City service efficiency and improve the image of the Project Area thereby contributing to reinvestment in the area.  

The construction of CSB will accomplish the following goals of the Redevelopment Plan: 1) eliminate environment deficiencies including incompatible or non-conforming land uses and obsolete buildings, including deteriorating office trailers; and 2) promote architectural and urban design principles to foster the development of a full range of activities.  Construction of the CSB Project will provide permanent facilities, thereby allowing Redevelopment staff to better serve the public with the processing of building plans and other services and implement all the goals of the Redevelopment Plan, including providing for the preservation and the expansion of affordable housing.  The use of funds for the construction of CSB will also serve to eliminate conditions of blight within the Merged Redevelopment Project Area. 

2)         There is no other reasonable means of financing the building.

In 2000, the City approved the expenditures of $7,176,576 in funds for the relocation of staff from the Municipal Services Building to temporary modular units.  Furthermore, the City has paid $3,614,565 from various sources for the construction of the Community Services Building. 

The total cost for the CSB is estimated to be $38,100,000.   In September 2003, the City appropriated over $20 million (now $20,043,855) in Remarketing Proceeds to the CSB Project.  During the Fiscal Year 2006-2007 budget discussions, the City recognized the need to focus expenditures on significant infrastructure improvements.  As a result, the City may, as part of this item, reallocate those Remarketing Proceeds previously allocated to this project (which are general funds that can be used for other capital infrastructure needs), leaving only $4,297,284 in the Project�s budget.  If the reallocation of the Remarketing Proceeds occurs, the Project will have a total shortfall of $33,802,716 ($38.1 million minus $4,297,284). The City has no other reasonable means of financing the remaining $33,802,716 given the other priorities desired by the City, and that there are no other viable funding sources, it is proposed that this amount be funded by Agency Golden State bond proceeds and tax increment reserves as a last resort.  Bond interest costs will total $6,552,465 though the bond�s full repayment in 2024.  The total Agency assistance in nominal terms is $43,757,535 and $37,207,535 in present value terms.

3)         Funding the project will assist in the elimination of one or more blighting conditions inside the project area.

The use of Agency funds for the construction of CSB will assist in the elimination of the following blighting condition inside the Merged and Amended Redevelopment Project Area: �Factors that prevent or substantially hinder the economical viable use or capacity of buildings or lots.  This condition can be caused by a substandard design, inadequate size given present standards and market conditions, lack of parking or other similar factors.�  By assisting in providing a permanent facility, the Agency will be able to not only improve public services but will also intensify development on an underutilized site, thereby reinvesting in the Redevelopment Project Area.

This Project will further provide a direct public benefit by eliminating certain environmental deficiencies including incompatible or non-conforming land uses and obsolete buildings.

The Summary Report for the Community Services Building Project is provided herein as Exhibit H.

Alley Vacation (V-351). The applicant (City of Burbank) is requesting the vacation of the two alleys (V-351) that affect the development of the civic block bounded by Olive Avenue, Glenoaks Boulevard, Orange Grove Avenue, and Third Street.  This is for the purpose of constructing the proposed CSB that will accommodate and centralize the Community Development Department, Public Information Office, Park, Recreation, and Community Services, and Public Works that are currently operating in temporary modular trailers and other City facilities. The City of Burbank and the Burbank Redevelopment Agency own the land that is to be developed and the alleys are no longer needed to serve individual ownership on the block.  A segment of one alley extending between Olive Avenue and Orange Grove Avenue was vacated in 1977 per Resolution No. 17935.

This vacation, provided herein as Exhibit I has been submitted and reviewed by all appropriate City departments and outside utility companies.  A copy of written comments received by each department and each utility company is included as part of Exhibit I.  The proposed vacation is being conditioned by The Gas Company, Burbank Water and Power, and Public Works who have facilities in the area to be vacated.  A utility easement will be reserved for the gas, water, and sanitary sewer facilities in the vacated area. 

Burbank Water and Power, Electrical Division has conditioned the vacation subject to their facilities being removed upon completion of the Project.  There are no other comments or conditions to the proposed vacation.

Pursuant to the State and California Streets and Highways Code Section 8300, the hearing was noticed by: 1) a mailed notification to all property owners within 1,000 foot radius of the area to be vacated, mailed at least 10 days prior to the public hearing on the vacation; 2) by posting a notice at several locations in the area to be vacated; and 3) by a published notice in the Burbank Leader.  The published notice appeared two (2) times within the fourteen days preceding the hearing. 

PSA Amendment #5 -  Leo A. Daly.  The Project Architect, Leo A. Daly has been involved with this Project since they were first retained in November 2003 to re-design the CSB.  The Professional Services Agreement (PSA) Amendment #5, provided herein as Exhibit J, increases the PSA services by $241,364 (an 18.6 percent over the current PSA amount) and will encompass the following additional professional services.

�        Various Owner Directed Design Changes - $3,270

�        Bidding Phase Services - $65,000[5]

�        Construction Administrative Phase Services - $173,094

A majority of the Construction Administrative Phase Services are value-added services that will be provided on an �as-needed� basis and require the City�s pre-authorization.  This Amendment increases the total value of Daly�s professional services to $1,539,264, or approximately 4.0 percent of the $38.1 million Total Projected Project Cost.  

PSA � Smith-Emery Laboratories. Staff is requesting Council approval to execute a PSA, provided herein as Exhibit K, in the amount of $95,000 with Smith-Emery Laboratories (S-E) to provide deputy inspections, materials testing, and laboratory services as part of the CSB construction effort.  The cost for this PSA is part of the $38.1 million Total Projected Project Cost.

Staff negotiated competitive hourly labor rate for S-E�s inspection services and a 35 percent discount for materials testing and laboratory services.  Services of this type and nature are typically provided throughout the construction industry on a time and materials basis. 

S-E�s service proposal was also rated best in terms of added value-services.  Their personnel are highly qualified and capable of completing these Project required services.  S-E has been in business since 1904 and has provided similar services to the City of Burbank on past projects. 

Environmental Review:

The Municipal Services Building is part of the Civic Center Master Plan Project. On March 11, 2003, through Resolution No. 26,443, the City Council adopted a mitigated negative declaration for the Civic Center Master Plan Project (Planned Development No. 2002-2), and found that the mitigated negative declaration was prepared in accordance with the California Environmental Quality Act (Public Resources Code Section 21000 et. seq.), the State CEQA Guidelines (14 Code of California Regulations Section 15000, et. seq.) and the City�s CEQA procedures.  On December 20, 2005, minor modifications were made to the Planned Development No. 2002-2 and an addendum was prepared by the Community Development Director in accordance with 15164 of the CEQA Guidelines. No further changes have been made to the Project, and none of the conditions warranting either supplemental or subsequent review, under CEQA Guidelines Sections 15163 or 15162, respectively, have been triggered. A copy of the mitigated negative declaration, mitigation monitoring program, and the addendum is attached as Exhibit L.

PROJECT SCHEDULE

Based on Council�s approval and direction to proceed with the construction of the CSB Project, the sixteen (16) month construction effort will result in the following anticipated schedule milestone.

1. Commence Construction                                                          January 2, 2007

2. Complete Construction                                                              May 2008

3. Occupancy                                                                                 July 2008

FUNDING SOURCES AND FISCAL IMPACT

The current funding sources for the CSB Project are listed in Exhibit M.  However, during the 2006-07 budget process, Council requested an overview of the City�s overall infrastructure needs that was presented as a discussion paper item at the May 30, 2006 Council meeting.  This discussion paper indicated that the City had an unfunded infrastructure deficit for streets, alleys, sidewalks, buildings, bridges, and parks of about $200 million.  In response to this information, Council formed an Infrastructure Subcommittee that has been meeting since August 2006 to identify priorities and potential funding sources.  Staff recommended that the $20,043,855 in the CSB Project shown in Exhibit M as Remarketing Proceeds be used to address City infrastructure needs.

Council is being asked to consider a budget amendment to reprogram the Remarketing Proceeds for a portion of the unfunded infrastructure projects. The Remarketing Proceeds are City general fund money restricted to capital facilities, due to the tax-exempt nature of the remarketing of the 1993 Golden State Redevelopment Project Subordinated Tax Allocation Bonds, Issue of 1993. Should Council agree to reprogram the Remarketing Funds, then the CSB Project will have as part of the shortfall, $20,043,855.  The CSB project is estimated to cost $38,100,000, yet would only have $4,297,284 remaining in the Project budget if the reprogramming of the Remarketing Proceeds is approved.  The City does not have a reasonable means of financing the remaining $33,802,716 needed to complete the Project.  The Agency is therefore proposing to fund the shortfall amount of $33,802,716.  Of this amount, $14,072,827 will be funded from Golden State bond proceeds (this is an acceptable use of Agency funds because the CSB project is one of the improvements outlined within the bond refinancing documents) and $19,729,889 from tax increment reserves from the Merged Project Area.  Interest costs on the Golden State bond proceeds to be paid through the bond�s full repayment in 2024 will total $6,552,465.  This is in addition to the $682,719 already funded in tax increment.  The Agency will also be deeding property it owns that was acquired at the cost of $2,722,100.  

The total costs borne by the Agency for CSB is proposed at $37,207,535, which includes the $33,802,716 construction costs to be funded by the Agency, the $682,719 already previously funded by the Agency, and the $2,722,100 in land acquisitions costs for the property to be deeded over to the City.  Including bond interest costs totaling $6,552,465, the final costs borne by the Agency upon full repayment of the bonds in 2024 will be $43,757,535.

The proposed resolutions amend the City�s 2006-2007 Fiscal Year Budget to appropriate $20,043,855 from account number 370.CP01A70019.0000.11915 to 370.CP01A .70020.1000 (Capital Holding � Bond Proceeds),  and amend the Agency�s and City�s 2006-2007 Fiscal Year Budget to appropriate $19,729,889 from Merged Project Area tax increment reserves and $14,072,827 from Golden State bond refinancing proceeds, for a total of $33,802,716 in funds from account number 306.ND000.30004.0000.00000 (Merged Project Area Un-appropriated Fund Balance) to the City account number 370.CP01A.70020.1000 (Capital Holding � Bond Proceeds).

RECOMMENDATION

Staff recommends that the Council approve the following Resolutions:

1.                  A Resolution of the City of Burbank amending the budget for Fiscal Year 2006-2007 for the purpose of Allocating Funds to the Capital Holding Fund

2.                  A Resolution of the Redevelopment Agency of the City of Burbank Amending the budget for Fiscal Year 2006-2007 for the Purpose of Funding certain Costs of the Community Services Building and  Approving a Cooperation Agreement Between the Redevelopment Agency and the City of Burbank relating thereto

3.                  A Resolution of the City of Burbank Amending the budget for Fiscal Year 2006-2007 for the Purpose of Accepting Agency Funding relating to the Community Services Building and Approving a Cooperation Agreement Between the Redevelopment Agency and the City of Burbank relating thereto

4.                  A Resolution of the City Council ordering the Conditional Vacation of Two Alleys Bounded by Glenoaks Boulevard, Olive Avenue, Orange Grove Avenue and Third Street (V-351)

5.                  A Resolution to Approve the Plans and Specifications for Bid Schedule 1098 and the Construction Agreement between the City of Burbank and the General Contractor, Swinerton Builders Inc.

6.                  A Resolution to Approve a Professional Services Agreement, Amendment #5 between the City of Burbank and the Project Architect, Leo A. Daly

7.                  A Resolution to Approve a Professional Services Agreement between the City of Burbank and Smith-Emery Laboratories

Community Services Building (CSB) Project

Bid Schedule 1098

List of Exhibits

Exhibit A    Swinerton Builder�s Trade Summary

Exhibit B    Swinerton Builder�s Guaranteed Maximum Price (GMP) Summary

Exhibit C    Construction Agreement between the City of Burbank and Swinerton Builders

Exhibit D    Total Project Cost Summary Comparison

Exhibit E    Project Cost Anatomy

Exhibit F   Cost Comparison (Design Development Phase Estimate vs.     Construction

                   Documents Phase GMP)

Exhibit G   Cooperation Agreement between the City of Burbank and the Burbank

                   Redevelopment Agency

Exhibit H   Summary Report pursuant to Sections 33445 and 33679 of the California

                  Community Redevelopment Law

Exhibit I      Alley Vacation (Map V-351), including all Referenced Attachments

Exhibit J     Professional Services Agreement, Amendment #5 for Leo A. Daly, Architects

Exhibit K    Professional Services Agreement for Smith-Emery Laboratories

Exhibit L     Mitigated Negative Declaration, Mitigated Monitoring Program, and Mitigated

                    Negative Declaration Addendum

Exhibit M    Current Appropriated Funding Sources for the Community Services Building

                     Project

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