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ADOPT A MOTION TO ALLOCATE AND APPROPRIATE GRANT AND GENERAL FUND DOLLARS TO THE NAVIGATION CENTER PROJECT AND AUTHORIZE CONTRACT CHANGE ORDER NO. 2 AND AUTHORIZE PROFESSIONAL SERVICES CONTRACT AMENDMENT NO.1
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a motion to:
1. Reallocate and appropriate $1,798,000 American Rescue Plan Act (ARPA) funds for construction and construction management services from existing ARPA project #EARP301 to Navigation Center project #EARP212;
2. Allocate and appropriate $1,000,000 of discretionary Council Priority Project funds as recommended by the Council’s Budget/Finance/Economic Development Committee on March 29, 2024, for construction of the Navigation Center project;
3. Authorize the City Manager, or designee, to execute Contract Change Order No. 2 in the amount of $2,714,647.13 with G&G Builders for construction of the Navigation Center project;
4. Authorize the City Manager, or designee, to execute Amendment No. 1 to the Professional Services Contract with Griffin Structures, Inc. in the amount of $200,000 to provide construction management services for the Navigation Center project;
5. Authorize the City Manager, or designee, to allocate remaining funds and any other cost savings realized during construction to, and to enter into contract(s) with, other entities involved in the completion of the Navigation Center;
6. Authorize the City Manager, or designee, to enter into and execute any associated documents and take appropriate and necessary actions to carry out the purpose and intent of this motion.
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Summary
On November 17, 2020, the City Council approved a Resolution (Attachment A - Resolution 2020-11-17-1402) authorizing the allocation of $2,338,623 in grant funding through the State’s Homeless Housing, Assistance and Prevention Program (HHAP) Round 1 to the Stockton Shelter for the Homeless for the construction of the Navigation Center.
Construction of the Navigation Center commenced on October 22, 2022. Stockton Shelter for the Homeless terminated shelter operations and issued contract termination notices to three contractors working on the Navigation Center project effective September 1, 2023. The City’s allocation of $2,338,623 in HHAP 1 funds was fully expended by Stockton Shelter for the Homeless at the time of their closure. At that time, best estimates suggested that the Navigation Center project was about 75 to 85 percent complete; though the Navigation Center was not watertight.
The City of Stockton, Economic Development Department, assumed control of the Navigation Center project on September 1, 2023. On October 17, 2023 City Council approved a Motion (2023-10-17-1204) authorizing the allocation of $1,826,961 in grant funding to complete G&G Builders’ Inc. (G&G) original scope of work with Stockton Shelter for the Homeless and other identified scope items not part of the original contract, excluding landscaping and Fixtures, Furnishings and Equipment (FF&E).
The city subsequently issued contracts to G&G for the Navigation Center construction scope of work ($1,341,961.40), to Griffin Structures, Inc. (Griffin) for construction management services ($185,000), to RPM Team (RPM) for Architecture and Engineering Services ($33,900), and to Integrated Modular Solutions (IMS) to complete the fire sprinkler system and other work and repairs to the modular structures ($97,296).
In late October 2023, Griffin embarked on a comprehensive discovery process to assess current project conditions. Gaps were identified between project plans and specifications and contracted scopes of work with the Stockton Shelter for the Homeless and its contractors.
A Notice to Proceed was issued to G&G on November 13, 2023, though severe rains delayed kickoff. Construction and weathering-in the structure began in December of 2023.
In January 2024, G&G and Griffin observed evidence of visible mold growth and construction stopped. A water intrusion inspection, conducted on January 23, 2024, confirmed the presence of water and mold impacting the floor and wall systems throughout. The City has deferred several G&G contracted scope of work items to pay for the removal and treatment of water-impacted building materials to meet certification to industry standards, so that construction can resume.
There are additional costs to complete the Navigation Center following identification of missing scope of work items and the remediation and repair of water damage due to the rains from 2022/2023 and 2023/2024. Additionally, staff are now requesting allocation of funds for landscaping, as discussed in October 2023.
It is recommended that Council approve Contract Change Order (CCO) No. 2 in the amount of $2,714,647.13 with G&G for construction of the Navigation Center. To date, one zero cost CCO has been approved with G&G. Upon approval of CCO No. 2, the revised total contract amount will be $4,056,608.53.
It is also recommended that Council approve Professional Services Contract Amendment No. 1 in the amount of $200,000 with Griffin for construction management services for the Navigation Center project. Upon approval of Amendment No. 1, the revised total contract amount will be $385,000.
Council approval is required, as each of these contract changes or amendments exceed the administrative authority for change orders or amendments, and the recommended actions increase the project budget. Upon Council approval of the recommended contract changes or amendments, the administrative authority will be reset, providing the City Manager with authority to approve future contract changes or amendments up to the new calculated limits. Staff are requesting $1,798,000 in ARPA funds and $1,000,000 of General Fund to complete the work.
DISCUSSION
Background
The State's Homeless Housing, Assistance and Prevention Program (HHAP) funds are designed to support regionally coordinated efforts between the County, Continuum of Care (CoC), and the City to expand and develop local capacity to address immediate homelessness challenges throughout the state. HHAP funds are focused on moving homeless individuals and families into permanent housing and ensuring those individuals and families maintain their permanent housing.
On November 17, 2020, the City Council approved a Resolution (Attachment A - Resolution 2020-11-17-1402) authorizing the allocation of $6,460,265 in grant funding through HHAP Round 1. In total, 12 projects were approved for HHAP Round 1 funding to carry out eligible activities prioritized in the San Joaquin Community Response to Homelessness Strategic Plan, including the allocation of $2,338,623 to the Stockton Shelter for the Homeless for the construction of the Navigation Center.
The Navigation Center is the first of its kind, low-barrier, service-enriched shelter in Stockton. It will focus on moving homeless individuals and families into permanent housing and providing temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing.
Initial grant funds issued by the City/County/CoC to Stockton Shelter for the Homeless for the Navigation Center project totaled $4,847,045, as follows:
HHAP 1 Grants Received:
City of Stockton $2,338,623
San Joaquin County $ 972,420
San Joaquin County CoC $1,121,960
HHAP 2 Grant Received:
San Joaquin County CoC $ 414,042
Total $4,847,045
Stockton Shelter for the Homeless announced it was closing and terminated shelter operations and issued contract termination notices to three contractors working on the Navigation Center project effective September 1, 2023. The City’s allocation of $2,338,623 in HHAP 1 funds were fully expended by Stockton Shelter for the Homeless at the time of their closure.
The City of Stockton, Economic Development Department (EDD), assumed control of the Navigation Center project on September 1, 2023. Prior to Stockton Shelter for the Homeless’ closure, EDD conducted an overall assessment of the project including conducting interviews with Four Leaf, the contracted state inspector, CalFire, and Caltrans about the project. Staff from EDD and Public Works conducted site visits with G&G and RPM, and project documents were shared with Public Works.
At the time, it was estimated that construction was about 75 to 85 percent complete. When construction ceased, the building was not watertight-there was no roof and there were multiple water penetration points. The City was aware that the Navigation Center experienced extensive flooring damage due to the unprecedented rains of 2022 and 2023 and anticipated additional damage if the building was not immediately sealed. Barring additional damage or any unforeseen scope items, the City’s best estimate for the total balance/cost to complete the Navigation Center was $1,826,961.40, excluding FF&E and landscaping.
On October 17, 2023 City Council approved a Motion (2023-10-17-1204) authorizing the allocation of $1,826,961.40 in grant funding, including a million dollars from Senator Eggman as part of the 2022-23 California Budget Bill Jr. directly for the Navigation Center, to finish the project per G&G’s original scope of work with Stockton Shelter for the Homeless and other identified scope items not part of the original contract. Pursuant to Stockton Municipal Code (SMC) 3.68.070, Council additionally approved findings which supported an exception to the competitive bidding process.
The city subsequently issued contracts to G&G for the remainder of the Navigation Center construction, to Griffin for construction management services, to RPM for Architecture and Engineering Services, and to IMS for remaining modular manufacturing items.
Grant funds contracted by EDD to resume construction of the Navigation Center that have been committed by the City to date, as follows:
ARPA Contingency:
G&G Builders $ 341,961.40
Griffin $ 185,000
RPM/IMS/Other $ 300,000
Senator Eggman, 2022-23 California Budget Bill Jr.:
G&G Builders $1,000,000
Total $1,826,961.40
In late October 2023, Griffin Structures embarked on a comprehensive Discovery process to assess current project conditions. Gaps were identified between project plans and specifications and contracted scopes of work with the Stockton Shelter for the Homeless and its contractors. Namely, no contracts covered the exterior seaming work and scaffolding required to seal the horizontal and vertical water penetration points; the intumescent paint at ceilings and walls to provide 1-hr Fire Rating, as added by CalFire; or the miscellaneous plumbing connections not yet made between containers. Further, the project has experienced cost increases due to scope items being clarified during the Request for Information process around roofing, concrete work, and plumbing work.
A Notice to Proceed was issued to G&G on November 13, 2023, though severe rains delayed kickoff. Construction and weathering-in the structure began in December of 2023.
In January 2024, G&G and Griffin observed evidence of visible mold growth. Construction stopped immediately, pending review by an industrial hygienist. A water intrusion inspection, conducted on January 23, 2024, confirmed the presence of water and mold impacting the floor and wall systems throughout. The City deferred several G&G contracted scope of work items to pay for the removal and treatment of water-impacted building materials to meet certification to industry standards, so that construction can resume. Remediation revealed additional scope issues; the fire rating assembly details previously approved are no longer applicable, per CalFire.
Timeline
Construction of the Navigation Center commenced approximately two years ago; however, due to multiple stoppages, the project has been under active construction for approximately 12 months.
§ August 24, 2021: The contract between Stockton Shelter for the Homeless and the City was signed.
§ July 29, 2021: Stockton Shelter for the Homeless approves contract with RPM Team for Architecture and Engineering Services.
§ December 1, 2021: Stockton Shelter for the Homeless approves contract with Integrated Modular Systems (IMS) for the purchase, delivery, and prefabrication of the modular structure.
§ May 9, 2022: Stockton Shelter for the Homeless approves contract with G&G Builders (G&G) for the Installation of the Container Structure and Site Work.
§ June 26, 2022: Formal groundbreaking.
§ July 6, 2022: Anticipated construction commencement (permit delayed).
§ September 1, 2022: Caltrans requests new City/Caltrans lease.
§ October 22, 2022: Encroachment permit obtained; construction commences.
§ December 31, 2022: Winter storms impact construction timeline and damage containers.
§ July 18, 2023: Stockton Shelter for the Homeless announces their impending closure.
§ July 31, 2023: City Council ratified the Local Emergency Proclamation due to Public Health and Safety related to unhoused individuals.
§ September 1, 2023: The City of Stockton transferred the Stockton Shelter for the Homeless sublease to St. Mary’s Dining Room effective September 1, 2023. Stockton Shelter for the Homeless issued contract termination notices to their three contractors working on the project.
§ October 17,2023: City Council approves motion to accept, allocate, and appropriate grant funding for a contract for construction manager services and a contract for construction of the Navigation Center Project.
§ October 26, 2023: City of Stockton executes contract with Griffin for Construction Management services.
§ November 11, 2023: City of Stockton executes contract with G&G for construction of the Navigation Center.
§ November 13, 2023: A Notice to Proceed to commence work was issued to G&G.
§ November 29, 2023: On-site construction resumes, following rain delay.
§ December 14, 2023: City of Stockton executes contract with RPM Team for Architecture and Engineering Services.
§ January 23, 2024: Construction stops after identification of visible mold, pending remediation removal and treatment of water-impacted building materials to meet certification to industry standards.
§ April 11, 2024: City of Stockton executes contract with IMS to complete the fire sprinkler system and other work and repairs to the modular structures.
Present Situation
Removal of the water-impacted building materials is complete, per the work practices specified in the Water Intrusion Inspection Assessment Report. The City approved CCO No. 1 to complete the remediation and the Roof Sleepers. This zero cost CCO did not require Council approval, as it did not exceed the administrative authority for change orders. Remediation took approximately four weeks, and certification to resume construction was provided on March 28, 2024. The cost for removal, and treatment of water-impacted building materials to meet certification to industry standards was $351,397.65. These costs were paid through project contingency ($149,488.53) and deferred scope ($201,909.12), as described below.
At the time construction stopped on January 23, 2024, G&G had completed a significant portion of their contracted scope of work, including:
• Trenching and backfilling for underground utilities
• Underground electrical
• Roofing Installation
• Concrete pavement/Fire access road (~75% complete)
The remaining scope of work items that were delayed until remediation was complete, included:
• Fire Access Road
• Egress Stairs
• Electrical Work - Switchgear and associated panels installation
• HVAC Equipment Install (Roof Mounted Units)
• Fire Alarm
• Sprinkler System (IMS Contract)
These scope of work items are scheduled to resume in April and be completed prior to the contract closing on May 31, 2024.
The scope of work items that were deferred to pay for the removal and treatment of water-impacted building materials to meet certification to industry standards, so that construction can resume, included Change Orders previously approved by Stockton Shelter for the Homeless that were incorporated as part of G&G’s contract with the City of Stockton (#8, 10, 11, 14, 16, 17). Those Change Orders were determined by the Construction Manager and Project Team to be nonessential to securing the Certificate of Occupancy and will not be incorporated into CCO No. 2.
There are additional costs required to complete the construction of the Navigation Center, excluding mark-ups, general conditions, and insurance or bonds. The details of those costs are as follows:
1. Deferred Work. Elevator seismic gap.
2. Scope Due to Mold/Demo Remediation. Costs for drywall and finish work after remediation, including all new partitions and fire rated partitions and updates to the fire rating assembly details added by CalFire. All new flooring work after remediation. Any reinstallation of existing panels and HVAC units removed for remediation work and reconnecting electrical.
3. Additional Scope of Work Items. The Construction Management team conducted several months of Discovery to assess current project conditions. Gaps were identified between project plans and specifications and contracted scopes of work with the Stockton Shelter for the Homeless and its contractors, including:
a. Additional asphalt paving and curb to create an accessible entry.
b. Exterior seaming work and scaffolding.
c. Intumescent Paint at floor penetrations, ceilings, and wall to provide 1-hr Fire Rating. Added by CalFire.
d. Utilities (Storm Drain).
4. Extended Construction Management Services . Additional months of construction management services to extend through completion of construction plus 30-days.
5. Landscaping. Staff noted to City Council on October 17, 2023 that it would return to request funds for landscaping based on previously completed pro-bono landscaping drawings.
6. FF&E (estimated $50 per sq. ft @ 13,500 sq ft.) (If cost savings realized, not currently part of CCO No. 2). Since this project was funded in 2020 during a global pandemic, the homelessness landscape has changed tremendously. Further, there have been recent changes in the overall campus wide utilization. Staff noted to City Council on October 17, 2023, that it would return to request funds for FF&E once St. Mary’s had an opportunity to confirm highest and best use of the building. While all three shelters have been at or near capacity; St. Mary’s is regularly turning away families. In the first quarter of 2024, St. Mary’s was unable to accommodate 142 families because the family shelter was full. There are insufficient funds available to include FF&E as part of this CCO. The City is pursuing other options to fund FF&E as well as potential cost savings realized in the G&G contract. In the meantime, the City will coordinate with St. Mary’s on FF&E options, including movable partitions, to maximize the number of semi-private family units.
Construction projects of this size and complexity often experience unforeseen conditions that require a team approach to resolve. The contractor, architect, and construction management staff all play key roles. While these issues are expected to decrease as the project progresses, the project previously lacked a construction management team under Stockton Shelter for the Homeless. The increased level of supervision and guidance, the significant weather damage and the resulting mold demolition and remediation that exposed unknown existing conditions related to the Fire Protection Plan, and increasing construction costs have resulted in a volume of changes that require adjustments to contracts. This CCO represents a scope of work to meet requirements to obtain a Certificate of Occupancy.
It is recommended that Council approve CCO No. 2 in the amount of $2,714,647.13 with G&G for construction of the Navigation Center project. Upon approval of CCO No. 2, the revised total contract amount will be $4,056,608.53 (Attachment B - CCO No. 2 with G&G).
It is also recommended that Council approve Professional Services Contract Amendment No. 1 in the amount of $200,000 with Griffin for construction management services for the Navigation Center project. Upon approval of Amendment No. 1, the revised total contract amount will be $385,000 (Attachment C - Amendment No. 1 with Griffin).
Council approval is required, as each of these contract changes or amendments exceed the administrative authority for change orders or amendments, and the recommended actions increase the project budget. Upon Council approval of the recommended contract changes or amendments, the administrative authority will be reset, providing the City Manager with authority to approve future contract changes or amendments up to the new calculated limits. Staff are requesting $1,798,000 in ARPA funds and $1,000,000 of General Fund to complete the work.
The estimated date of completion is early fall 2024, pending approval of the recommended action.
The City has identified the source to cover the CCO scope and continuing construction management services.
§ $1,798,000 from the Council-approved American Rescue Plan Act (ARPA) Funds. On May 2, 2023, Council adopted a resolution to allocate $1,800,000 of ARPA Funds for acquisition, pre-development, rehabilitation, and capitalized operating subsidy funds to Upholdings Inc. as a match for Round Three of the Homekey Grant Program. Authorization of funds was contingent upon approval of the grant application by the Department of Housing and Community Development. On January 4, 2024, the City learned that its joint application for Round 3 of Homekey was denied. Some work related to Upholdings, Inc. resulted in minor expenses, bringing the total available to $1,798,000. These funds must be re-obligated by December 31, 2024 and spent by December 31, 2026.
§ $116,647.13 from the Council-approved ARPA Funds. On October 17, 2023 City Council approved a Motion (2023-10-17-1204) to allocate $300,000 to “other entities involved in construction of the Navigation Center.” The City has entered into other contracts and paid for the water intrusion inspection with these funds for a total of $143,226.00. No other contracts are deemed necessary by the construction manager, so these funds are available for use.
§ $1,000,000 of discretionary Council Priority Project funds as recommended by the Council’s Budget/Finance/Economic Development committee on March 29, 2024.
FINANCIAL SUMMARY
City Council Resolution number 2024-01-23-1501 appropriated $4 million in Council Priority Project Funds. The Council Budget / Finance / Economic Development Committee recommended programming $1 million of this funding for the Navigation Center.
The $1,798,000 of funds incur no financial impact to the City’s General Fund or any other unrestricted funds as a result of this action. This allocation is payable from the Council-approved ARPA Fund and is available in existing ARPA project #EARP301. The $116,647.13 is payable from existing Navigation Center project #EARP 212 and is available for use.
Attachment A - 2020-11-17-1402
Attachment B - CCO No. 2 with G&G
Attachment C - Amendment No. 1 with Griffin